[Offense and Defense Practical Strategies] — April 3 Pre-Market Outlook

I woke up a bit later today—let me just say a couple of things. [Taoguba]
Adding the previous sentence, I’m done speaking.

Just joking. But yes, I did wake up late—let me briefly talk about it.

Here, the big-picture trend for the index is still within an adjustment cycle. For the smaller timeframe, you can treat it as a trading-range/sideways movement. The biggest issue right now is that trading volume is continuously contracting on a phased basis. And at this spot, above the gap in the Shenzhen Component Index, there’s a very heavy overhead pressure. With the current level of trading volume, it’s almost impossible to relieve that pressure. So during the sideways movement, once price approaches the gap area, it tends to become a de-risking/sell-down point. Under this expectation, after a high open, chasing is almost pointless; or after the stock has risen, buying again the next day to chase—there’s basically no room left. Only after it adjusts down and you see a clear stabilization rhythm to play the left-side setup can you capture a little bit of upside elasticity. Even so, the difficulty in the market is still very high right now.

Actually, if we compare the index with performance outside the market, you can see it clearly: the overall volatility range of A-shares is much smaller than that of the external markets. It’s the same whether it’s up or down. Therefore, as long as overseas doesn’t see consecutive sharp sell-offs, systematic risk on the A-share side is not big for the time being. On the short-term sentiment side, besides those few old monsters in top-position crowding/cluster trading who are getting subsidized, the short-term “losing money” effect has decreased somewhat compared with the day or two before. Today, I expect sentiment-wise the risk should be controllable and not too extreme.

So the problem now is still that thematic continuity is too poor. In the past two or three days, it’s basically been one path: the previous day, whatever direction is a bit stronger; on day two, it falls pretty sharply. After a few days, so many directions have rotated through, and only the medical/pharmaceutical sector has shown some degree of continuity. That means even for directions that are strong intraday, only the front-row names can still get some premium. If you react a little late and chase the intraday “limit-up” leaders on day one—leader two or leader three—buying on that kind of action, the next day you may still not be able to make money. This is the most uncomfortable part right now. It causes times when intraday the market looks like it’s doing “not bad,” but in reality there aren’t many opportunities you can actually act on. Until this issue shows a reversal, the difficulty of thematic trading will remain relatively high. Thursday was already quite obvious. Actually, on Thursday the sentiment was not bad, but even so, funds were willing to bet on those purely “tier/ladder recognition” names in the process more than they were to chase intraday strong thematic ideas in the back rows. So although the short-term margin of error has improved a bit, the “food/meal-sized” trend still has to wait for a thematic idea with real continuity to show up.

Also, Thursday saw a 20cm (三板) move. This type of three-board appears during the phase when big “monsters” like Yunneng Holding and Huadian Liaoning are continuously adjusting. It’s basically an attempt by funds to shift the main battlefield from 10cm to 20cm. Even if this attempt may not succeed, it still needs to be tracked. If, going forward, the overall performance of 20cm names gradually becomes stronger than 10cm, then you should pay attention to a potential switch in the main battlefield.

And on Friday, it’s still the same. We only open next Tuesday, so there’s a certain amount of “betting” on the news/events over the weekend. This needs to be considered.

That’s it for now. I’m not going to fix typos—other things we’ll talk about during the session.

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Thanks to all the brothers who sent encouragement and tips
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