Rebirth of the Capital Legend

He Zhong responded, "You know what, I almost sold at the limit down. I had already placed an order when it hit the limit down in the morning, but luckily it didn't go through. In the afternoon, seeing the strong buying momentum in the 'new energy industry chain' sector, I quickly canceled the order, haha... This dramatic turnaround not only helped me recover the large losses from my holdings in the morning, but also made me quite a bit of money. And judging from the market enthusiasm for 'Huawen Online', I estimate that this stock will continue to rise tomorrow, at least with a high opening premium."

"It's not as simple as a high opening premium," Zhang Xinlei chuckled. "The market enthusiasm for 'Huawen Online' has rebounded, second only to 'Huaxin Cement.' Given this level of activity, 'Huawen Online' will most likely hit the daily limit again tomorrow. Moreover, if it opens high and quickly reaches a new high, recovering yesterday's limit down, then there will be even less pressure to continue the upward speculation. Sure enough... when market sentiment improves across the board, speculative stocks are still the most volatile."

"When market sentiment is fully recovering, there's no problem with speculating on 'monster stocks'," Zheng Jinming said. "This afternoon, 'Huaxin Cement' and 'Huawen Online' both rebounded well, and I feel that these two stocks will have a good premium effect when they open tomorrow."

"The positive news at noon was really helpful," Lao Qian chuckled. "After seeing the extreme surge in the 'new energy industry chain' sector when the market opened this afternoon, I immediately filled my position. I estimate that the market turnover will approach 6000 billion yuan by the close of trading today."

“Yes!” Zheng Jinming nodded and said, “We’ve finally increased production.”

Zhang Xinlei said, "After this surge in trading volume, both the overall market index and individual stocks should be able to rise steadily for a while, right?"

“That’s for sure,” He Zhong said. “And judging from the market feedback this afternoon, the main areas where a lot of bargain-hunting funds have concentrated are actually the ‘emerging industrial chain’ sector. I feel that the market’s future development will most likely continue to focus on this sector.”

"That's basically it," Zheng Jinming said. "Let's not even talk about the 'new energy industry chain,' which is itself a sub-sector of the core main theme of the 'emerging industry chain.' Just look at the strong profit-making effect of the two stocks, 'Huaxin Cement' and 'Huawen Online,' today. This fully demonstrates that the price elasticity of small and micro-cap stocks is far stronger than that of the main stocks in the market."

In fact, this afternoon's market trend...

Several key themes in the motherboard sector.

Sectors such as liquor, white goods, pharmaceuticals, consumer goods, power, and finance were among the worst performers.

Moreover, the banking sector performed so poorly despite the huge positive stimulus at noon, failing to demonstrate any strong profit-making effect.

This is enough to show where the market's core focus lies.

Another key area to watch is the net capital inflow of funds into the major themes and sectors this afternoon. Undoubtedly, the 'new energy industry chain,' 'smartphone industry chain,' and 'major infrastructure' themes, as well as the film and television media, internet software, and internet application sectors, which have successfully rebounded across the board thanks to the limit-up performance of 'Huawen Online,' are the areas where a large amount of off-market bargain hunters and many active short-term funds within the market are concentratedly attacking.

Since a large number of funds are buying on the sidelines, they have already provided us with direction.

Therefore, we simply need to follow along.

“The weighting line is indeed…” He Zhong nodded and said, “Not just today, but recently, it has been progressing rather unsatisfactorily.”

"The weighted index is already at a high level, so it can't rise unless the overall market valuation increases significantly," Old Qian replied. "Besides, the amount of capital needed to boost the entire weighted index is simply too large. Although some new funds have entered the market, this liquidity is still insufficient to drive up the major weighted indices, isn't it?"

"I believe that the heavyweight sector should not only not rise, but should even decline appropriately, which would be beneficial for the overall market trend," Zhang Xinlei said. "We need to release the liquidity accumulated in the heavyweight sector to revitalize market sentiment!"

