2/25 Retrospective Notes

Today, the index opened high and continued to rise steadily in the morning, following the rally of the brokerage sector, with a very good trend. However, in the afternoon, the momentum clearly weakened. First, look at the brokerage sector. Just a few minutes after the market opened at 1 p.m., the volume bars showed a long green candle, which was quite conspicuous and made people feel a bit凉半截. Looking at the Shanghai Composite Index, the same green candle appeared, indicating a follow-through. So, when you see this situation, as someone who has been in the market for a long time, you should be cautious. At this point, you need to focus more on the stocks that surged in the morning. If they start to turn downward again, it’s a clear sign to reduce your positions. Even if you sold some in the afternoon after the decline, and then waited for your stocks to retrace downwards before adding back in the last half hour of trading, you are likely to earn at least 1%-2% more than just holding steady. This profit is earned through your technical skills. Over time, your total account returns will be much higher than others. [Taogu Ba]

This is not hindsight; it’s a test of the market’s sensitivity. Because you saw the index perform well in the morning, but at 1 p.m., right after the market reopened, a green candle appeared on the index and on the brokerage sector, and your stocks also started to turn downward. Looking again at the index’s position, 1 p.m. was the highest point of the morning at 4160. The resistance level above is 4190, leaving less than 30 points of space. The volume today isn’t as lively as 3wy scenes, still around 2.5wy, so it’s obvious that after seeing this at 1 p.m., you should have started reducing your holdings of stocks that surged in the morning. This is not hindsight but market sensitivity that you should have. If your stocks that rose less in the morning don’t decline, then no need to reduce. But if they have risen significantly, it’s unreasonable not to cut. Many retail investors probably don’t pay close attention to market trends, so about 80% of retail traders wouldn’t think this way. If you don’t act accordingly, when the market is good and everyone is making money, you will make less. When the market is bad and others cut losses timely, you will lose more. Over time, this pattern leads to consistent underperformance. That’s why many retail investors are crying every day. Sometimes, it’s not entirely the market’s cruelty but whether you have truly studied the market and your stocks. If you can make slightly more money than other retail investors in good times and lose slightly less in bad times, over time, you can survive in this tough A-share market.

So, if you didn’t notice the 1 p.m. performance of the brokerage sector and the index and didn’t reduce your positions accordingly, reflect on this during your evening review. Record it in your notes so that next time you encounter a similar situation, you’ll know what to do.

Looking at the volume today, close to 2.5wy, which is decent—at least it’s much higher than yesterday. But the brokerage sector underperformed in the afternoon, pulling the index down again. That’s frustrating. If the brokerage sector had maintained its strength, there’s a high chance the index could have tested 4190 this afternoon. To reiterate my view: whether the index can continue to reach new highs depends on the broker sector. If brokers keep underperforming, the index can’t surge sharply. When brokers rally strongly, combined with other sectors, they can lift the index. This morning, the gains were mainly in the minor metals sector, and rare earths also performed well, which is a normal upward trend. Meanwhile, as the index retreated in the afternoon, the commercial aerospace sector started to absorb funds again, showing a small “tip of the iceberg” phenomenon. This is normal because 2023 is the first year for commercial aerospace, especially with Old Ma’s SpaceX preparing for an IPO. Related sectors and supply chains will likely be hot this year. I wonder if anyone still holds stocks like Han’s Laser from October, which has risen from 40 to 60, a 50% increase, and has been rising even more sharply in recent days.

The brokerage sector is now near a support level—early December support, which was revisited in early February. Yesterday and today, it tested this support again. Today, the sector also saw some volume increase, which is good news. If tomorrow the brokerage sector can continue to increase volume and rally, that’s even better. But if the sector breaks below the December and February support levels, it’s time to run. A breakdown in broker stocks could drag the index down, especially now that the index is approaching resistance levels. The pressure is already high, and whether it can break 4190 and hold above 4200 is uncertain. International gold and silver are also just hitting resistance levels. International silver has just crossed the 92 yuan mark. When international silver started to fall from 120 yuan, I said it mainly depends on whether it can hold the 90 support. If it breaks below 90, the downside opens up. When it fell below 90, it dropped sharply to around 60, a 50% cut. When silver rebounded from 60 to over 70, I said it could still rise and reach new highs. But short-term, whether it can hit new highs depends on whether it can stay above 92. Today, I sold my pre-New Year bottom-fishing position in Guotou Silver, earning over 20%. I couldn’t predict if 92 would hold, as it’s entirely dependent on international news. When silver was around 60, it was predictable; at 92, it’s uncertain because that’s a strong resistance level. If it can stay above 92, there’s a high chance of continued oscillation upward, with a short-term new high ahead. There’s also a big event at the end of March—delivery of silver—so many factors are at play. Now, 92 is no longer like the 70s when the opportunity outweighed the risk. Currently, the opportunity and risk are almost equal. So, be cautious about buying recently. If you buy, it’s mostly luck. When it was in the 70s, there was some technical and insight-based advantage.

