Rebirth of the Capital Legend

"No matter what, there shouldn't be too much risk in taking on the 'Huaxin Cement' stock today, right?" Li Jinshi said. "I don't believe that the 'major infrastructure' sector, with such a good mood at the beginning of the day, will repeat yesterday's trend in the main sectors of 'emerging industrial chains,' such as film and television media, internet software, and internet applications."

“Huaxin Cement will most likely perform well today,” Chen Guiyun added. “Even if the sentiment surrounding the ‘major infrastructure’ sector fades today, and many investors who profited yesterday start to take profits and withdraw, Huaxin Cement, as the emotional anchor of this ‘major infrastructure’ sector rebound, will likely hold up until the end and attract significant buying interest.”

“Yes, I think so too,” Li Jinshi said. “If we’re talking about the most certain short-term core stock in the market right now, it has to be ‘Huaxin Cement’.”

"Let's take a look at the market's opening auction trend after 9:20," Liao Guoxiang said.

He then turned his attention back to the stock market.

Amidst the discussions among several major speculative investors from the 'Fushan Group,' the market trading time had already reached 9:18 AM.

After the initial auction and the changes in the first three minutes.

It can be seen that the indices of related industry sectors and concept sectors in the "emerging industrial chain" theme are still declining. At the same time, related stocks in these industry sectors and concept sectors are also continuing to decline. The funds gathered on these related stocks, especially the large number of short-term trapped positions from yesterday, are accelerating their selling of shares as the market trading time approaches 9:20, trying to stop losses and exit the market as soon as possible.

Meanwhile, the related industry sectors and concept sectors are undergoing accelerated adjustments amid the core theme of 'emerging industrial chains'.

The "major infrastructure" theme, which has attracted significant attention from a broad range of investors, continues to see accelerated growth in related sectors such as real estate, construction and decoration, building materials, non-ferrous metals, steel, and coal. Market attention and the influx of bullish funds are also increasing.

Regarding the performance of leading stocks in core concepts and industry sectors in both Shanghai and Shenzhen stock exchanges.

The stock performance of leading companies related to the "major infrastructure" theme contrasts sharply with that of leading companies related to the "emerging industrial chain" theme.

The stocks 'Guangdong Media' and 'Huawen Media' continued their limit-down opening auction trend.

Furthermore, the number of sell orders at the daily limit down for both stocks continued to increase as the pre-market auction period progressed.

The core leading stock of the "emerging industry chain" concept, "Huawen Online", has already opened 7% lower. Compared with the opening lower position at 9:16, it has continued to fall by several points. As its stock price continues to decline, the number of active sell orders on the trading screen continues to increase.

Stocks like 'Renzihang', '2345', and 'Yinzhijie', which are popular concept stocks in the 'Internet software' sector, are performing quite poorly at the moment. The selling volume on the market is continuously increasing, and the capital outflow is quite obvious.

The core constituent stocks of the ChiNext index, such as LeTV, Netspeed Technology, Maruda Film & Television, Eastmoney, Tonghuashun, All-China Education, and Baofeng Technology, are also performing extremely poorly at this moment. The decline of these stocks has not only failed to narrow as the pre-market auction continues, but has continued to widen.

In contrast, consider the leading stocks in the "major infrastructure" sector, as well as the stocks with significant industry weighting.

Huaxin Cement had already completely hit its daily limit up, and the number of buy orders at the limit up price had soared to 2.1 lots, showing a rapid increase over time.

Stocks following the trend, such as 'Shougang Group', 'Financial Street', 'Tianshan Cement', and 'Beijiang Jiaojian', are also showing a strengthening trend. The opening gains of these stocks have all reached 5%, continuously attracting buying funds.

Leading stocks in the "major infrastructure" sector, such as Conch Cement, Poly Real Estate, Huaguo Construction, and Kewan Real Estate.

At this moment, their performance is generally quite strong, showing a trend of opening higher.

Even for the stock 'Oriental Yuhong,' which many investors in the market generally believe has reached its limit and whose expected gains have been realized, the opening gap is still widening, with the buying power actively supporting the stock clearly suppressing the selling power.

