Rebirth of the Capital Legend

"The difference in the market pattern before and after the opening auction is quite significant." Noticing the final opening situation of the two markets, Li Jinshi, a member of the 'Fushan Group' of major speculative funds, stared at the now-fixed market indices and the performance of various industry and concept sector indices, and sighed, "I originally thought it would open generally higher, but I didn't expect... the result was not beyond expectations."

Hearing Li Jinshi's remarks, Chen Guiyun chimed in, "The influence of overseas market trends on the A-share market is becoming less and less significant. At the same time, after the market fully reacted to the two major positive developments last Friday, the bullish sentiment in the market has clearly begun to decline."

"The key is still trading volume," Li Jinshi said. "Without a continuous influx of new external funds, it's difficult to create a sustained profit-making effect by relying solely on existing funds in the market. In the past two days, under the pressure of profit-taking from those who had been accumulating positions, the overall market's profit-making effect has been getting lower and lower. I feel that if this continues, the market will probably have to undergo a relatively large correction before it can regain its upward momentum."

“The core themes with relatively high market certainty, such as liquor, white goods, major infrastructure, and even the financial sector, are all at relatively high levels and lack sufficient investment value. Under such circumstances, how can we attract off-market funds?” Chen Guiyun said. “Compared to the booming real estate market, the stock market simply lacks investment value and doesn’t offer enough profit-making opportunities to attract this hot money. Therefore, I think it’s unlikely that we can expect a sustained influx of external funds and a significant improvement in market volume in the short to medium term.”

Li Jinshi thought for a moment and said, "Since we have been unable to attract any new external funds, it is highly unlikely that the index will continue to rise from this level to release the historical trapped positions and start a sustained upward trend, given the current situation of existing funds competing for resources."

"It's unlikely that we can break out of this upward trend," Chen Guiyun said. "I think it would be good if we could just hold steady above 3000 points. In fact, given the current situation... without the ability to attract continuous external investment, we can only try to buy time."

“If we’re trading time for space…” Li Jinshi said, “then the market will only be able to move in a range-bound pattern.”

Liao Guoxiang chuckled upon hearing their discussion and then chimed in, "Maintaining a sideways trading pattern isn't necessarily a bad thing. As long as expectations aren't too high, there are still opportunities to make trades within this sideways trend. Moreover... with the overall market trend diverging, active short-term funds are more likely to concentrate on some popular themes with higher certainty."

In other words, although there is an increase in funds from outside the market, the scale of involvement is very limited.

However, in popular sectors with higher market certainty, there will certainly still be plenty of opportunities, and some stocks will be able to perform well due to sustained capital inflows.

"Old Liao, the popular themes you mentioned with higher certainty should mainly be liquor, white goods, and major infrastructure. These are sectors where institutional funds are currently heavily concentrated, and the fundamentals have shown a certain degree of reversal, right?" Li Jinshi asked with a smile. "It seems that in the current market, only these few themes can attract the most funds and gain the most recognition from a large number of investors. However, these themes are already at a relatively high level. Compared to the beginning of the year, they have all risen quite a bit. I think that since institutions have already completed their position building in these themes and their holdings are already substantial, it will be quite difficult for the market to go any further."

Besides these popular core storylines...

Other market themes face unfavorable fundamentals, coupled with a heavy historical burden of trapped investors due to internal shareholding structures, resulting in insufficient institutional attention.

It is unlikely that it can shoulder the responsibility of continuing to lead the index rebound while these major popular themes are undergoing adjustments.

Therefore, I think it will be quite difficult for the market to move further and break through 3100 points to form a continued upward trend.

However, if it is determined that the index cannot open up space here.

Therefore, we should probably gradually shift to a more conservative trading strategy.

Another issue is the smartphone supply chain. I'm not very optimistic about it right now. First, Apple's new product launch in the fall is just around the corner, and there's a certain expectation that the positive news will be realized. Second, this sector has already risen quite a bit recently. Also, the valuations of these relatively core Apple supply chain stocks are actually not low, and their internal shareholding structures are quite complex, with institutions, speculative funds, and retail investors all playing the game.

