Rebirth of the Capital Legend

“Yes, I think so too.” Zhang Xinlei nodded and said, “Huaxin Cement is the core stock that captured market sentiment today. If it opens less than 5 points higher tomorrow, it will be below expectations, which also indicates that the future trend of the ‘major infrastructure’ sector is highly uncertain.”

However, given the current after-hours sentiment and the trading data disclosed in the after-hours trading report for 'Huaxin Cement', this is still a significant factor.

I feel this stock will most likely open at its daily limit tomorrow. As for whether it will open at the limit during the trading day, that depends on the overall market sentiment and whether the institutional investors who previously entered the market will take profits and sell at this point.

"If tomorrow's stock price for 'Huaxin Cement' shows that the institutional investors who bought in earlier are dumping their shares to take profits, then it means that these institutional investors who bought into 'Huaxin Cement' are not real institutions at all, but rather speculative funds using institutional seats," Lao Qian said. "Logically speaking, institutions wouldn't buy today and sell tomorrow. Of course... judging from their buying patterns, I think these institutional seats that bought into 'Huaxin Cement' are unlikely to be speculative funds disguised as institutional seats; they are undoubtedly real institutions."

"Yes, if these are genuine institutional seats, and these institutions are continuously locking up their positions, then the stock 'Huaxin Cement' will most likely continue its upward trend tomorrow," Zheng Jinming said. "In fact, I personally think that the candlestick pattern of 'Huaxin Cement' is better than that of 'Huawen Online' back then."

Before this check was successfully placed on the 'Chinese Online' check.

Due to negative news, Huaxin Cement experienced a sharp drop. At that time, as the "major infrastructure" theme was undergoing a general correction, a large number of active funds in the market focused their attention on the "emerging industrial chain" theme. As a result, during the sharp decline suppressed by negative news, many retail investors and speculative funds had already withdrawn.

After that, the stock price of 'Huaxin Cement' reversed course and performed very quickly.

This meant that many investors who missed out didn't even have time to react.

In summary, the current internal shareholding structure of 'Huaxin Cement' is quite clean.

If the institutional investors who significantly increased their holdings in this stock over the past two days are indeed genuine institutional funds, then it means that there are currently very few shares of 'Huaxin Cement' available for trading.

Don't be fooled by the fact that this stock has more than twice the circulating supply of 'Chinese Online'.

Its actual liquid assets may not even be as many as the 'Chinese Online' check.

Since the number of floating shares is limited, and the market recognition and discussion surrounding the stock have increased, the pressure to push the stock price upward will be relatively small.

Logically speaking, as long as the sentiment surrounding the "major infrastructure" sector doesn't collapse and there are no sudden major negative events, the situation should improve.

Therefore, there's a high probability that 'Huaxin Cement' will perform well and even form a consecutive limit-up trend. It's just a bit of a pity... These logics can only be clarified after the market closes. In the final stages of the trading day, when the stock failed to secure its position, the underlying logic wasn't so clear, leading to a missed opportunity to follow suit.

“The old dragon dies, the new dragon is born.” Zhang Xinlei said, “The switching between the ‘emerging industrial chain’ and ‘major infrastructure’ themes in the closing stages of today’s trading was truly remarkable. The funds that mainly bought ‘Huaxin Cement’ today also showed some courage and quick judgment!”

"I think the surge in 'Huaxin Cement' at the close today was more a result of market forces than the work of a single speculative fund," Lao Qian said. "When the 'Emerging Industrial Chains' sector plunged in the afternoon, and 'Huawen Online' hit its daily limit down, 'Huaxin Cement' rebounded sharply, indicating a concentrated influx of follow-up funds. Later, with the recovery of bullish sentiment in the 'Major Infrastructure' sector, a large amount of funds flowed back into the market's heavyweight sectors. At the same time, the losses in the 'Emerging Industrial Chains' sector worsened, so it was only natural for this stock to continue its upward surge and hit its daily limit up. What really impressed me was the decisive action taken when the sentiment in the 'Emerging Industrial Chains' sector began to decline, and 'Yue Media' completely hit its daily limit down. Looking at the subsequent market performance... this 'igniting' fund was the real trigger for the reversal of the two major sectors at the close."