The movement of international silver directly affects the Shanghai A-shares index and the non-ferrous metals sector. Keep an eye on silver prices. There’s an opportunity here: for example, if silver drops sharply—say 5%—but nickel and other metals like Shanghai Nickel and London Nickel only fall about 2%, it indicates that the fall is mainly driven by silver’s decline, a “mis-kill,” with minimal impact from the fundamental supply and demand of nickel. Stocks related to nickel in the A-shares, like Huayou and G林美, also fell sharply—5% or 7%—due to silver’s plunge. This is a clear buy signal for stocks like Huayou and G林美. I just want to remind everyone: using nickel as an example, similar logic applies to other metals like tungsten, tin, rare earths, germanium, tantalum, etc. When there’s a “mis-kill” causing a sharp decline, it’s best to buy in batches at lower prices to get bloodied chips.

Back to the index: it’s now at a resistance level. At this point, stocks that have risen significantly should be sold into strength, not chased. Don’t chase highs. Better to miss some gains than to buy at the top. Because in the big A-share market, when the market hits you, it hits hard—more brutal than when your mom used to hit you. Everyone has been hit before, so I won’t elaborate. The key in the mainland A-shares is to protect your life first.

This is also my trading rule: when the index or individual stocks rally and approach the upper end of the oscillation zone, I gradually reduce positions in batches. No one can predict whether it can break through and stabilize above resistance. If it fails to break through and hold, it will likely retrace. That’s why I prefer to cut back as it approaches resistance, and only add back when it truly breaks through and stabilizes above it. Because we buy not just the price but the trend. Remember: when an uptrend exists, price matters; when a downtrend, price is less meaningful. Especially at high levels after a correction, the price isn’t the cheapest; there’s always cheaper.

I only look at 4200 points for the index. Only if it surges with volume and stabilizes above 4200, with volume around 2.5wy-3wy, will I consider it truly stable. Below 2.5wy isn’t volume; it’s shrinking volume. Since the index is above 4000 now, not at 3000, volume below 2wy is a sign of severe contraction. Only exceeding 2.5wy counts as slight volume, around 2.8wy is ideal, and over 3wy indicates the market is hot and might cool down. Maintaining around 2.8wy volume, with the index above 4200, especially if brokers rally, could push the index toward 4500 or even 4800 this year. But if volume isn’t sustained, brokers underperform, and the index can’t hold 4200, then a short-term drop below 4000, even to 3800, is not surprising.

Downward, watch two levels: 4000 and 3800. If it breaks below 4000, you’ll see indexes starting with 38. As long as it doesn’t fall below 4000, I can tolerate it. But if it can’t hold above 4200, I’ll reduce positions at the top and add back when it returns to 4000. If it breaks below 4000, I’ll clear positions and wait for it to drop to around 3800 before re-entering. If it breaks below 3800, I’ll clear again and buy back around 3730. These are the likely operations I’ll execute in the future. I’m sharing this in advance as a reference—don’t get caught off guard by big fluctuations.

Regarding lithium carbonate: today, it touched 170,000 yuan again, which is good news, driven by positive news from Zimbabwe, where yesterday there were restrictions announced, and ships are being stopped. This directly stimulated the futures market, pushing lithium carbonate to 170,000. Recently, it’s been rising sharply. Remember, that’s the futures market—high leverage. A 5% daily move is significant. Currently, the leading domestic raw material companies for lithium carbonate are gaining more influence over the supply chain, giving them confidence that supply will be tight this year. In the past, they were squeezed by top lithium battery manufacturers, but now they’re turning the tables. This is good for lithium carbonate prices. The stronger their voice in raw materials, the more stable the price. I remain optimistic about a 200,000-yuan target this year, and even 300,000 isn’t impossible if external news supports it.

For individual stocks: Salt Lake shares followed the futures market higher today but approached the resistance at 37.3. During the session, it also neared 37.13. Today’s lithium carbonate futures pulled back, which is normal. Whether it can break through depends on the short-term trend of lithium futures. It’s up to your profit and position management. If you’re profitable, reducing positions is correct. If your position is small, don’t worry. If lithium pulls back, you can lower your holdings and add back gradually. Recently, positive news from the external market supports lithium, so I believe it’s unlikely that lithium carbonate at 150,000 yuan will break below. The closer it gets to 150,000, the more you should add to Salt Lake, Ganfeng, and Shengxin Lithium. Previously, Tianqi was included, but now it’s replaced by Shengxin Lithium, which I’ve observed has high activity—rises sharply when going up, and falls sharply when going down, indicating good liquidity. I don’t like Tianqi much, so I replaced it with Shengxin Lithium. For those who can withstand big fluctuations, Shengxin Lithium is a good choice; for more stability, choose Salt Lake. For those who prefer the “white moonlight” of lithium carbonate, Ganfeng is the best, as it’s very pure in the lithium sector.

