Rebirth of the Capital Legend

"The trading decisions and changes in opinions of retail investors are greatly affected by emotions." Wang Shujie, the main fund product manager of 'Nuoan Blue Chip Mixed Selection', said with a smile, "In recent days, whether it is the index or the market's small and medium-sized stocks, the trend is very good, especially the 'big infrastructure' line, which has indeed played a continuous money-making effect and provided a good guidance for the market sentiment.

In this situation where multiple market main lines have recovered comprehensively and the market's profitability effect continues to improve.

The market investment trend is moving towards bullishness across the board. Retail investors are generally becoming optimistic and have corresponding expectations for the future market. This is also normal.

However, whether the market can recover in the future and whether the trend will meet the expectations of a large number of retail investors in the market remains to be seen.

That depends on the degree of sentiment, as well as market news, external market trends, fundamentals and other factors. "

"Mr. Wang, looking at the market trends in recent days, the trend direction of individual stocks, and the strength of the market..." Li Shangfeng paused and continued, "It is true that the large-cap and heavyweight core stocks are continuing to weaken, while the small-cap and micro-cap stocks that were severely oversold before are continuing to strengthen. It seems that the market is gradually switching from large-cap and heavyweight blue-chip stocks to small-cap and micro-cap stocks again."

"The current trend of small and micro-cap stocks does not have enough positive news to stimulate them." Wang Shujie said, "I feel that the trend of small and micro-cap stocks is still a simple 'oversold rebound' logic, which is the result of a group of short-term speculative funds after the overall market sentiment has warmed up.

Compare the trend of the 'big infrastructure' line and the underlying logic.

I don’t think how long this sustained rebound of small and micro-cap stocks can last, or how much space and height it can continue to reach.

After all, emotions are hard to describe.

The market may explode strongly today and the sentiment is very good, but the external market may plummet tonight, and tomorrow the market may open with a big drop, and the entire main market trend will collapse again.

In general, if we want to move beyond continuity and truly open up space, we need a main line.

I think there must be sufficient underlying logical support and very strong future expectations to allow a large number of medium and long-term capital groups to dare to lock positions on this main line and let the chips settle. Otherwise... it will be difficult to achieve sustainability if all short-term capital groups compete with each other.

The most they can do is take advantage of the sentiment to speculate, and then wait for the chip structure to quickly touch the concentrated trapped chip area above.

There is a high probability that it will fall back quickly along the same path.

Looking back at the trends over the past six months, Internet software, film and television media, Internet applications... these so-called "emerging industries" main-line sector stocks that were concentratedly speculated by various capital groups in the last bull market and overdrew their growth space for at least ten years in the future have basically shown the trend I just mentioned.

It can be said that these stocks...

Not surprisingly, after the rebound, the market would set new lows, burying large batches of funds that were used to buy at the bottom.

Moreover, with each decline after a rebound, these stocks will have smaller and smaller volumes.

At present, at least from a fundamental perspective, these stocks have not digested the expectations and valuations that were overdrawn by last year's bull market. From an investment perspective, these stocks are still ridiculously expensive.

Moreover, a number of institutional groups in the industry have significantly reduced their positions and withdrawn from these main areas.

Now, when the fundamentals of these main sectors have not improved significantly, logically speaking, these institutions that withdrew will not add their positions back so quickly.

And... I don't know if you noticed.

In the past two days, although the main sectors of the so-called "emerging industries" such as Internet software, Internet applications, film and television media, as well as a number of oversold small and micro-cap and small-cap stocks in the market have performed very strongly, in terms of volume performance, in the past two days, the volume of these sectors has not increased significantly, but has shrunk instead.

This shows that, at least for now, there is no strong intervention of major buying funds.

Those who participate in the speculation of individual stocks in these sectors are mainly speculative hot money groups, and the style of hot money groups is destined not to lock up shares for a long time and stay on one stock for a long time. "

"According to your analysis, Mr. Wang, the sustainability of the 'oversold rebound' line is still questionable, and the market's small and medium-sized stocks and micro-cap stocks are unlikely to break out of this line." After listening to Wang Shujie's point of view, Li Shangfeng pondered for a moment and responded, "Then... the market is still on the original style path?"

