3.11 The direction is gradually becoming more focused!

$Yunnan Energy Holdings (sz001896)$ Brief note: Regarding the current market, many funds react by not following the usual patterns. For example, last week’s new theme saw a one-day rally, while this week’s sectors like electricity calculation, computing power, and green energy are only rallying from low positions to catch up, without high-level continuation. What I want to say is that quantitative trading itself is often the opposing side of retail investors and hot money. Since it’s an opponent, why follow the usual patterns? This market behavior is a strategy for quantitative traders to respond to the current situation, but we need to find our own strategies rather than complain about the market. As for quantitative trading or trading robots, I wrote about this frequently two years ago. The biggest difference between humans and quant is subjectivity—humans can subjectively research future industry trends and stock trends, while quant simply follows the data calmly. Therefore, to counteract quant, we must strengthen our research capabilities and understanding of the market.

Regarding Tuesday’s market, due to a sharp drop in oil and gas, the sector collectively hit the pause button in the morning. As mentioned in previous articles, the market only has two sectors with momentum: oil & gas and electricity calculation. The pause in oil & gas, while electricity calculation operates independently, is not ideal since many active funds are in oil & gas. After the sector re-opened around 11 a.m., the market started to improve, as the reopening indicated some active funds had exited, allowing funds to shift into other sustainable sectors like electricity calculation, green energy, and the offshore photovoltaic sector discussed earlier. Next, I will analyze the index levels and sentiment cycles:

1. Index Cycle Thinking:
   The index fell due to some mysterious low-level buyers stepping in and then pushing prices higher, indicating support. The direction of the index will depend on the outcomes of the Wednesday and Thursday meetings, but from the perspective of easing conflicts and the sharp drop in oil prices, it’s more likely that after the meetings, the index will oscillate and then recover. This is my view on the index cycle.

2. Sentiment Cycle Projection:
   First, analysis by Zhenlong: Before Tuesday’s market open, I wrote that core stocks in oil & gas and electricity calculation represented the market’s direction. However, on Tuesday, oil & gas stocks weakened collectively as conflicts eased, which aligns with the pattern. The current market does not support continuous strength but favors a trend of oscillation around anomalies. For oil & gas, expect a correction lasting at least a week, so no need to focus on it in the short term. Besides oil & gas, the focus is on electricity calculation, especially green energy and the lobster concept. The lobster sector continues to ferment, supported by some institutional research. Its underlying driver is computing power, as lobsters can directly mobilize TOKENS, which is a larger demand than human-driven needs. Additionally, lobsters are essentially connected to large models, with MINI being the best match currently, which explains why MINI continues to rise in Hong Kong stocks. On the green energy side, last Friday and Monday saw a rally in domestic electricity calculation concepts, which shifted in the Tuesday afternoon to offshore photovoltaic projects—concepts driven by expectations of performance. Overall, the core trend remains upward, focusing on leading stocks like Hang Electric, Yunnan Energy, and Huasheng.

Second: Opportunity Analysis:
Since Tuesday, oil & gas entered correction, while computing power and electricity sectors diverged. Lobster stocks strengthened, and offshore photovoltaic rebounded from lows. This reflects a divergence after a market peak, but data shows the market is overall recovering, mainly from low levels. This is interesting and challenging—funds are at the lows, but divergence at high levels takes time to resolve. For Wednesday, priority should be given to the sustainability of the offshore photovoltaic sector, such as batteries and inverters, followed by whether the electricity sector shows signs of recovery from weakness to strength, and finally, whether lobster stocks have new subdivisions emerging. As analyzed above, the computing power and models largely overlap with previous AI application targets, with many trapped funds, requiring more time. Lastly, besides the electricity calculation sector, the upcoming important meetings may also discuss green fuels like hydrogen energy, which could lead to sector rotations. Keep a close watch.

Special reminder: The above information is for reference only and does not constitute investment advice. No stock recommendations are provided! Investing involves risks; please proceed cautiously!