Rebirth of the Capital Legend

"The main reason is that the market volume is insufficient and the off-market capital group is not actively entering the market." Xu Qiao said, "If the market volume is sufficient, the off-market capital group is actively entering the market, and the market liquidity is ample, then it will naturally be able to support the simultaneous upward breakthrough of various main lines."

"In terms of market volume, if we want to see further growth, I'm afraid we'll need further stimulus from the market's profitability," said Old Wu. "However, macroeconomic liquidity isn't abundant to begin with, and the real estate market has siphoned off too much of it, resulting in very limited capital flowing into the stock market. Therefore... at this stage, I think it's going to be difficult to increase market liquidity."

"If market liquidity doesn't become more abundant," Lao Zhang said, "then it's likely that the current market will struggle to escape the cycle of market rotation and differentiation. In fact, even last Friday's sudden positive market news didn't truly change the market's ecological structure."

"Of course," Old Wu said. "How can the market's ecological structure be changed so easily?"

"In this period of time, the main trend of the market is differentiation and rotation," said Brother Chen. "And even if the market is dominated by differentiation and rotation, I think there is nothing wrong with it. If you take advantage of the periodic profit opportunities, the returns will not be low."

"It's the differentiation and rotation stage. It's a bit difficult to get the rhythm right," said Xu Qiao.

Brother Chen responded, "It's actually not that difficult. Just focus on the strongest main trend in the market. You can ignore other main trends as much as possible. Also, when trading, if you are not completely sure, just wait and see. It's better to let it go than to make mistakes. Because at this stage, if you make a mistake or get the rhythm wrong, your subsequent mentality will be easily affected."

"Brother Chen is right," Lao Zhang said. "For now, we just need to focus on the main line of major infrastructure construction and the new energy industry chain."

"In fact, the overall market trend has remained largely unchanged for the past six months or so, right?" Old Wu said. "Initially, it was the liquor, white goods, and financial sectors, then the major infrastructure investment sector, and now the new energy industry chain. The market has been constantly rotating, and other than the core market sectors, it's difficult for other sectors to generate sustained profits."

Brother Chen said, "The overall market trend hasn't changed much. It's always been a cycle of rotation and differentiation. It's just that sometimes... market sentiment fluctuates. When a core trend reaches a peak, it briefly drives other trends, leading to a brief, general rally. In reality... the fundamental direction of the market trend remains unchanged."

"Brother Chen sees things more clearly," Xu Qiao said. "I feel the same way, and it seems the funds driving this market rotation are basically the same."

"That's right." Lao Zhang nodded and said, "It has always been the institutional capital that has dominated the market."

"But looking at the specific holdings of the major institutional investors in the industry..." Xu Qiao said, "their positions are still relatively light."

Old Wu said, "This shows that many institutional investors currently don't have very high expectations for future market developments."

"It definitely won't be too high." said Lao Zhang.

"It's difficult for the trapped chips from the last bull market to completely loosen up in a short period of time," said Lao Wu. "With these trapped chips constantly suppressing the market, expectations really can't be too high."

"The main expectations come from several main themes that indicate a fundamental reversal," Xu Qiao said. "Apart from these core themes, the other themes basically have no profit potential."

"It's not that there's no money-making effect at all," Lao Zhang said. "It's just that this occasional money-making effect isn't sustainable."

"Let's see how the market reacts to the volume." Brother Chen paused and continued, "If the volume can maintain the current level of 5000 billion to 6000 billion, then there's still a chance that the overall market will improve. If the volume continues to decline, falling back to around 4000 billion, or even below 4000 billion, then we'll have to be extremely cautious about future market trends."

"Brother Chen, do you think the current market volume can be maintained and become the norm?" asked Lao Zhang.

Brother Chen responded: "I think it is still quite difficult, because the overall chip structure of the market and the market trend have not completely changed. Also... although institutions like to group together on heavyweight stocks in certain industries that have seen a significant reversal, these institutions will not hold long-term positions if their expectations are not high. They will most likely withdraw at some point.