"The market is always changing dynamically." Wang Shujie said, "Specific trends require specific analysis. At present, in the weighted main line, such as liquor, white goods, medicine, consumption, electricity, finance, etc., after many weighted leading stocks have relatively reflected the performance expectations for this year and next year, there are indeed major institutional funds that locked positions in the early stage, and are reducing their positions to stop profits.

But overall, the chip structure of the entire weight main line is still relatively stable.

Moreover, through the changes in the volume of the market, especially the specific changes in the volume of each main line, it can be found that the main funds that have withdrawn from the main weighted sectors such as liquor, white appliances, medicine, consumption, electricity, finance, etc., have not entered the small and medium-sized stocks and micro-cap stocks that have rebounded the most strongly and performed well in the past two days to buy the bottom. Instead, they have flowed into the main line of "big infrastructure" that is already at the so-called short-term high point. "

"Well, among the major market trends recently, the volume of the 'big infrastructure' line is indeed the most fully expressed." Li Shangfeng said, "And the trend of yesterday's sharp drop at the end of the trading day has been fully reversed today, which is enough to show that the potential long position of the 'big infrastructure' line is strong. However... the short-term increase of the 'big infrastructure' line is indeed a bit large compared with the market trend and the trends of other main sectors. It is hard to say that there will be no correction and shock at this position."

"Whether it is the overall market, the main sector, or individual stocks, the short-term trend is extremely difficult to grasp." Wang Shujie said, "We don't need to pay special attention to the market trend of one or two days, but we should take a longer-term view and look at the trend development in the next month, two months, half a year, or even a year.

You have to analyze from the underlying logic and evaluate the current investment value based on the fundamentals.

Moreover, when analyzing the stock's position, one cannot simply look at how much it has risen.

We need to look at this stock and see whether its valuation has been significantly raised when its fundamentals have changed, or whether there is any obvious overdraft of expectations?

Starting with these analytical perspectives…

Looking at the "big infrastructure" line, whether it is "Poly Real Estate", "Kewan Real Estate", "Gemdale Group", "Conch Cement"... these industry leading weighted stocks, or growth stocks such as "Oriental Yuhong" and "Huaxin Building Materials"..., in fact, at present, with drastic changes in fundamentals and sudden changes in future expectations, compared with their performance growth potential in the next one or two years, their valuations have not only not risen compared to the previous bottom position, but have shown a downward trend.

Some stocks in the market tend to become more expensive as they fall, while some stocks tend to become cheaper as they rise.

We should avoid buying stocks that become more expensive as they fall, and focus on or hold stocks that become cheaper as they rise and have strong fundamental support. Analyze from the expected direction of the future.

Overall, the 'big infrastructure' line is not overvalued at the moment.

Therefore, its market trend is unlikely to stop at this position. After all, as expectations continue to strengthen in the future, more capital groups will continue to intervene and provide strong support for the core stocks related to this main line and the truly high-quality stocks. "

"According to what you mean, Mr. Wang..." Li Shangfeng paused and said, "At present, should we stick to the previous trading strategy, continue to hold a large position in the core stocks of the 'big infrastructure' line, and continue to focus on this core line for investment? Our fund still has a relatively heavy position in the weighted sectors such as liquor, white appliances, electricity, and finance, especially in the core industry leading stocks of these major weighted sectors.

Regarding this part of the position...

Mr. Wang, do you mean to keep a static position and maintain the original strategic judgment? "

"Of course it is so." Wang Shujie said, "For the main weighted sectors such as liquor, white goods, electricity, and finance, many core weighted leading stocks are not overvalued compared to future expectations. At present, these core weighted leading stocks have only had some buying liquidity siphoned off by the 'big infrastructure' main line. It does not mean that the fundamentals and expectations of these main weighted sectors and these core leading stocks have changed.

In fact, when it comes to investing in and buying stocks, I still think that we can’t just focus on the stock price.

The most important thing is to look at the changes in the fundamental logic behind it.

Furthermore, let's see if Huayi Capital, which previously held heavy positions in Qianzhou Moutai, Wuliangye, Gree Electric Appliances, Midea Electric Appliances, etc., has significantly reduced its holdings? According to current market news, there seems to be no news or related rumors that Huayi Capital has reduced its holdings in these heavyweight stocks, right? "

"That's not the case." Li Shangfeng said, "Then let's maintain the original trading strategy and focus our positions on 'white wine', 'white appliances', 'electricity', 'finance' and 'large infrastructure'. If there are new changes in the market trend, we will consider a new strategy for adjusting our positions."

