Rebirth of the Capital Legend

There are also some less popular sectors, such as coal and non-ferrous metals. Although their performance was weaker than that of major infrastructure, consumer, and financial sectors, they did not experience significant losses. Their overall performance remained stable, basically fluctuating in line with the overall market trend, with neither obvious selling pressure nor obvious active buying.

"Sigh, there's still no volume. Today's half-day trading volume is even lower than yesterday's. Everyone says that volume is what drives the market, but with this persistently weak volume, it feels like the market trend will only get worse. If the volume drops further, I wonder if the infrastructure theme, which is the only bright spot in the market, can still hold up the market?"

In light of the market performance in the morning, during the lunch break after the close of trading in both Shanghai and Shenzhen stock exchanges.

The numerous retail investors gathered on various online stock investment exchange platforms are engaged in heated discussions, each expressing their own views and opinions.

Most of them remain relatively optimistic about the future market trend.

However, with the continuous decline in trading volume and the Shanghai Composite Index remaining stuck at 3100 points and unable to break through effectively, more and more people are becoming cautious or pessimistic about the market outlook.

"If trading volume in both markets declines further, I think the short-term outlook for the infrastructure sector will likely be unfavorable. In fact, the overall market performance today is significantly weaker than yesterday's. The new energy industry chain and the smartphone industry chain have clearly entered a phase of divergence. Apart from the leading stocks in each sector, many concept stocks that were previously hyped by funds are now retreating. Judging from the trading situation of these stocks this morning, it seems that the funds that entered the market earlier are taking profits and leaving."

"Yes, the overall market trend of the smartphone industry chain and the new energy industry chain is indeed becoming more and more divergent. Only a few core leading stocks are still trending positively, while other stocks have either started to fluctuate and consolidate or have already fluctuated and declined."

"That doesn't seem right. I get the feeling that short-term speculative sentiment in the market is still strengthening."

"Enhance? I doubt it?"

"Isn't that right? Today, hasn't the stock of Beijiang Jiaojian already started to accelerate upwards? Isn't the acceleration of the core leader a sign that short-term speculative sentiment in the market is starting to accelerate? Moreover, the limit-up orders for Beijiang Jiaojian haven't loosened at all during this morning's market trend."

"The stock of Beijiang Jiaojian is indeed performing very well, but this is an exception and cannot be used as a basis for analyzing the overall market trend."

"How can it be an exception? Isn't Beijiang Jiaojian the core leader and sentiment indicator of the current short-term speculative ecosystem in the entire market? As long as Beijiang Jiaojian, the flag of bullish sentiment, doesn't fall, I think there are still good opportunities in the current market."

"When analyzing the market, you need to look at the overall picture. If that's the case, during last year's stock market crash, there were still a series of stocks that doubled or even multiplied several times, such as Terui A, Meiyan Jixiang, and Huayida. But that doesn't change the fact that most people lost money, and even suffered huge losses. I think that as long as the overall market's profit-making effect and trading volume gradually decrease, while the loss-making effect increases, then we should remain vigilant."

"That's not wrong, but I think the current reduction in trading volume isn't necessarily a bad thing?"

"What do you mean? Does this mean that reduced volume is a good thing?"

"In my opinion, the low-volume consolidation at this level is certainly a good thing. It's a sign of further consolidating the market and building momentum for a breakout. After all, if the market were really going to crash, it wouldn't have been fluctuating in this narrow range below 3100 points for so long. If it were going to fall, it would have already done so. The current low-volume sideways movement indicates that the market can't fall any further. The market will always eventually move in the direction of least resistance. Since it can't fall any further, the only option for the direction of least resistance is to go up. However... it's not time to choose a direction yet."

"Yes, I agree with that view. In fact, whether it is an upward trend or a downward trend, the market is in a sideways state more than 90% of the time. I think we should be patient at this time and wait for the market to make a new directional choice after the consolidation. It is not too late to decide how to operate after the new direction is revealed. Right now... I think that maintaining a half position and rotating operations would be more appropriate."

"The infrastructure sector has risen so much, shouldn't it be due for a correction?"

"Does a significant rise necessarily mean a correction is inevitable?"