Without the long-term lock-up of institutional main funds, the internal chip structure will never be settled.

Then, it will be difficult for the market to produce a strong and sustained money-making effect.

Without further stimulation from the continuous money-making effect, the group of funds on the sidelines are unlikely to be willing to enter the market on a large scale to take over the chips.

When off-market funds have no such desire to enter the market.

So, when a large amount of funds are in the market and are constantly taking profits and exiting the market.

The number of active funds that continue to trade on the exchange will naturally become smaller and smaller.

This is a law that the market cannot violate, and it is also a status quo that is difficult to change under the current market ecology.

So, while the future outlook for major infrastructure projects and the new energy industry chain is promising, if these two core themes run out of momentum and sentiment becomes overly aggressive, it's time to take profits and exit.

"That means quitting while you're ahead, right?" Lao Zhang said. "That's what I think too."

"Brother Chen, do you think that with the current market trends, it's unlikely that the overall valuations of the major infrastructure and new energy supply chains will increase?" Xu Qiao asked. "It's highly likely that after this wave of hype ends, the market will continue to bottom out."

Brother Chen nodded and said, "I think so."

"I think what Brother Chen said is correct," Old Wu said. "Without a fundamental shift in the market's bull-bear pattern, it's inherently difficult to expect significant valuation increases. However, at the moment... many core leading stocks in the major infrastructure and new energy industry chains are definitely still slightly undervalued or reasonably valued. Furthermore, a large amount of follow-up funds haven't yet completed their positions. It feels like these two major lines haven't reached the point of a so-called trend reversal, and it's time to take profits. Especially in the new energy industry chain, after the big rebound over the past two trading days, it hasn't even broken out of its bottoming range."

"Yeah." Xu Qiao nodded and said, "In the new energy industry chain, due to rumors of subsidy reductions, the trend is indeed lagging behind the market, and the growth rate is also significantly lagging behind the market. At present, it is indeed not time to pay attention to risks in this line. On the contrary, when it is gradually breaking out of the bottom and forming a trend, it is time to increase positions and go long, rather than reduce positions and take profits. In fact, everyone is doing this."

"I'm talking about the future," Brother Chen said. "Right now, the main line of major infrastructure construction and the new energy industry chain are definitely on an upward trend, so we should increase our positions and go long."

"Yes." Xu Qiao nodded.

Then, he turned his attention back to the two markets, only to see that at this time, the stock of Tianci Materials that she had mentioned before had already hit the upper limit.

"Oh my god! I was saying that Tianci Materials would become the leader in the new energy industry chain," Xu Qiao exclaimed in surprise. "It seems like a lot of people share my opinion. This stock has become the core concept leader of the entire lithium battery sector. It's not just a concept leader; the fundamentals of this stock seem very strong."

"Xiao Xu, you have a good eye," Old Zhang praised. Xu Qiao sighed softly and said, "Oh, I bought too little just now. I should have added another 1500 million."

"The market cap for this stock is relatively small. It's hard not to notice your 1500 million." Old Wu said with a smile, "It's good to have a base position. We'll see how this stock performs later. For now, this buying point is still on the left side. Once a more clear buying point on the right side emerges, the stock's trend may become clearer."

"The market is indeed small, with less than 30 billion in circulating shares." Lao Zhang nodded and said, "It's not easy for large funds to enter and exit a market like this."

Xu Qiao said, "The leading stock cannot be too large. Just look at Huaxin Cement. With the current market liquidity, it's difficult to attract capital with tens of billions of shares in circulation. I think the current circulating volume of Tianci Materials is just right."

"Yes, the main institutional funds should have gone to buy Ganfeng Lithium and Tianqi Lithium stocks." Lao Zhang said.

