Rebirth of the Capital Legend

"I don't think 'Shuguang Shares' will be able to hold at the daily limit down." Noticing that the market had entered the actual pre-market auction phase at 9:20 AM, the number of pending orders for Shuguang Shares was increasing, while the number of sell orders at the daily limit down was decreasing. At this moment, in the "Shanghai Short-Term Trading Group," Old Zhang, with his eyes fixed on the market, said, "Judging from this situation, let alone opening at the daily limit down, it probably won't even drop by five percent. This is a bit beyond expectations."

"Hehe, I told you before, if Shuguang Shares opens at the daily limit down in the opening auction today, there will definitely be a lot of bargain hunters." Xu Qiao chuckled when he heard Lao Zhang's words and said, "Although the short-term speculative sentiment in the market has dropped a bit, it is far from collapsing. After Shuguang Shares hit the daily limit up yesterday, it has already fallen by about 15 points within the day. If it opens 5 points lower today, that's a 20-point pullback in two days. Even if this stock had directly hit the daily limit up before, with a serious gap in the shareholding structure, this pullback is almost complete."

From a sentiment perspective after the sharp correction, there is also a brief pullback and rebound here.

As for what happens next... I estimate that stocks with this kind of price movement will continue to fall after a brief rebound.

I'm thinking that if the performance of Shuguang Shares in today's opening auction exceeds the market's generally pessimistic expectations, and the amount of bargain-hunting funds gathering is far greater than everyone's pre-market estimates, then its intraday impact on the main theme of the new energy industry chain will not be negative, but may be positive.

And under the influence of positive emotions...

The new energy industry chain is likely to see a correction in its price trend today.

Since the new energy industry chain is likely to recover today, popular stocks in this sector that were unfairly punished yesterday due to the extreme losses in Shuguang Shares are likely to see a strong recovery today.

Looking at the current market...

As funds rapidly increased to buy shares of Shuguang Co., Ltd. at bargain prices.

Tinci Materials, Power Source, Lead Intelligent Equipment, Ganfeng Lithium, Tianqi Lithium... This group of core and popular stocks in the new energy industry chain are seeing an increase in active buying on the market. Tinci Materials, in particular, has been rising steadily since 9:15 am, and its performance is now significantly stronger than the overall market index.

Meanwhile, related sectors include lithium batteries, auto parts, auto accessories, complete vehicles, and charging piles.

It has gradually started to turn red.

The infrastructure sector seemed a bit weak during today's opening auction.

As a leading stock in the core theme of major infrastructure construction, and also the most popular stock in the current market for short-term speculation, Beijiang Jiaojian's opening auction today didn't seem very strong, and the trading volume started to increase further.

However, this surge in volume at this position, which is clearly accelerating, is not necessarily a good thing.

I think if the stock of Beijiang Jiaojian starts to show signs of high volume but stagnant price today, its impact on short-term market sentiment will likely be more severe than that of Shuguang Shares yesterday.

After all, the market discussion surrounding Beijiang Jiaojian's stock is far more heated than that surrounding Shuguang Shares.

Moreover, its market influence is also much stronger.

However, in the major infrastructure sector, Taihe Shares, which attracted a lot of short-term funds yesterday and showed a strong upward trend, had a somewhat unexpected performance in today's opening auction.

Unexpectedly, this stock, based on yesterday's performance, opened directly at the daily limit up today.

Moreover, looking at the current market situation of this stock, the limit-up is still very strong. As the market goes on, the limit-up buy orders have been increasing, and the number of matched orders has remained stable without any significant increase. However, it is hard to say what the future trend of this kind of stock, which starts to have a limit-up after the first limit-up with high volume, will be.

If, within the major infrastructure sector, a lot of funds want to switch between high and low investments...

Therefore, there is still a chance for Taihe Shares to continue to show signs of convergence with increased trading volume.

If the funds in the market don't have this intention, then at this level, with this kind of trend, the entire main theme will likely enter another adjustment phase.

"The opening auction performance of Beijiang Jiaojian stock today can't be said to be below expectations, right?" Old Wu chimed in. "In my opinion, the fact that Beijiang Jiaojian stock was able to open higher today is a positive feedback to yesterday's limit-up with high volume, and also a positive feedback to the overall sentiment of the major infrastructure theme."