"Yes, I agree," Zheng Jinming said. "However, judging from the buy and sell data released in the post-market trading data, the funds that ignited the market today are most likely institutional funds, right? And considering the usual buying and selling behavior of institutional funds, the methods used by these institutional funds concentrated in 'Huaxin Cement' stock seem a bit like those of speculative capital!"

"Regardless of the true nature of the institutional funds concentrated in 'Huaxin Cement' stock, whether they are actually speculative capital in disguise, I think... as long as these funds can continuously lock in their positions and guide the market, they are institutional funds with a sound strategy. We don't need to delve into the fundamental nature of these funds; we just need to pay attention to the subsequent market trend and changes in everyone's expectations for this stock." Zhang Xinlei thought for a moment and said, "Deeply investigating so much can easily affect our own trading decisions and our true judgment of the market trend."

“I think…” He Chong pondered for a moment, then continued, “If ‘Huaxin Cement’ wants to continue to perform well and maintain relatively high expectations, it seems that it still needs the support of the overall trend of ‘major infrastructure’. Compared with ‘Huawen Online’ and ‘Oriental Yuhong’, the speculation logic and underlying logic of ‘Huaxin Cement’ don’t seem to be that strong.”

Especially when compared to the stock of 'Oriental Yuhong' in the same main industry.

Not to mention, the stock of 'Huaxin Cement' itself is already facing negative pressure from the major shareholder's reduction of holdings.

"That definitely needs the support of bullish sentiment in the 'major infrastructure' sector." Old Qian nodded slightly and continued, "However, judging from the current time and the after-hours sentiment, the expectation and pattern for the 'major infrastructure' sector to continue to strengthen are both present. Moreover, within the main sector of 'major infrastructure,' among the three core industry sectors of 'real estate development,' 'construction and decoration,' and 'building materials,' it is clear that the 'cement concept' sector within the 'building materials' sector is performing much stronger."

Let's take a look at the stock performance of two industry leaders, 'Huaxin Building Materials' and 'Anhui Conch Cement'.

Its price increase is significantly higher than that of other small-cap and mid-cap concept stocks in the same sector, such as 'Tianshan Cement' and 'Huaxin Cement'.

In other words, at the current stage... the two stocks 'Huaxin Cement' and 'Tianshan Cement' are the core focus of today's market sentiment and have made a clear distinction.

In fact, this is in comparison to the recent performance of the entire 'cement concept' sector.

There is a certain demand for price recovery.

In other words, these two stocks are still relatively low.

Comparing the overall trend of the concept sector index, even if it opens higher tomorrow and continues to rise, the risk of going long shouldn't be too high, and the expected profit potential should still be considerable.

“Yes, that makes sense.” Zhang Xinlei nodded. “Since the ‘major infrastructure’ sector can’t continue to adjust, and most active funds in the market have chosen to flow back into this core sector, then most of the leading stocks in this sector will continue to reach new highs, which is the basic expected range. Considering this logic, whether it’s ‘Huaxin Cement’ or ‘Tianshan Cement’, there is at least 20% upside potential.”

"I feel that the subsequent performance of 'Oriental Yuhong' will be very important in shaping the bullish sentiment of the entire 'major infrastructure' theme, as well as the subsequent performance of 'Tianshan Cement' and 'Huaxin Cement'," Zheng Jinming thought for a moment and continued. "If you're unsure about the performance of 'Tianshan Cement' and 'Huaxin Cement,' buying 'Oriental Yuhong' actually offers a relatively higher degree of certainty."

"Yes, I agree," Old Qian said. "Looking at the current market, the general consensus is that 'Oriental Yuhong' has already met expectations and is at a relatively high level, making it difficult to break through and rise further. But actually... I think with 'Fuxing Road' continuously holding shares and strong future earnings expectations, its valuation and share price are still quite undervalued. We can continue to speculate. The market always moves in the direction of least resistance. It's clear that 'Oriental Yuhong' faces strong downward resistance and simply can't fall. Since it can't fall, it means that most of the funds invested in this stock haven't had their expectations met yet, and there's still room for it to rise."