Xiamen Tungsten: no need to say more—buy low, sell high. Tungsten prices are very strong, with no end in sight.

Zhongchong Shares: previously broke below 50, so I sold and haven’t re-entered. Currently, it’s not suitable to buy again because the market isn’t favoring pet stocks; funds are focused on metals. Wait until a low price appears again.

Huaxi Nonferrous Metals: today’s sector also rose, similar to Yunnan Gejiu, Dongfang Tantalum, which also rose. Many rare small metals gained today, but I prefer tungsten more than tin. Among rare metals, I like Ge and Indium in Yunnan Gejiu the most, then Tantalum.

Jinli Permanent Magnet: yesterday, no benefit for rare earths, but today it recovered. Northern Rare Earths also rose, with Jinli reaching over 9%, close to the limit. It’s a good sign—holding steady pays off. We held at low levels, and today saw increased volume, so I believe it will continue to oscillate upward in the short term.

Innovative drugs: wait and see; buy on dips.

Huaming: not low, but not high either long-term. The best strategy is to buy low and sell high.

Jindawi: watch 18 yuan. If it breaks below, reduce positions. Below 17, clear positions. If it doesn’t break 18, hold. Currently, it’s in a consolidation phase at a low level, oscillating around 18 support. Today’s volume was obviously higher, which is a good sign. A long upper shadow today indicates potential for upward movement, as stocks that have been consolidating for a long time often shake out retail investors with long upper shadows. As long as it doesn’t break 18, hold. But don’t buy high and sell low; if there’s a chance to buy lower during intraday dips near 18, add then. If it rises during the day, consider selling the lower positions. If you buy on dips and it doesn’t rise, just add to your support level.

Sany Heavy Industry: 24 yuan is a resistance level. It’s normal for it to hesitate here. No volume today, so it’s uncertain if it’s stabilized above 24. Need to keep watching.

Boyuan Chemical: congratulations on reaching 9.4, the highest today. It’s a reward for holding since 6-7 yuan. I mentioned long ago on Xiaohongshu that I liked Boyuan the most among all stocks. Looking back, that statement’s value is increasing. I wouldn’t speak recklessly without confidence. When it broke 9.2, I suggested reducing positions. I also discussed with a friend this morning about reducing at 9.2, which is the March 2023 resistance level. After reducing, you can add back in the last half hour or wait for a low open tomorrow—both are fine. Today, it broke a two-year resistance, so a large selling pressure is normal. A low open tomorrow is also normal. But breaking 9.2 indicates the market is still bullish this year, likely stabilizing above 10 yuan. Reaching a new high of 13 yuan is possible, given the current reasonable P/E ratio and the industry’s bottoming out. The market is already pricing in expectations early. If the index pulls back sharply, say to 4000 or below, Boyuan will likely fall with it. But that’s also an opportunity to buy more at lower levels after a deep correction, setting the stage for a rebound above 10 yuan.

HuaYou Cobalt: continue to be optimistic about reaching 90. No change. EVE and XianDao are not worth discussing—they have low volatility and volume. Wait for volume to pick up before adding. Nickel still needs to rise. G林美 is returning to 10 yuan soon. Both are good stocks. If you have more funds, buy HuaYou; if less, buy G林美—both give opportunities to play nickel. Today’s trend and volume are good. These stocks are resilient to index corrections. Remember: a correction is an opportunity.

KedaLi: these past two days, KedaLi performed well. The robot sector fell sharply, but KedaLi didn’t drop much. It rose significantly with the robot sector previously, but when the sector fell, KedaLi held up well—quite resilient. Support is around 165. If it breaks below, reduce; if it stays above, add more as it approaches 165.

Baowu Magnesium: although it already hit my target of 20 yuan early this year, the weekly chart still looks good. Hold and see if it can stabilize above 22 yuan. If it breaks through 22, the sky’s the limit. If not, 16-17 yuan remains a bottom zone. The chance to return to around 12 yuan is slim now.

Yuntianhua: traded strongly yesterday and today. Today’s move suggests reducing positions, especially after the gap-up. Although it closed above the gap, it shows some fatigue. As long as it continues to open high tomorrow, reduce or clear positions. Short-term, rapid gains are likely to be followed by sharper declines. While I remain optimistic long-term, rapid short-term gains can exhaust potential. A slow, steady upward oscillation is better. When it surges, take profits timely. If the main fund can push from 43 to 60, that’s impressive—money earned by strength, not by wishful thinking. I don’t envy that; it’s their own strength. Make your own decisions.