On the contrary, the consumer sector, including liquor, white goods, retail, food and beverages, and consumer electronics, is the most prominent.

Today's opening auction performance was significantly weaker than that of the major infrastructure sector.

Apart from the relatively resilient liquor sector, which opened flat overall, other related sectors and related concept sectors all opened slightly lower.

Especially in the consumer electronics sector, it's clear that a lot of capital has already left the market ahead of time.

A general reduction in holdings and profit-taking has been implemented.

After all, there are only a few days left until Apple's fall product launch event.

At this juncture, there is a high probability that the positive news will turn into a negative one, because by this point, all expectations surrounding the press conference have already been priced in.

Of course, if there's anything particularly eye-catching or unexpected at this press conference...

Therefore, after the press conference, this trend will most likely materialize and trigger a market reaction.

However, in the interim period between the start of Apple's new product launch, there are certainly no expectations for this trend, or at least it is unlikely that there will be any unexpected positive developments or trends.

Therefore, comparing this to the consumer sector...

I believe that the major infrastructure sector, including real estate, construction and decoration, and building materials, is still performing strongly. There are no signs of loosening of the market sentiment, nor are there any signs of large amounts of funds reducing their positions and taking profits during the opening auction.

As for the performance of individual stocks in the major infrastructure sector...

As for the stock of Beijiang Jiaojian, I think the speculation in this sector will continue until it completely loses its momentum and experiences a sharp drop to the daily limit, which has a significant negative impact on investors' profits.

Whether it's cutting highs and lows within the main theme or uncovering new concept stocks.

There should still be plenty of opportunities.

Moreover, after reaching a new annual high, I feel that Oriental Yuhong stock is likely to continue its previous trend and continue to rise and expand its potential.

With this stock, the scope for speculation in the major infrastructure theme continues to expand.

Therefore, I think other funds can also freely speculate on other stocks with similar themes.

Moreover, overall, in the major infrastructure sector, whether it's heavyweight leaders like Conch Cement, China State Construction Engineering, China Communications Construction, China Railway Construction, Poly Real Estate, Kewan Real Estate, and Gemdale Group, or niche industry leaders like Oriental Yuhong and Huaxin Building Materials, or many growth stocks along this main line, their valuations are not high at the current level. Furthermore, in the Hong Kong stock market, there are stocks related to the entire real estate industry chain.

Its market trend has not stopped yet.

Not only did it not stop, but looking at Rongchuang Group, Hengda Group, Country Garden, Longfor Properties and other mainland property stocks, their trends are still in a clear phase of accelerated growth.

Overall, with so many leading stocks of both large and small caps, they are all continuing to expand their upward potential.

Therefore, it is unlikely that the sentiment surrounding the major infrastructure sector will collapse in the short term, and its stock price is also unlikely to experience a significant correction in the short term.

In fact, the opening auction trend today...

What surprised me most was not the slightly better-than-expected performance of the new energy industry chain.

Instead, I noticed that the steel and coal sectors, which hadn't received much attention before and were relatively unpopular, have recently seen continuous attention and accumulation from major funds. It's highly likely that they're close to completing their accumulation. The opening auction performance of these two sectors today was also quite strong.

In the time between 9:15 and now...

The major market indices and several popular themes have all been gradually declining as sentiment has weakened, exhibiting a pattern of opening high and closing low.

However, the two major sectors are coal and steel.

From the initial call auction onwards, the price gradually rises, reflecting upward feedback.

Moreover, these two sectors held steady and did not decline during yesterday's market correction, when most other major themes were undergoing adjustments.

Generally speaking, it outperforms the broader market during downturns, demonstrating its resilience against declines.

At the same time, while the overall market remains weak and sideways, it can slowly oscillate upwards, gradually expanding its upward potential.

This is a scene where the market is about to explode, like dry tinder ready to burst.

Moreover, analyzing the industry fundamentals of these two sectors, the overall industry fundamentals have reversed under the influence of macroeconomic policies that have shown initial results from supply-side reforms.

However, the fundamental turnaround has not yet been reflected in the company's performance.

However, this is because earnings performance lags behind fundamental feedback and policy developments. Therefore, when speculating on expectations and earnings, a certain level of predictive ability is required.

