3.17 Review: Index Loses Support, Sentiment Breaks Through! Amid Divergence, Who Can Lead the Market Out of the Quagmire?

The three major indices collectively declined, with over 4,300 stocks in the red. The indices broke below the 60-day moving average, and trading volume shrank to 2.2 trillion. Technology hardware faced a heavy setback, while energy storage and wind power quietly resisted, showing a divergence between market sentiment and indices. Amidst a somber atmosphere, is the recent emotional rebound the end of risk release or a prelude to a new main trend? [Taogu Ba]

Following the Trend
Today, after opening flat, the indices surged in the morning but then pulled back, further declining in the afternoon. All three major indices closed lower, with the Shanghai Composite and the A-shares average stock index breaking below the 60-day moving average. Trading volume significantly decreased, totaling 22.079 billion yuan for the day, down 1.175 billion from previous. The main reason for the decline was large-cap stocks in hardware-related sectors experiencing sharp drops due to negative news, which dragged down the indices. Although major financial institutions attempted to support the market during the day, external negative news in the afternoon added pressure, and the indices ultimately closed at their lowest points.
After today’s sharp decline, the next few days are critical. If the market continues to fall tomorrow, the break below the support may be further confirmed, and the indices could test lower levels. However, considering the support efforts seen during the day, even if there is further decline, the space is limited, and the market still maintains expectations of forming a bottom.

In terms of themes, energy stocks outperformed technology today, with energy storage leading the way. Eight stocks hit the daily limit, with a total increase of 7.458 billion yuan. Guosheng Technology hit the limit 5 times in 11 days, Farsen doubled its limit 4 times, Chint Power 3 times, and Na Bai Chuan, a newer stock, hit the limit twice in 4 days.
Wind power-related power companies also hit the limit 5 times, with a total increase of 11.721 billion yuan. Shun Na Co., Ltd. led with 6 limit-ups in 11 days, and Xihua Technology hit 3 limit-ups.
Chemical stocks continued to adjust today, with 4 stocks hitting the limit, totaling 8.128 billion yuan in gains. Sanfangxiang hit 4 limit-ups, Chitianhua 3, and Luhua Technology and Jinjingda both rebounded to hit the limit again.
AI hardware led the decline today. At GTC 2026, Jensen Huang emphasized the importance of copper, and optical technology will be used for different dimensions of expansion, which directly triggered a sharp decline in optical communications and CPO sectors today. The “Three Swordsmen” of Yizhong Tian led the drop, especially impacting the ChiNext and Shenzhen indices. Among the stocks hitting the limit today, hardware stocks dominated, and large-cap stocks were mainly hardware-related.
Although the theme today remains chaotic, compared to yesterday, signals of energy outperforming technology are more evident. The key now is whether energy stocks can further consolidate and strengthen.

Market Sentiment Fluctuations
Today’s market performance was opposite to yesterday’s. Market sentiment reversed sharply, with the indices breaking support and individual stocks mostly declining. Nearly 4,300 stocks closed lower, with only over 800 stocks rising. Trading volume also decreased significantly.
Compared to the overall weakness of the indices, speculative sentiment, after two consecutive freezes, stabilized and rebounded earlier than the indices. Although the number of stocks hitting the limit increased to 10 today, the overall sentiment was relatively positive. On one hand, the rally of consecutive limit-up stocks was rare at this stage; on the other hand, recent sentiment-driven groupings have been quite positive. Shun Na doubled its limit-up, Jinniu continued to hit new highs, and Yunnan Energy started to stabilize after falling.

Thoughts for Tomorrow
Yesterday, I thought it was best to wait for signals of a new cycle, expecting the market to resonate with the indices. However, today, although sentiment improved, the indices continued to decline, showing a divergence between sentiment and the market. The key point to watch in the broader trend is whether sentiment can lead the indices to rebound together or if the indices will drag sentiment down further.
If sentiment and the indices rebound together, focus should remain on their resonance. Today, technology stocks collapsed while energy stocks resisted, with energy stocks having the advantage. If energy stocks continue to strengthen, it may signal the emergence of a new main trend.
Additionally, from a style perspective, the current retreat in sentiment started before the Year-End, triggered by regulatory crackdowns on commercial aerospace speculation, marked by the regulatory crackdown on Lio. Over the past two months, although sentiment groups have been avoiding risks through snake-like movements, the overall style has remained active. Today, the collective adjustment of large-cap stocks has created a situation where sentiment is strong but institutions are weak. The key moving forward is whether this style shift can further revert to a sentiment-driven market.

In summary, the retreat of sentiment shows signs of ending. The main trend is still unclear, but it feels like dawn is not far away. Holding onto hope, I continue to wait for the right moment.

Trading Notes
Today, I held two stocks: I bought Jin Niu Chemical early in the session, sold at the top, and then saw a slight pullback but managed to rally again at the end of the day.
Another stock, Shun Na Co., Ltd., was sold completely at the open. In the afternoon, it moved slightly and was bought back near the flat level.
I opened a new position in Yunnan Energy Holdings, buying on dips. Despite multiple attempts to rise, it faced resistance and pulled back, so I am holding roughly break-even.

Post-market holdings: Shun Na Co., Jin Niu Chemical, Yunnan Energy Holdings.

Data Summary

☑ Disclaimer: The above is solely my personal review notes. Any opinions or stocks mentioned are for illustration only and do not constitute investment advice. Please do not follow blindly. Trading involves risks; invest cautiously!
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