“That’s true.” Old Qian nodded slightly and continued, “Only when the stocks in the heavyweight sector show a clear and sustained downward trend will the funds that hold them together disintegrate, and liquidity will be released. Only when liquidity is released and begins to concentrate on small and medium-sized stocks in the market will the market’s vitality be truly stimulated, and short-term speculative sentiment in the market will be greatly enhanced.”

"It seems unrealistic to expect to further release liquidity through the decline and pullback of the major weighted sectors," Zheng Jinming paused, then continued, "First of all, although the valuation levels of the major weighted sectors in the market are not low at present, there is no obvious bubble. The valuations are in a relatively reasonable range. Since the valuations are in a reasonable range, and the market does not have the ability to turn from a bear market to a bull market, then the funds that are clustered in these weighted sector stocks have no need to rush to exit and sell. After all, these funds entered these weighted sector stocks relatively early, when the stock prices and valuations of the leading stocks in these sectors were quite low."

With relatively low costs, these major institutions can make a fortune simply by reaping dividends.

As long as there isn't an extreme bubble in the overall market's major sectors, I feel that the major institutions that are holding onto these heavyweight stocks will not be willing to leave the market.

After all, it's hard to say how undervalued other major sectors of the market are.

Actually, that's not necessarily true.

I think we can't expect the market's major sectors to release liquidity. We need to see if the large amount of bargain-hunting funds attracted by today's positive news can be retained.

As long as we can retain these bargain hunters and gradually revitalize the market.

I think that's enough to create a sustained upward trend.

"I'm afraid the funds that came in today alone aren't enough," Zhang Xinlei said. "After all, in the market's small-cap and micro-cap stock sectors, whether it's the major sectors of film and television media, internet software, internet applications, and electronic information, or the related industry and concept sectors of the 'new energy industry chain' and 'smartphone industry chain,' many stocks have extremely heavy historical trapped positions. These historical trapped positions are basically calculated in the hundreds of billions or even trillions. It's still difficult to move them with just this amount of incremental funds, isn't it?"

“Judging from the amount of funds that entered the market today, there is definitely not much hope,” Zheng Jinming continued. “But the positive news at noon was all about the future. As long as my country’s interest rates do not fluctuate with the US Federal Reserve, then the macro liquidity of the market will improve soon. If even a small portion of these funds flows into the stock market, it will be enough to change the current ecological structure of the stock market.”

"Not necessarily," Old Qian said. "The key issue is that the real estate market is currently draining liquidity from the macro level!"

He nodded and said, "The current housing market is indeed a bit exaggerated, and I feel that the housing market trend is unlikely to end in the short term. As long as the housing market continues to siphon liquidity from the market, it will be very difficult for the liquidity situation in the stock market to improve significantly!"

“Sigh, actually I don’t think we need to think that far ahead,” Zhang Xinlei said. “Things like bear-to-bull market transitions and bull market expectations… are too far off. We should focus on the present. Also… it’s not like we need market liquidity to really recover before there’s any opportunity. As long as liquidity remains relatively good, there will be localized market opportunities, and we can trade with peace of mind.” “Indeed,” Lao Qian nodded and said, “Localized market opportunities, if done well, can yield good returns.”

“Let’s look at what’s in front of us first…” Zheng Jinming nodded.

Then, attention turned back to the stock markets.

At this point, the market trading time had already reached 2:15 PM.

In the brief exchange between the few people, within 15 minutes, the market had already undergone new changes.

During the short conversation, the Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index all rose by more than 1%, and the gains continued to expand over time.

And besides the index increase...

In terms of the performance of the major themes in the market, as well as the performance of a number of leading stocks and popular concept stocks.

In the 'new energy industry chain' sector, as long as the fundamentals are decent and the circulating shares are not particularly large, most related stocks have already hit their daily limit. Even some related concept stocks that are facing delisting or being designated as ST stocks have also hit their daily limit.