"Old Wu, do you mean you're bullish on the steel and coal sectors?" Xu Qiao asked after listening to Old Wu's analysis. "But although these two sectors have performed slightly better than the index recently, the market enthusiasm hasn't picked up, and there aren't any obvious core hot stocks emerging."

The stocks that initially moved in tandem with the major infrastructure investment theme.

Stocks such as Shenhuo Shares, Pingmei Energy, and Bayi Steel have basically fallen back to their original levels and are now fluctuating.

To be honest, I don't see any significant speculative opportunities or signs of large funds continuously accumulating positions in the steel and coal sectors at present.

Moreover, in terms of market popularity, these two sectors really don't have much presence.

It's not as strong as the non-ferrous metals sector.

If we're talking about the ferrous metals cycle, it seems like non-ferrous metals will be the leading sector in terms of price increases.

Generally speaking, coal follows the non-ferrous metals sector, but currently the non-ferrous metals sector doesn't seem to be showing any significant or sustained upward movement.
Of course, if we're talking about valuation...

Currently, the steel and coal sectors are indeed very cheap, with many stocks, especially some industry leaders and heavyweight stocks, hovering around their net asset value.

However, the logic behind rising stock prices has never been that they are cheap.

Rather, it's the anticipated shift.

Currently, market expectations for the steel and coal sectors haven't changed significantly. Retail investors are paying little attention, and institutional investors have very few industry research reports and overall holdings in this area. In general, there's a clear lack of confidence in the overall ferrous metals sector.

Of course, from a broader perspective...

The recovery of the entire infrastructure sector and the explosive growth of the entire real estate industry chain.

It will definitely have a certain cyclical reversal effect on the steel and non-ferrous metals sectors, but I don't think a major bull market in the ferrous metals sector will happen so quickly.

From a long-term perspective, the entire ferrous metals sector, as well as non-ferrous metals, should not yet be out of the bear market.

However, in the coal sector... there have indeed been some policy shifts recently, but for these policies to ultimately translate into performance and new consensus expectations...

I feel it will take more time, and a considerable amount of time, for the reaction to take effect.

At this point, getting involved in the steel and coal sectors seems a bit premature. We need to wait until the market has a strong speculative sentiment before these two previously suppressed sectors present significant speculative and investment opportunities.

"The coal and steel sectors haven't yet shown a clear and sustained upward trend, but I think Lao Wu's logic is sound," Chen Ge interjected after listening to the three's analysis of the market trend. "Keeping an eye on them, or even taking a small position, should still be a good idea. The valuations of these two sectors have been compressed to this extent, and from a fundamental perspective, the industry's capacity clearing and market concentration are nearing their end. Even if this isn't the turning point of a cyclical reversal yet, it's very close."

"Does Brother Chen also have a positive outlook on the coal and steel sectors?" Xu Qiao asked.

Chen responded, "I like to invest in industries that are at cyclical turning points. I feel that the steel and coal sectors are about to reach a new cyclical turning point. However, this is just my prediction. The actual market trend should be observed in the present, following market sentiment and the main direction of large funds. I only use a small portion of my portfolio to invest in the core stocks of these sectors to make an investment based on my prediction. With a controllable position and loss margin, I think it is still very worthwhile to invest."

“Generally speaking, cyclical reversals tend to fluctuate around the turning point,” Lao Zhang said. “In the early stages of a cyclical reversal, due to the lack of market confidence in the leading sectors, the trading volume and stock price movements are not particularly prominent. I also believe that the coal and steel sectors currently exhibit some characteristics of a cyclical turning point, but as Brother Chen said, the trend… has not yet fully unfolded. Entering a position at this time should be considered a relatively left-side trading strategy.”

"With proper position control and stop-loss orders, I believe there's no problem with buying on the left side," Lao Wu said. "Back when Brother Su's 'Huayi Capital' was building a large position in the liquor sector, wasn't that also buying on the left side? At that time, everyone's judgment on the industry cycle of the liquor sector was actually unclear. In fact, when market certainty is relatively high, it's often difficult to find a good buying opportunity. In other words, high-value opportunities and certainty can never be obtained simultaneously; profits always come with risks." (End of Chapter)