As expectations are gradually overdrawn, it becomes difficult for the participating funds to form a unified force.

Therefore, the stock price is unlikely to show any particularly strong performance in the future.

Therefore, before Apple's new product launch, I will most likely quickly reduce my holdings in the Apple supply chain to free up capital and gradually shift to a defensive trading strategy.

“I have a slightly different view from yours,” Chen Guiyun said. “Actually, people’s expectations for Apple’s new product launch are not high this time. And the speculation on Apple supply chain stocks has not been excessive. Many related stocks have not reached the point of acceleration in their price movements. I feel that this line... will likely still have some expectations in the future, and the stock price has not peaked.”

Of course, this is in comparison to certainty.

That would definitely be the safer route – large-scale infrastructure projects.

However, many stocks in the major infrastructure sector are already at relatively high levels, and there are no suitable opportunities to participate.

Even with the stock of Beijiang Jiaojian, it seems there aren't many suitable opportunities to participate anymore. At this level... continuing to rise is possible, but it's also possible that it will replicate the trajectory of Huawen Online, suddenly crashing and falling back down.

“This stock, Beijiang Jiaojian, has clearly accelerated, hasn’t it?” Li Jinshi said. “Generally speaking, without sufficient sustained major positive news to support it, a stock that hits its daily limit with low volume and is driven purely by sentiment is a short-term selling point. However, looking at the number of limit-up orders during today’s opening auction, I think that no matter how the market goes today, it will be difficult for this stock to open or even break its limit.”

"Actually, to judge the potential future trend of Beijiang Jiaojian stock, we can also look at the trends of several related stocks," Chen Guiyun said. "For example, the trends of a number of major infrastructure-related stocks such as Tianshan Cement, Shougang Group, and Financial Street have a significant impact on Beijiang Jiaojian."

Li Jinshi nodded and said, "These stocks are basically followers of Beijiang Jiaojian, the core leading stock. If Beijiang Jiaojian can maintain its stability and not crash today, then given the overflow of liquidity, I feel that these follower stocks are worth speculating on for a short period of time."

“In a volatile market, the risks of speculating on trending stocks are quite significant,” Chen Guiyun said. “I think that in this overall market situation, if you want to buy stocks, it’s safer to focus on the core market leaders, since they have the most abundant liquidity. Even if you buy at the wrong time or make a mistake, there will be opportunities to stop losses on rebounds. On the other hand, trending stocks often follow the lead of the leaders, and their performance is completely one-sided, making it difficult to reach a stop-loss point on rebounds.”

Li Jinshi said, "That makes sense, but the core leading stocks are watched by all investors in the market, so it's very difficult to find a suitable entry point. As for Beijiang Jiaojian, given the current market sentiment and the amount of attention it receives, I also want to buy it, but unfortunately, I can't."

“If you can’t buy, then you can choose another stock or just wait with an empty portfolio,” Chen Guiyun said. “Anyway, I will not continue to chase the high prices. Even if I were to chase, I would choose stocks with more stable trends and higher certainty, such as Oriental Yuhong or Lixun Precision, which are mid-to-large-cap stocks with significant weight in the main theme.”

“The market enthusiasm and investor discussion surrounding Oriental Yuhong stock have been steadily declining recently,” Li Jinshi said. “I’m wondering if this stock has already reached its peak.”

Liao Guoxiang said, "Since I didn't see President Su explicitly reduce his holdings in 'Fuxing Road,' we can still keep a high opinion of it. However, even if Oriental Yuhong's stock continues to rise at the current price and continues its previous trend, I will not invest heavily in it."

“Yes, that’s true.” Chen Guiyun nodded and said, “In a volatile market, chasing highs is not advisable. I’d rather miss out than make a mistake. Speaking of which… Lao Liao, haven’t you planned to reduce your holdings in Lixun Precision stock yet? I feel that the market is unlikely to continue rising as most people expect today, given the opening auction price.” Liao Guoxiang said, “The price trend of Lixun Precision stock, as well as expectations and market attention, are still on an upward trend. Even if there is some profit-taking as the Apple product launch date approaches, there’s no need to take profits before the trend deteriorates. Let’s follow the trend and let the profits run. Respecting the market trend and holding profits, I think it’s okay to wait a bit longer.”