Of course, this excludes stocks related to the "major infrastructure" theme and stocks related to the "emerging industrial chain" theme, which show significant differences in their price trends.

Other main storyline areas...

Sectors such as liquor, white goods, pharmaceuticals, consumer goods, power, and finance.

There are also stocks related to the two major sectors of the 'smartphone industry chain' and the 'new energy industry chain'.

The trend is relatively ordinary, generally showing a flat opening or a slightly higher opening. There is no obvious active buying to support the bidding, nor is there a large amount of active selling to rush to leave the market.

Immediately afterwards, all eyes were on them...

The time passed 9:18, then 9:19, and finally reached 9:20. When the time reached 9:20, a large number of false orders were cancelled at 9:19. The final auction situation in both markets basically maintained the strong performance of the "major infrastructure" theme, while the "emerging industrial chain" theme continued to lead the decline.

"Damn it, we're doomed! The drop in 'Huawen Online' stock during the pre-market auction is still widening." As the market entered the real pre-market auction phase where orders couldn't be cancelled, He Zhong, a member of the "Suzhou-based" major speculative capital group, who still held a large number of shares in leading stocks of the "emerging industry chain" core concept, frowned deeply and couldn't help but complain, "Judging from this, 'Huawen Online' will most likely open at the daily limit down. It simply can't withstand the continuous selling pressure from stop-loss orders. Sigh... this is a huge loss. My holdings will lose over 1000 million at the opening."

"Before 9:20, the stock 'Huawen Online' actually showed some resistance in its price movement," said Lao Qian, a member of the "Suzhou-based" major speculative capital group. "Unfortunately, it was ultimately dragged down by the stocks 'Huawen Media' and 'Yue Media'."

“Yes, the opening auction trends of ‘Guangdong Media’ and ‘Huawen Media’ were absolutely terrible,” Zhang Xinlei echoed. “They opened at the daily limit down, completely sealing off any possibility of a rebound in the ‘emerging industry chain’ sector. Seeing these two stocks open at the daily limit down, many funds that wanted to capitalize on the rebound in the ‘emerging industry chain’ sector backed down.”

"While the opening auction performance of 'Guangdong Media' and 'Huawen Media' was indeed disastrous,..." Zheng Jinming chimed in, listening to the discussion, "The real reason why the 'Emerging Industrial Chain' theme lost the attention of bullish funds looking to buy on dips was that the 'Major Infrastructure' theme performed too strongly during the opening auction. It siphoned off all the bullish funds from other themes, leaving no other bullish funds able to enter the 'Emerging Industrial Chain' sector. At the same time, yesterday's market performance showed that the leading stocks in the film and television media, internet software, and internet applications sectors of the 'Emerging Industrial Chain' theme suffered severe losses. In a short period, the amount of shares needing to be stopped out was too large, and the market's potential bullish forces couldn't absorb it. Naturally, this led to the collapse of all the leading stocks in the various sectors and related themes of the 'Emerging Industrial Chain' theme during today's opening auction."

“Yes!” Old Qian nodded and said, “The funds that took over the leading stocks of several core concepts in the ‘emerging industrial chain’ sector yesterday were in a bad state, with losses of at least 15% the next day.”

“Old He, the main theme of ‘emerging industrial chains’ has collapsed across the board. Almost all the short-term funds that took over yesterday are now cutting their losses and fleeing.” Zhang Xinlei paused and continued, “In this situation, will you still decisively cut your losses? If you ask me… it has already fallen to this level, I feel there is no need to follow the extreme emotions and continue to sell off.”

“If we don’t sell, what if it opens much lower again tomorrow and hits the daily limit down again?” He Zhong said. “There’s basically no decent buying support. I feel that the ‘emerging industrial chain’ sector is unlikely to reverse today. Sigh… I really shouldn’t have been greedy and kept adding to my position at the high yesterday. Since I’ve already made a mistake, I should cut my losses decisively and consider it a lesson learned. Fortunately, I made quite a bit of profit before. Overall, in this rebound of the ‘emerging industrial chain’ sector, although I didn’t make much, I didn’t lose much either. These past two days have just wiped out most of my profits. From now on… let’s start over.”