"Of course, a significant rise doesn't necessarily mean a correction is necessary, but it depends on trading volume. Currently, the market is still in a consolidation phase with limited capital, and I don't think anyone would disagree with that. Since it's a consolidation phase with limited capital, and there isn't enough new volume to further push the market up, then when the price has risen too much and there's too much profit-taking, doesn't a correction become inevitable? Or rather, doesn't the probability of a correction become relatively high?"

"However, compared to the performance of the entire real estate industry chain in the Hong Kong stock market, I feel that the performance of related stocks in the A-share real estate industry chain, as well as the performance of the sector indices of several major industries, is lagging behind and underperforming the performance of related sectors and their corresponding stocks in the Hong Kong stock market. Since the related stocks in the Hong Kong stock market are still surging upwards with various major funds chasing them, and there is no sign of a slowdown in the trend, then... why do we assume that the corresponding real estate industry chain stocks and the corresponding sector indices in the A-share market will enter a period of adjustment?"

"The market conditions in the two places are different, and the nature of the funds involved in controlling the market is different. Can't we make a comparison like this?"

"How should we compare them? I remember the domestic market's infrastructure sector boom was initially discovered in the Hong Kong stock market, right? And it was the Hong Kong stock market that led the way, wasn't it?"

"It wasn't led by the Hong Kong stock market, was it? Wasn't it initially discovered by 'Huayi Capital,' an institution headed by Mr. Su?"

"With the support of 'Huayi Capital' led by Mr. Su, I think the main reason is that the logic of this core theme itself is sound. The real estate industry has experienced a clear cyclical reversal, and the fundamentals of the entire industry have reversed, which has led to the formation of the major infrastructure theme."

"Fundamentals are certainly the underlying logic and fundamental logic driving the market, but what truly propels the market trend and drives the overall market sentiment is undoubtedly 'Huayi Capital,' led by Mr. Su. If it weren't for this institution's efforts, I dare say that the infrastructure sector wouldn't have reached its current level. There wouldn't be such strong consistency among major funds. I even think that... the real estate industry chain-related sectors in the Hong Kong stock market are also being driven by 'Huayi Capital,' led by Mr. Su."

"Regardless of whether this core trend was discovered by the institution 'Huayi Capital,' it cannot be denied that this trend has already passed the stage of risk-free arbitrage by blindly buying at its current position. Whether it's Beijiang Jiaojian or Dongfang Yuhong, I ask you, would you dare to blindly continue to buy heavily? I certainly wouldn't. Chasing highs in a weak market is the source of losses."

"I've been wanting to buy shares of Beijiang Jiaojian, but I just haven't had the chance."

"That's right, who says I don't dare to buy? You take all those hundreds of thousands of buy orders on the limit-up board of Beijiang Jiaojian, and I'll immediately place a buy order."

"Just follow the trend of the leading stock; don't try to predict it, because the leading stock doesn't have a clear top. Trying to predict the top of the leading stock is often an extremely dangerous thing."

"Even if the logic, expectations, and sentiment feedback of the major infrastructure sector are all sound, what about the other main themes in the market? If other main themes are all showing a downward trend, can the major infrastructure sector alone support the entire market? If it can't, then as other main market sectors and their corresponding stocks decline, won't it eventually have to catch up with the decline? Therefore... I firmly believe that when analyzing the market, we cannot look at the trend and sentiment feedback of a single core theme alone; we must consider this core theme within the entire market environment."

Without a doubt, the major infrastructure sector remains the strongest core theme among all the major themes in the market, and it is also the main area of ​​focus for major funds, retail investors, and speculative capital.

However, the large-scale infrastructure sector is continuously siphoning away active funds from other main market themes.

It is siphoning in active buying from other main sectors.

That's true.

Furthermore, it's a fact that market volume has been decreasing step by step, and people's trading frequency and volume have also decreased.

In this situation, the liquidity of other main sectors that are being siphoned off, as well as many related concept stocks, will only decrease.

In other words, the market's divergent trends will only become more pronounced.

If this fragmented and divided situation continues, eventually it will lead to a situation where everyone collapses together without distinction, a scenario that has been proven countless times in the past.