In other words, this is due to the favorable policies released by the government for the 'new energy industry chain'.

There are hardly any opportunities to enter this market during the trading session. The only likely entry point will be after tomorrow's divergence.

Following the strongest performing sector, the 'new energy industry chain'.

The "major infrastructure" theme ranked second in market popularity, and the leading stocks in the corresponding industry sectors and related concept stocks continued to strengthen, constantly attracting other bargain-hunting funds from both inside and outside the market.

Among them, stocks such as 'Huaxin Cement', 'Oriental Yuhong', and 'Shougang Group' hit their daily limit.

Most concept stocks with a market capitalization of less than 10 billion yuan in the "major infrastructure" sector have seen concentrated buying and price increases by active funds in the market.

And at this moment, the real estate sector, building decoration sector, and building materials sector are all affected.

It has climbed back into the top five of the industry sector gainers list in both Shanghai and Shenzhen stock exchanges, regaining its strong performance from the morning session and winning the unanimous support of major funds in the market.

The remaining ones rank third and fourth in terms of current market popularity.

These include the 'smartphone industry chain' as a branch, and three interconnected sectors: film and television media, internet software, and internet applications.

Among them, the "smartphone industry chain" line received the main buying funds.

It seems to be different from other sectors.

It seems that those buying into this line are mostly large or super-large orders from major institutional investors.

While the film and television media, internet software, and internet applications sectors are ranked in the middle of the market's industry sector gainers list, the market's discussion of these three sectors is extremely heated. Moreover, as the market trading session continues, these three sectors have the most stocks that have rebounded significantly and have huge potential for speculation.

"With the market trend now, it's basically confirmed that there's a deep V-shaped reversal, right?" In the 'Qilu Gang' group of major speculative investors, Zhao Zhiyuan chuckled and said happily, "Luckily, I was able to buy back in the afternoon after reducing my position. Otherwise, I would have missed out on the afternoon's market movement, and I would have felt terrible."

"The market's performance this afternoon was indeed somewhat beyond expectations," Zhang Wei said, picking up where Zhao Zhiyuan left off. "Especially the 'Huawen Online' stock, its dramatic rise from the bottom to the top was truly eye-opening. Most people in the market thought this stock was dead, but unexpectedly... this stock actually exhibited a highly recognizable bottom-to-top pattern. Now... this stock seems to be on its way out!"

"Sigh, what a pity. I was planning to buy this stock at the bottom this afternoon," Zhao Zhiyuan sighed. "But when I saw that 'Huawen Online' was still locked at the daily limit down after the market opened, and there were no buyers, I hesitated. Now it seems... I should have been more decisive back then!"

"Old Zhao, you didn't buy the dip in 'Huawen Online' stock..." Hearing Zhao Zhiyuan's words, Liang Jiucheng couldn't help but ask, "Then what stock did you buy the dip in, and you made up your position so quickly?"

Zhao Zhiyuan chuckled and said, "After weighing the options, I felt that 'Huaxin Cement' was a safer bet, so I bought a large amount of 'Huaxin Cement' stock. I never expected that 'Huawen Online' would go from limit down to limit up. I originally thought that 'Huawen Online' would most likely continue to fall to the limit down for another day, and then open much lower tomorrow, which would be a relatively good buying opportunity."

"Huaxin Cement's performance today was indeed quite good." Zhang Wei nodded and replied, "One is a core leader in the 'major infrastructure' theme, and the other is a core leader in the 'emerging industrial chain' theme. Judging from the current market enthusiasm for these two stocks, they are about the same. I wonder which of these two stocks will perform better tomorrow?"

"I feel it's 'Huawen Online'," Zhao Zhiyuan said. "After all, 'Huawen Online' has a much smaller free float than 'Huaxin Cement,' and its chart pattern and price position are also significantly better. I'm optimistic that funds will continue to flock to 'Huawen Online' tomorrow, and I'm bullish on it; it's the biggest speculative stock in this round of rebound." (End of Chapter)