Old Wu responded, "Ganfeng Lithium and Tianqi Lithium are also very strong. They opened high and continued to fluctuate with huge volume. No matter how much selling pressure there is, they just won't fall. Given this market trend, these two stocks will definitely continue to break through and rise."

"There's no doubt it will continue to rise," Lao Zhang said. "The core of the future new energy industry chain will likely be the lithium battery sector."

"That's for sure." Xu Qiao responded.

"In fact, the main sectors of the new energy industry chain, such as complete vehicles, auto parts, and auto decoration, seem to be performing somewhat weaker than expected," said Old Wu.

"Normal," Xu Qiao said. "These sectors are actually traditional industries, just labeled differently. The fundamentals are still difficult to change. Current new energy technologies are difficult to promote on a large scale in the commercial market. In other words, the future of electric vehicles is probably still a long way off."

"But the dawn before the industry explosion should be one thing that can be certain," said Lao Zhang.

"Yes, that's right." Xu Qiao nodded and said, "Anyway, I think there's room for growth in the new energy industry chain."

"I also believe that this line has greater potential in the future than the major infrastructure line," Lao Zhang said. "It's just that when this dawn will break through to daytime and usher in an explosion across the entire industry, we still need to wait patiently for a long time!"

"Just know it will definitely come." Xu Qiao said.

In the main speculator group of 'Magic City Super Short Gang', several core main speculators continued to discuss.

The market trading time soon came to ten o'clock in the morning.

After half an hour of continuous hot trading, the performance of the major main lines in the two markets at this moment has become more and more obvious compared with the beginning of the trading. The overall market situation is that the strong are getting stronger and the weak are getting weaker.

The two main lines are the major infrastructure construction line and the new energy industry chain line.

Related industry sectors and concept sectors continued to rise and break through as the main buying funds groups further increased their holdings, showing a strong money-making effect.

In the smartphone industry chain, as Lixun Precision maintained strong fluctuations and Changying Precision also maintained strong fluctuations, the corresponding core stocks in the Apple industry chain stabilized after the large volume at the beginning of the session, showing a sideways fluctuation situation.

The main areas of the emerging industrial chain include film and television media, Internet software, and Internet applications.

This is when the internal active capital flow is siphoned off by the core main line.

The market has been getting weaker and weaker. The decline of several major industry sector indices has now expanded to more than 2%.

Moreover, as the decline in industry sector and concept sector indices increased, the corresponding core leading stocks, such as Huawen Online, Huace Film & TV, Huawen Media, Guangdong Media, Quantong Education, Baofeng Technology, LeTV... and other stocks, also saw their market declines continue to expand.

The main board includes the liquor, white goods, medicine, consumption, electricity, finance, and petrochemical sectors.

After experiencing intense trading trends at the beginning of the session.

At this moment, the corresponding industry sectors and concept sectors are also showing serious differentiation.

The liquor and white goods sectors have benefited from the continuous increase in holdings by the main institutional funds, and the market trend has become stronger and stronger. The corresponding industry sector indexes have also increased by more than 1%, significantly outperforming the performance of the market core index. In other pharmaceutical, consumer, electricity, financial, and petrochemical sectors, except for a few independently strong core leading stocks, most other stocks continued to fluctuate weakly.

Overall...

The current market trend is based on the hot sentiment at the beginning of the trading session.

It is obviously lower than the expectations of a large number of investors both on and off the market.

However, when the market trend is significantly lower than expected and relatively weak, there is still a relatively obvious local profit effect on the entire market, and this profit effect is mostly concentrated in the two core sectors of large infrastructure and new energy industry chain.

In addition to these two core sectors and their corresponding core leading stocks.

In fact, although other stocks and other main market sectors have been adjusted, the loss effect on the market is not serious.

This shows that the profit-taking in the market is serious.

However, investor confidence and sentiment have only experienced a healthy decline, without collapsing. This means the overall market trend remains positive, and most investors remain relatively optimistic about the market's future performance. (End of Chapter)