Still following "drawing K-lines"? Analysts are already overwhelmed

Local time on April 1, U.S. President Trump issued the latest remarks on the Iran issue.

In his speech, Trump claimed for himself that he had achieved a “quick, decisive, overwhelming victory” in the Iran conflict.

Trump said the United States’ core strategic goals in the Iran conflict were “nearly complete,” Iran’s navy has now been “completely destroyed,” and its air force and missile projects have also been severely damaged. Iran’s ability to launch missiles and drones has been “greatly weakened,” and weapon factories and rocket launch sites have “virtually none left.”

Trump said that if Iran does not reach an agreement with the United States within the next two to three weeks, the U.S. military will target Iran’s key objectives and “strike them at every power plant very forcefully,” and may also target Iran’s oil facilities.

However, just minutes after Trump claimed to have destroyed Iran’s missile and defense systems, Iran launched missiles at northern Israel.

Trump’s remarks have raised expectations that a rapid ceasefire phase would collapse. Market sentiment, which had rebounded yesterday after both the U.S. and Iran released conciliatory statements to de-escalate, fell again today.

News about Iran’s situation has been coming and going, confusing and hard to pin down, and Trump’s statements have also been rather muddled.

Previously, the market joked about the relationship between Trump’s remarks and the movements of U.S. stocks as “drawing K-lines,” but Trump’s speech is, for the market, a “black swan.” Investors who followed the “draw K-lines” idea are furious today, and even broker professionals are a bit at their wit’s end.

A chief industry analyst at one brokerage complained in a朋友圈 that they don’t want to research anything that has to do with Trump anymore—they’re going to be sick of it. Just sold-side research for more than 100 months, and this is the most psychologically fragmented month.

Disturbed by Trump’s remarks, today both the Asia-Pacific stock markets and European stock markets adjusted.

As of the close, the Shanghai Composite Index fell 0.74%, while the Shenzhen Component and the ChiNext Index fell 1.60% and 2.31%, respectively. Total market turnover was 185.80 billion yuan, down 167.10 billion yuan from yesterday.

The number of individual stocks that rose and fell was 1,052 and 4,378, respectively. The median of the individual stocks’ gains and losses was a decline of 1.77%.

The recent market action is basically driving people crazy.

For a simple example, the chart below shows the recent number of stocks that rose and fell. The location of the dots is the number of stocks that increased.

Since March 19, the number of individual stocks that rose first stayed below 1,000 for three straight days. After that, there were three instances of “more than 4,000 stocks rising on the same day, and only around 1,000 the next day.”

On the short-term front, even Brother Dage is a bit dazed. On March 30 and April 1, the 30-minute K-line charts of the Shanghai Composite Index showed a sideways accumulation-of-energy pattern. By convention, it should have risen the next day—but the results were all declines.

This kind of market also led some investors to complain: today’s market is too extreme. Either more than 4,000 individual stocks are rising, or 4,000 stocks are falling. When it drops, you lose like you’re a whole cow; when it rises, you only get back like a single chicken.

It’s indeed a bit hard to forecast in the short term, mainly because with the noise in the news flow, the indices keep going back and forth.

There have been similar cases in history, the most typical being from early February 2022 to early March 2022, and from the second half of March 2022 to the first half of April.

This is also why, recently, Brother Dage has been repeatedly emphasizing “controlling position size; positions should not be too heavy.” The index is stepping back and forth, but it’s somewhat hard for money to return—chasing gains and cutting losses is especially painful.

In terms of timing, there are a 3-day holiday break for Qingming, Hong Kong stocks are closed for trading tomorrow, and trading appetite is relatively low, with funds having a defensive mindset. In addition, April 6 is the final deadline Trump hopes to reach an agreement with Iran.

Overall, the broad market is still within a rebound cycle, so in the short term it should be viewed as range-bound. If the broad market tests the bottom again or makes a new low, then pay attention to whether a bullish divergence resonance at the 60-minute level appears.

On the sector front, international oil prices surged sharply, which cooled the market’s enthusiasm for taking long positions, and sectors mostly fell more than they rose.

Sectors that rose included oil, coal, agriculture, forestry, animal husbandry and fishery, banks, utilities for gas and heating, pharmaceuticals, transportation, liquor brewing, and food and beverage. They were either tied to the Middle East situation line or traditional defensive sectors.

If expectations for the Middle East situation are unstable, this kind of scenario may keep recurring.

Let’s look at today’s news flow.

1. The General Office of the Ministry of Industry and Information Technology released a notice on launching a special campaign to empower small and medium-sized enterprises through inclusive computing power. It mentions promoting the deployment of technological applications such as all-optical switching to reduce network latency from computing power application terminals to servers; exploring innovative businesses such as “computing power banks” and “computing power marketplaces” to support small and medium-sized enterprises in storing idle computing power resources.

2. According to First Finance and Economics, starting April 1, some home appliance companies raised their supply prices for certain models of TVs, air conditioners, refrigerators, washing machines, and other appliances. The increases range from 2% to 10%. For major kitchen appliances such as range hoods and stoves, the increases are even around 10% to 20%.

3. According to Caixin Media, the original-box ex-warehouse price of Feitian Moutai (600519) rose to 1,730 yuan per bottle. “i Moutai” again “tightened” the purchase-and-reservation rules: each person can only purchase with reservation eligibility once per day. Up to 1–6 bottles can be purchased in a single order. After completing one order, you cannot reserve to purchase again on the same day.

4. Volcano Engine: Doubao large model’s daily average Token usage has surpassed 1.2 trillion, and Seedance 2.0 is entering enterprise public testing.

Finally, Brother Dage makes a summary: today the market adjusted, and the market action is still within a rebound cycle, with the short term mainly characterized by volatility. In terms of positioning, positions should not be too heavy; control position size appropriately. If you want to stay steady, you can wait for a “dual freezing point” in both the index and sentiment.

[Editor-in-charge: Zhang Yang HN080]

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