The two discussed their views on market trends and the changes in the current main market trends.

In the entire market, bullish sentiment continues to ferment.

Moreover, the trend of the external markets in the evening was also quite cooperative. The U.S. stock market continued to set new historical highs with a high-profile attitude.

Then, there is good emotional feedback both inside and outside.

The next day, Thursday, August 8, the market had not yet actually opened, but the pre-market sentiment had already clearly leaned towards a consistent bullish situation.

"Looking at the emotional performance before the market opens, I can't help but think of the market's opening trend the day before yesterday." At around 8:40 in the morning, Yu Xiaolu, the trading team leader of the 'Jufeng Future Growth' fund product trading room inside Jufeng Asset Management Company, said, "The emotional side seems to be a bit too consistent, which will inevitably lead to the market opening too high. After the sharp opening, the pressure from yesterday's profit-taking is probably not small."

"Today's pre-market sentiment is somewhat similar to the pre-market sentiment of the day before yesterday, but..." said Lu Xiangxiang, product manager of the 'Jufeng Future Growth' fund, "the market's trend pattern and trend orientation are obviously different from the day before yesterday.

It should be said that on the certainty of market trends.

After yesterday's comprehensive breakthrough and rise in the main line of "big infrastructure", which fully boosted the market's bullish sentiment and investment confidence.

The current market trend is obviously more certain than the day before yesterday.

If sentiment is too consistent and there is a concentrated bullish outlook, it does not necessarily mean that expectations will be fulfilled too quickly and profit-taking will occur in a concentrated manner.

It is also possible that the trend will develop into a pattern of shrinking volume and high-profile moves.

Just like yesterday's "big infrastructure" main line, did the core hot stocks related to the entire "big infrastructure" main line yesterday break through and increase in volume after being quickly pulled up from underwater at the beginning of the trading session? In its overall surge, its volume not only did not further increase, but because of the expectation of a rapid turn to a consistent trend, many internal holding funds groups chose to lock their positions.

Yesterday, the main line of "big infrastructure" had a demonstration effect.

The probability of the index breaking upward and hitting 3000 points is obviously greater than continuing to fall and adjust.

Moreover, the investment sentiment and confidence of the entire market have been established in the two consecutive days of long positive lines, and it is unlikely that they will suddenly reverse and take a sharp turn for the worse so soon. "

"From what you said, Mr. Lu..." Yu Xiaolu said, "Are you inclined to believe that the market will rise and the volume will accelerate, and the index will quickly hit 3000 points?"

Lu Xiangxiang smiled and said, "Of course it is so. At this position and with this kind of market sentiment, there is no reason to continue to be bearish!"

"Okay." Yu Xiaolu said, "I think it won't be easy for the Shanghai Composite Index to stabilize at 3000 points, let alone stabilize under the situation of shrinking volume. There are many historical locked-in orders near the 3000 point position. If you want to truly break through this position... it is basically impossible without increasing volume.

However, I am not optimistic that the index will hit 3000 points today.

However, as for the "big infrastructure" line that our fund holds heavily, I am still very optimistic. Looking at the current main line sectors of the entire market, it seems that only the three core sectors related to the "big infrastructure" main line, namely real estate development, building decoration, and building materials, have completely broken through the peak of the previous shock platform and formed a substantial breakthrough trend. Other main line sectors, including indexes, even the strongest Shanghai Composite Index, are still a little bit behind. "

"That's right." Lu Xiangxiang replied, "The market's 'oversold rebound' line looks hot, and retail investors are following suit strongly, but in fact, the real chip structure inside has not been significantly changed. Short-term pursuit of highs is more likely to be trapped. As for the market's small and micro-cap growth stocks, if they want to truly establish sustainability, it depends on whether many stocks will hit new lows again during the process of retracement and adjustment after the 'oversold rebound' logic is completed.

If there is no new low, and there is continued buying during the correction, and at the same time there are new expected changes in news and fundamentals.

In that case, you can still take a closer look and try to follow the logic of the market's main style switching.

Before that, I think the market is still trading on the left side, and the opportunities on the right side... Unless the Shanghai Composite Index completely stands at 3000 points, and the core main lines form a healthy rotation and rise, the market investment sentiment, investment confidence, and trading risk preference will have a more obvious recovery, and then it will appear. "(End of this chapter)