"Based on your analysis, it seems the 'major infrastructure' sector is likely to continue its recovery for a while," He Zhong remarked. "I was hoping the 'emerging industrial chain' sector might recover tomorrow, and whether 'Huawen Online,' the core leading stock, would see any funds attempting a reversal after its first decline. But now it seems... that expectation is getting smaller and smaller. Tomorrow, I must reduce my holdings in the 'emerging industrial chain' sector and wait for the right opportunity to enter the 'major infrastructure' sector."

“Market liquidity is limited right now. Generally speaking, without a strong underlying logic, once sentiment collapses, it’s very difficult to recover,” Zhang Xinlei said. “In recent months, core leading stocks with strong market recognition and discussion have experienced huge losses and a rapid decline in speculative sentiment. Apart from ‘Oriental Yuhong’ which has shown a reversal pattern, the other stocks have not been able to do so. So… at this time, it is completely unnecessary to gamble on the reversal trend of ‘Huawen Online’ or to bet on buying based on the expectation of a reversal. Although you suffered heavy losses today, Lao He, you basically lost all of your previous profits. Even if you cut your losses tomorrow and account for some of the losses, it shouldn’t affect your principal.”

Since the foundation hasn't been damaged, why bother fighting tooth and nail on the 'emerging industrial chain' line?

Following shifts in market sentiment and the main direction of major capital flows, adjusting trading strategies accordingly, and going with the trend is the correct way to trade!

“You’re right,” He Zhong said. “In short-term trading, it’s impossible not to make mistakes. Sigh… Old Qian was right before. Don’t try to make the last penny in the market. Be careful next time. This time, we’ll start over.”

The discussion took place among several core members of the "Suzhou-based" major speculative investor group.

Time continues to move forward.

At 8 p.m., a variety of positive news about the real estate market emerged one after another.

"It's really strange. Why does a surge in positive news seem to appear as soon as the market goes up?" Noticing the increasing optimism surrounding the 'major infrastructure' sector and the growing stream of related positive news, Lao Zhang, a member of the "Shanghai Short-Term Trading Group," remarked with some surprise in the group, "Many of these positive news items don't seem like new information. They didn't cause any emotional turmoil before, so why are they being brought up again and discussed so enthusiastically now?"

"Market fluctuations amplify emotions, and these amplified emotions, in turn, amplify both positive and negative news in the market." Hearing Lao Zhang's reflections, Lao Wu didn't seem surprised by the current heated discussions among investors and the series of positive news regarding the 'major infrastructure' theme. He chuckled and said, "When stocks rise, everyone naturally seeks out positive news to bolster their confidence in holding their positions. When stocks fall, everyone instinctively seeks out negative news for comfort. In short, given the tangible stakes involved, everyone only wants to see what they want to see."

Look at the main sectors of the 'emerging industrial chain'—a bunch of popular stocks that have had a terrible market performance today.

In terms of news, have any negative news emerged?

In reality, how easily can the fundamentals of an industry or a stock change in just one or two days?

It's all just emotions playing tricks on us.

If we let our emotions control us, we will eventually get lost in these news items and be influenced by so-called negative or positive news.

Therefore, we need to step back, grasp the underlying logic, and look at this calmly.

"Old Wu is right." Xu Qiao, having also browsed through the investor comments and trending topics online, agreed wholeheartedly. "The fundamental logic supporting a trend change in stock prices is still the change in its fundamentals and the shift in medium- to long-term expectations. Short-term emotional influences can change stock price movements for a day or two, but they cannot change the actual trend. Therefore, if we want to correctly grasp the true trend of market development, we really need to step out of the emotional circle and calmly view the market. Overall, the 'major infrastructure' theme bucked the trend and strengthened today, but tomorrow's expected trend may not be as optimistic as the current market sentiment reflects. Conversely, the extreme losses exhibited by the 'emerging industrial chain' today may not lead to the expected trend tomorrow as pessimistic as the current market sentiment reflects." (End of Chapter)