Unless these non-core popular themes and non-market-leading concept stocks have not completely lost market liquidity, and there is a series of major positive news similar to what happened before, which can instantly stimulate some incremental funds from outside the market to enter the market.

Otherwise, this predicament is difficult to change through the market's self-correcting ability.

Therefore, beyond logic, market volume and liquidity are actually the underlying logic that truly determines the direction of the market and the overall market trend.

As long as the trading volume is insufficient and there is no continuous inflow of off-market funds, the market will remain stagnant.

Therefore, many so-called core themes in the market are like water without a source or a tree without roots; sooner or later, they will be dragged down by other weaker themes.

Currently, we do not see any new major positive developments in the news in the short term.

Given that, there is no expectation in this regard.

Therefore, the probability of the market further shrinking in trading volume and undergoing further downward adjustment is increasing.

Of course, in a weak market, focusing on core leading stocks and heavyweight stocks with ample market liquidity is definitely the right trading strategy. Furthermore, core leading stocks with sufficient liquidity and strong upward momentum are relatively safer when the market is indiscriminately falling, and their decline will be slower.

"In any case, the three sectors that showed promise before—film and television media, internet software, and internet applications—are definitely hopeless now, right?"

"Then there's definitely no hope. Look at the long-term candlestick chart of these three lines; it's truly frightening. It's just heading south all the way without ever looking back. Even if it occasionally turns back and there's a weak rebound, it's a rare opportunity to reduce positions, stop losses, or even liquidate positions to escape."

"It is clear that the major funds in the market have lost interest in technology stocks."

"You can't say that, can you? In the Apple concept sector, stocks such as Lixun Precision, Goertek, Lens Technology, and O-Film Tech are still very strong, and have been hitting new rebound highs recently."

"These stocks, although they have 'technology' in their names, aren't they really technology stocks in the true sense?"

"How do you say that?"

"I think you're right. It seems that the logic behind the speculation of these leading Apple concept stocks is not technology, but consumption. They are based on the expectation of future consumption recovery and consumption upgrading."

"Haha, that really hits the nail on the head. Indeed, it follows the underlying logic of consumption upgrading."

"Isn't there an underlying logic to industry recovery at play here?"

"Isn't the underlying logic of the consumer electronics industry's recovery the logic of consumption upgrading? Isn't the increasing sales of Apple products a manifestation of consumption upgrading?"

"That makes sense."

"What about the new energy industry chain? What's the logic behind it?"

"This is purely based on news, right? Of course, there's also some logic to future expectations involved, but this is a breakthrough from 0 to 1, and I feel there's still room for imagination in this area."

"There is definitely room for growth in the medium to long term, but it's hard to say how much potential there is in the short term."

"Indeed, since the recent positive news was announced, this line has been rising sharply for many days, and it feels like it's about to undergo a correction."

"Yes, the trading volume of Shuguang Shares increased this morning."

"Hmm, I feel this stock will be the turning point for the market this afternoon. I always feel that this stock has a high probability of hitting the limit down today."

"Judging from the current order book, compared to the trading volume this morning, it's quite difficult for the price to fall below the limit up. However, if some major funds withdraw their orders... then it's hard to say."

"Actually, the stock price movement of Shuguang Co., Ltd. is quite erratic."

"It's hard to describe this kind of one-shot kill as 'magical,' isn't it?"

"Anyway, I won't participate in stocks that hit the daily limit up. If I really have to, the cost-effectiveness of Beijiang Jiaojian stock is obviously much higher."

"Haha, that's what I thought too."

"I feel that Shuguang Shares' market position is just average, right? Even if it hits the limit down, how much impact will it have on the overall market trend? I think everyone is being a bit too pessimistic."

"I'm not sure. I have a feeling that this place is uncertain, and it's quite big."

"Let's observe and act accordingly. The trend is unclear right now, and it's hard to predict the direction. It feels like it could go up or down. In general... it's best to maintain a half position, control the position size, and engage in rolling operations."

This has sparked heated discussions among numerous retail investors.

With the divergence between bulls and bears intensifying once again, time is flying by.

Amidst the chatter of the crowd, the one-and-a-half-hour lunch break passed quickly, and as everyone watched intently, 1 p.m. arrived, marking the start of the official continuous trading session for both stock exchanges. (End of Chapter)