3.10 Review: Calculating Electricity's First Major Disagreement. Who did the market wrongfully punish today?

Shunna failed to advance from 4 to 5, and the late rebound was hopeless, causing a collapse among many electronic computing stocks. Meili Y and Jinkai both experienced significant upward movements. Regarding the limit-up direction, only six targets remain, three of which are straight-up limit-ups, meaning that most traders daring to buy today are likely to face losses. Meanwhile, the old leaders are moving collectively, with Chukai and Jiamei both hitting the daily limit. Does this indicate that current market sentiment is still chaotic and uncertain, and that a major upward trend is still unlikely?

Shunna
As the second phase of the power sector’s sentiment driver, I mentioned yesterday that 4-5 is a critical hurdle, so today’s focus should be on that. During the bidding, Shunna showed a weak straight-up limit-up order, and the rapid limit-down yesterday, which drove the electronic computing sector to rebound, was expected. Therefore, there’s no need to push for a breakout here. The reason is that from the first to the fourth limit-up, Shunna mostly advanced with decreasing volume and no divergence. If it advances again today with a straight-up limit-up, and doesn’t open the market, that’s fine. But once it opens, the selling pressure inside the market will be hard to absorb. We see that throughout the day, Shunna attempted multiple rebounds, but due to a chip disconnect, volume divergence made it very difficult to close the gap.
Although today’s attempt to advance failed, compared to its smaller peers, Shunna’s negative feedback was not significant, and funds still hold expectations for a rebound tomorrow. Currently, this is the second phase of the power grid hype, after the first phase with Yunnan Energy, which continued sideways after a limit-down, transitioning into a trend. The core of the second phase is Shunna. Tomorrow, it’s important to watch whether it makes a new high on a rebound. If it does, the sentiment driver will still be Shunna. If it continues to fall further, then watch for the sentiment driver to be low within today’s first and second limit-ups.

Meili Y / Jinkai
These two large-cap stocks probably caused many traders to get caught today. Both Jinkai and Meili Y opened with huge volume during bidding. From a bidding perspective, there’s no issue, but given the trend capacity expansion, if they open lower despite the bidding indicating a bullish trend, it warrants caution. Both opened too high, which is unfriendly to off-market participants. Moreover, if they narrow volume early on with divergence in the sector, there’s a high risk of funds cashing out.
However, after today’s divergence, Meili Y and Jinkai are likely to be misjudged and sold off. If the theme recovers tomorrow, one of these two will probably attempt a rebound or a reversal. It all depends on where the funds choose to go.

Huasheng / Tuowei
Yesterday, Huasheng was pushed to a second limit-up by Tuowei, but today Huasheng finally started to fight back and regain its position as the leading power stock. Recall yesterday’s analysis: although Huasheng was somewhat passive yesterday, structurally it still followed a trend upward along the five-day moving average. Today, it reversed and surged in the afternoon, guiding funds to try to flow back into the power sector. Although unsuccessful, this shows initiative. For the power sector to recover significantly tomorrow, Huasheng will need to speak up again!
Tuowei’s opening today was below expectations, which foreshadowed sector divergence today. Despite the poor performance, Huasheng reclaimed its leading position. However, this doesn’t mean Tuowei will become a smaller player. Since the sector is still in a rotation phase—where the strongest sector is quickly realized and cash out—core stocks within the sector, like Tuowei, Huasheng, and Great Wall, also rotate daily. In such a low-continuity market, either stay flat or follow quantitative strategies if confident.

Yunnan Energy / Hang Electric
Today, Hang Electric continued to outperform Yunnan Energy. Yunnan Energy’s movement today was clearly controlled by major players, with expectations of a breakout on Friday. If it successfully breaks out, it could lead the sector into another upward phase, but caution is needed as the breakout day might also be a profit-taking day.
Hang Electric maintained above the five-day moving average, and under the extreme negative feedback from the sector’s continuous limit-ups, the five-day line’s profit-taking effect is spreading rapidly. Stocks like Huagong, Yasheng, and Yunnan Energy are all trending along the five-day line. Even Tongding, which broke down a few days ago, returned above the five-day support today. This indicates that current trend style outweighs the sector’s limit-up relay. However, be aware that as the negative feedback from the limit-up relay intensifies and the profit-taking effect on the trend increases, the market’s momentum may reverse—yet, most traders are now focusing on trend-following, which has brought back the favor for limit-up relays.

That concludes today’s review and outlook. Reviewing the market is not easy; your likes and follows motivate me to keep analyzing. If you have questions after reading, feel free to discuss in the comments. See you tomorrow!