[Red Envelope] All positions closed! Historic low!

Long-time followers know that the only times I can go completely into cash are predictable [Taogu Ba].

The recent two weeks of black swan events combined with institutional selling didn’t allow me to fully exit the market. What risks do I see now?

Markets, if institutions can’t move the market, they turn to sentiment; if sentiment isn’t enough, they revert to institutional trends; if that fails, they consider quantitative strategies.

But what if the index, ecosystem, and themes all resonate and decline together?

How should you respond?

Let’s start with the index, which is also a big issue.

The Shanghai Composite Index has dropped to near the 60-day moving average for the third time, each time weaker than before.

The first time, just approaching this level.

The second time, breaking through and then bouncing back.

The third time, breaking through decisively with no follow-up.

Of course, the third decline needs to be judged at the open; this requires sensitivity to major market themes and institutional funds to recognize.

For example, I mentioned the CPO risk in the morning.

Yesterday, CPO was initially leading the decline, but semiconductor stocks rose during the session, and CPO didn’t continue falling. It seemed like stabilization, right? But this round of decline was driven by CPO. If CPO can’t lift itself, can we rely on others?

So, at market open today, I warned about the risks in the CPO sector.

Some may not understand how CPO sector risks relate to the index.

Let me explain: In the past, many times when the Wang Wang team brought social security funds into the market, they mostly bought CPO and its upstream and downstream stocks.

This round of CPO sell-off is somewhat like a bubble being punctured—like an AI bubble.

Although CPO stocks look like they’re being hammered hard, from a high position, the decline is only about 10 points. Each rebound at this stage carries uncertainty.

Only after CPO drops 20 points or more does it become a confirmed bottoming opportunity!

Of course, when I talk about bottoming, I mean at the institutional level. This decline might only bottom out around early April.

Regarding ecosystem declines, everyone can see this happening recently.

For example, the continuous downward pressure on certain stocks has pushed them below specific levels.

Previously, the maximum consecutive limit for some stocks was 9 or 10 days; now it’s down to 6-7 days. That’s a sign of ecosystem deterioration.

Recently, the maximum consecutive limit for the market’s top stocks has dropped significantly, and I won’t elaborate further.

Many stocks that hit the daily limit-up are down the next day, even opening deep in the water! Most institutional stocks, despite opening red, sell off unless actively bid at the opening. Quantitative trading causes a straight line down.

This is a downgrade of the ecosystem level.

If, at this point, there’s another downgrade in a theme sector—like green energy—it’s mainly what I want to discuss.

Last week, green energy stocks, with strong logic, saw funds operating for a week. Over the weekend, it was said to continue, but aside from Oriental Fortune, no other broker or platform signaled continuation.

But the sector still couldn’t rally.

This is like a natural disaster or man-made calamity.

In such cases, if three factors resonate and start declining together, it can be very dangerous!

When sentiment and index decline together, it’s just a tide going out—don’t even mention three-factor resonance!

So, this morning, when I saw the market at risk of such a resonance-driven decline, selling was the right move!

Now, about securities.

A few days ago, I mentioned that the market’s rally in securities was the last point for institutional funds to reduce their holdings.

By overlaying the trend of the securities sector with the index, you’ll understand what I mean.

Of course, today’s market isn’t without counterattack.

The recent strength in the new stocks sector is due to relatively few trapped and lurking positions.

It’s a kind of emotional capital attempt to lift the market!

Trying to drive the market purely through sentiment flow.

Basically like Clai Electric’s earlier approach!

If the market starts moving in this direction, we might see some limit-down days and continuous emotional floors.

It’s a mixed bag of good and bad.

But the sustainability of this approach remains uncertain.

If retail funds can’t rally and we rely on quantitative strategies, it’s also very difficult!

A clear example is the stock I bought yesterday, Shouhang New Energy.

Ningde Times’ Hong Kong stock has already shown leadership, but A-shares’ Ningde Times has lagged significantly.

Of course, Ningde’s large size explains its weakness recently.

Plus, energy storage stocks have seen several movements lately, so big stocks can’t move, and smaller, more flexible stocks are tried.

When Shouhang New Energy failed to rally, it showed market sentiment was also weak.

If new stocks want to continue rising tomorrow, the best approach is to go all-in high and high!

Even within the sector, a big contrast can be made, and supporting a major leader for a rally is also an option!

Finally, I want to say that such poor market conditions happen every year.

But at this stage, it’s often the lowest point of the year!

The subsequent market can come at any time!

It could be sentiment, it could be trend—either way, it will come, and it will come quickly!

Our only task is not to fall before dawn!

Teachers must understand that speculation is an ancient art, older than mountains! Today’s new stock rally is just the first attempt by sentiment funds. Even if it gets suppressed tomorrow, other directions will emerge afterward!

What we need to do is wait for that main rally that quantitative strategies can’t stop!