The market has shrunk to the extreme, and a rebound is highly likely!

The decline in today’s Thursday broad market is the result of a sideways consolidation, and it’s also the broad-market trend I accurately predicted one week in advance. After all, Wednesday saw an uptick without volume. I’ve said that a trading volume of 2 trillion isn’t enough to support a breakout formation. So today’s Thursday broad-based selloff is just one link in the sideways consolidation, and ahead of the Qingming Festival, there’s also a need for funds to be withdrawn. In reality, this has little to do with the relationship with Old Tev’s bearish comments from the morning.

Today’s Thursday broad market saw volume shrink to 1.8 trillion, which is also roughly volume contracting to the extreme. This also indirectly proves that this isn’t capital fleeing in panic. If it were a panic exit, it would definitely be a volume-increasing selloff. And this also proves that the GJD’s control over the broad market has reached its extreme!

On April 7, 2026, the new quantitative trading regulations will start being implemented normally. So on Friday, there will likely be a quantitative-capital exit, leading to a likely low open tomorrow on Friday. In fact, this is a good opportunity to add to positions. Because for us retail investors, the new quantitative trading regulations are a long-term positive. Let me briefly explain the new quantitative trading regulations:

1. More fair trading: removing institutions’ “speed advantages”
   In the past, some quant institutions could use expensive VIP trading channels and hardware advantages like server colocation to get trades executed ahead of others at the millisecond or even microsecond level. This put ordinary retail investors in an absolute disadvantage in a “race against speed” game.
   The new rules bring retail investors and institutions basically back to the same starting line through the following measures:

1. Limit high-frequency trading: significantly tightened the criteria for recognizing high-frequency trading (for example, reducing from 300 trades per second to 15), and also restricted order-cancellation rates, effectively curbing frequent “fake orders” and “order canceling in seconds” behaviors that exploit speed advantages.
2. Equalize trading channels: pause new dedicated trading units and require exchanges to clear out their dedicated colocation/hosting, physically leveling differences in trading speed.

2. A more stable market: reduce the “instant flash crash” of stock prices
   In the past, high-frequency quant strategies sometimes created fake liquidity or guided stock prices by placing large orders and canceling them instantly, causing individual stocks to experience sudden surges or crashes with no warning, increasing investment risk for retail investors.
   The new rules make stock-price fluctuations more real and more steady through the following:

1. Strict control of abnormal trading: directly monitor and restrict behaviors involving large order submissions within 1 minute coupled with excessively high order-cancellation rates, effectively reducing malicious attempts to pump or suppress stock prices by exploiting funding and speed advantages.
2. Penetrative regulation: combine monitoring of related accounts to close loopholes that allow market manipulation via “alt” accounts splitting positions across accounts.

In short, the new quantitative trading regulations are a major positive for retail investors. The summary is just six words: remove the speed外挂, return to fundamentals. The market shifts from a zero-sum game of “competing for hand speed” to value investing based on “competing for knowledge,” and the risk that retail investors get “harvested by machines” is greatly reduced.

I think the sideways consolidation will most likely basically end today Thursday, because volume has already contracted to the extreme. What’s left are the chips held by those firmly bullish. So going forward, the broad market will most likely rise in small, incremental steps, not too fast. Therefore, be sure to do low-buying high-selling and high-selling low-buying.

As for sectors:

1. Storage chips: I’ll still be firmly bullish, but you need to pay attention to doing low-buying high-selling within that space.
   Based on the current situation, today Thursday in the U.S. stock market the storage chip sector collectively opened low, but it keeps flipping back to red. Micron Technology, SanDisk, Seagate Technology, and Western Digital are already very strong. That essentially means the bearish news about Google’s algorithm and the price cuts of consumer-grade DDR5 spot products has already been digested. Looking at the medium to long term, even if Google’s algorithm applies to storage, it would only drive larger storage demand.

2. Innovative drugs: In the news, in the first quarter, the transaction value of China’s innovative drugs licensed externally exceeded 60 billion. And it’s also expected that in 2026, domestic and international markets will continue to accelerate growth.
   So this is also a solid risk-avoidance logic. This has been the case in prior years. But the initial wave of upside basically goes only as far as here. After that, it will consolidate sideways. Then when the time comes, we’ll have opportunities to step into high-quality individual stocks.

3. Electricity: In the news, Premier Li Qiang, during an inspection and research trip in Sichuan, emphasized electricity computing power. In addition, our country’s grid saw investment of 130 billion yuan in the first quarter. The涨停 of Leshan Electric Power was actually driven by today’s Sichuan inspection and research. Quant funds already got the news in advance, so tomorrow the grid sector will have a weak rebound—but that would be an opportunity to distribute/sell into strength.

4. Commercial aerospace: The rebound is over here. This is also something I reminded about in the past two days regarding commercial aerospace. Since last week, I also reminded you that during this phase, commercial aerospace from the nation would not see a reversal/engulfing move upward; instead, it would just have a rebound. A rebound is an opportunity to distribute/sell. Because it’s still caused by the stimulation of Musk’s SPX filing for an IPO.

5. Humanoid robots: At this point it has started to stabilize. At any moment, good news could trigger a rebound for it as well, because it also has a need for a rebound.