Of course, this also depends on the trend of today's pre-market auction and the opening price.

It's clear that the active buying volume and market attention in the smartphone supply chain are not as strong as those in the major infrastructure sector, nor are they as strong as those in the new energy supply chain.

"Brother Liao, you're still very composed," Li Jinshi remarked. "I'm planning to sell. Today, the opening price of Changying Precision stock was somewhat below expectations."

Chen Guiyun said, "The opening price of Changying Precision stock was in line with expectations, wasn't it? Originally, this stock didn't receive as much attention or follow-up buying as Beijiang Jiaojian and Tianci Materials. As the third most popular leading stock in the market, opening with a gain of over 4% is a very strong performance, in my opinion. Moreover, the overall market situation today was quite volatile in the last few minutes of the pre-market auction, so... I think the support for this stock was quite good."

After the market officially opens, we can continue to observe the buying and selling situation of this stock.

If, within five minutes of the market opening, the stock can gather strength, withstand selling pressure, and reach a new intraday high, then I think there's a high probability that Changying Precision will be able to hit the daily limit up today.

As for whether it can continue to hit the daily limit, led by Beijiang Jiaojian stock, it may further refresh its record high and open up new space.

Then we'll just have to keep going and see what happens.

But in any case, I don't think this stock's rally is over yet.

Of course, if there is an opportunity to buy Beijiang Jiaojian stock after the market officially opens, it will definitely be a higher priority than Changying Precision stock.

As for the stock of Tianci Materials...

Yesterday, the overall trend of the new energy industry chain was quite divergent.

Looking at the new energy industry chain today, the stock performance of various sectors such as lithium batteries, complete vehicles, auto parts, and auto accessories clearly shows a further widening of the divergence.

Therefore, if institutions do not continue to lock up their positions or continue to buy...

I think that the intraday strength and market performance of Tinci Materials stock are likely not as good as that of Changying Precision stock.

After all, the positive news in the new energy industry chain has only just begun to be reflected in the market.

There were no new major positive stimuli to further change market expectations regarding this line.

However, Changying Precision, and even the entire Apple supply chain, has a sustained and certain expectation, which continues to support these stocks and attract funds to converge and speculate in this direction.

Of course, the strongest sector is definitely large-scale infrastructure construction.

Judging from the opening trend of Hong Kong stocks today, it seems that the continuous short squeeze of mainland property stocks has not ended and is even accelerating. I feel that this trend in the Hong Kong stock market will still have a certain stimulating effect on similar stocks in the A-share market.

Therefore, regardless of whether the market rises or falls today.

As long as the market does not experience a one-sided liquidity crisis or a sharp, indiscriminate sell-off.

Therefore, stocks related to major infrastructure projects, including companies like Beijiang Jiaojian, Tianshan Cement, Shougang Group, and Financial Street, should still be suitable for short-term speculation.

However, this kind of short-term speculation requires caution; one must know when to take profits and run.

"In general, we shouldn't be too pessimistic, but we also shouldn't be too optimistic," Liao Guoxiang said after listening to Chen Guiyun's analysis. "The final point of the opening auction was indeed somewhat lower than the general expectations of market investors, but the situation didn't get any worse. So, if the overall market sentiment can stabilize after the official opening, there's still something to watch in the day. Many core leading stocks are likely to generate some profit-making opportunities. So... let's take it one step at a time and not draw too many conclusions about the day's market trend at this time."

After saying that, he turned his attention back to the stock market.

In the short time it took for the group members to talk, the time had already changed from 9:25 to 9:30.

The two stock exchanges have officially entered the continuous auction trading phase.

Under the concentrated attention of countless investors both inside and outside the market, and with countless eyes focused on them, the stagnant stock market screens began to pulsate rapidly and intensely.

Among them, the core themes and popular stocks have attracted much attention.

At the very moment the market officially opened, an enormous volume of trading occurred, causing extremely volatile stock price fluctuations. (End of Chapter)