"Yes, stay calm, we'll look for opportunities later." Zheng Jinming was quite supportive of He Zhong's idea. "Looking at the fund flow preferences and sentiment feedback in the opening auction, among the major market themes, the strongest is still the 'major infrastructure' sector. However... I feel that the opening auction trend of the 'major infrastructure' sector today was a bit too uniform in its expectations, and the sentiment feedback was a bit too overheated. It feels like the expected trend that should have been expected during the trading session was already realized in just a few minutes of the opening auction."

"Old Zheng, what do you mean by that?" Old Qian asked.

"What Lao Zheng means is that the 'major infrastructure' theme has already exhausted its expectations during the pre-market auction. It's unlikely that it will perform better than expected after the market opens. Many 'major infrastructure' concept stocks and popular leading stocks that performed strongly during the pre-market auction are unlikely to continue to rise and expand their space after the market opens." Zhang Xinlei smiled and explained, then paused and continued, "I have to say, I have the same feeling. However, the underlying logic of the 'major infrastructure' theme is indeed strong enough. I estimate that even if many leading stocks within the 'major infrastructure' theme find it difficult to expand their space after the market opens, there won't be a situation where the good news is realized and the stock opens high and then falls back and sells off. So there's no need to worry too much. Fundamentally speaking, the 'major infrastructure' theme is completely different from the 'emerging industrial chain' theme. After all, the market trend in the 'major infrastructure' theme is not driven by active speculative funds, but by the major institutional funds that form large groups within the industry."

When institutions band together, they rarely engage in speculation for just one wave, or end the market after only one day.

So, looking at it all...

Today, we continue to hold shares in key, popular stocks related to the "major infrastructure" sector. While there is some risk involved, there's a high probability of securing some premium profits.

"The sentiment foundation for the 'major infrastructure' sector is already quite good, so I don't think it's likely to repeat the trend of the 'emerging industrial chain' sector." Old Qian remained very optimistic about the trend of the 'major infrastructure' sector. After a pause, he continued, "Of course, it's not wise to continue chasing the highs at the peak of sentiment. I think today the 'major infrastructure' sector will at least have a strong oscillating trend."

“I also think the market will mostly see strong fluctuations,” Zhang Xinlei nodded and said. “After all, during today’s opening auction, apart from the ‘major infrastructure’ sector, which performed slightly better than most investors expected before the market opened, the opening auction performance of other major market sectors felt somewhat below expectations.”

Other major market trends generally fell short of expectations.

This is especially true in the case of the "emerging industrial chain," a key sector where the largest number of retail investors gather, resulting in extreme losses.

The overall bullish sentiment in the market, as well as the bullish confidence of the majority of investors, will not be very high.

At the same time, with the 'emerging industrial chain' dragging down the overall market confidence, the index is unlikely to show a strong performance.

There was no follow-up from other main themes, nor any coordination from the overall market index.

At this juncture, especially for leading stocks in core industries related to the "major infrastructure" theme, the expectation of a subsequent performance surge has not yet materialized and remains uncertain. Therefore, the possibility of this line continuing its strong upward breakout is indeed very low.

Of course, although it is difficult for the 'major infrastructure' sector to strengthen independently, it is unlikely to continue to break out independently at this level.

However, with the support of this line, and with this line continuously providing local profit-making effects.

At the same time, there is also the stimulus from the trends in external markets.

I believe that even if pessimism takes over again, and even if the 'emerging industrial chain' sector experiences extremely poor sentiment feedback, resulting in an extreme loss-making effect that no one wants to see, the index and major weighted stocks won't fall too far. Overall, at this level, before market liquidity significantly improves, it remains in a state where it can neither rise nor fall significantly.

"Yes, you're right." After listening to Zhang Xinlei's analysis, Zheng Jinming nodded and said, "The index risk is not high, and the improvement in liquidity is limited, so... the market will most likely maintain a range-bound trading pattern and a rotation of main themes in the near future and for a long time to come." (End of this chapter)