Rebirth of the Capital Legend

"Indeed, from the perspective of the chip structure, small and medium-sized stocks and micro-cap stocks have rebounded violently for several days in a row, and have begun to generally touch the historical locked-in area above them." Zhang Wei nodded slightly and responded, "Once they generally touch the heavy historical locked-in area above, coupled with the selling pressure of profit-taking in recent days, as long as the market's hot bullish sentiment subsides slightly, and the follow-up buying is no longer so strong, then the small and medium-sized stocks and micro-cap stocks will most likely enter the adjustment stage again. As for the expected adjustment trend in the future...

Will it be a benign adjustment or a malignant adjustment?

Is it a pullback after moving out of the bullish trend, or is it a continuation of the previous overall long-term downward trend after an oversold rebound?

I'm afraid it also depends on the depth of involvement of long funds in small and medium-sized and micro-cap stocks, as well as the sustainability of volume.

If the small and medium-cap and micro-cap stocks want to transform from the current oversold rebound trend into a trend reversal trend, they cannot simply rely on emotional speculation and a group of short-term funds within the market to follow suit. They must allow institutional funds that dare to lock positions and require time periods to enter and exit to enter the market and take over the long positions.

As for the current market trend and trading volume.

Most of these institutional main capital groups still have many concerns about small, medium and micro-cap stocks, and not many dare to intervene in positions.

At the same time, don’t underestimate the strong rebound of small and medium-sized stocks and micro-cap stocks.

But in fact, the volume feedback is not ideal.

Even in the case of a collective surge like today, the trading volume of the entire small and medium-sized and micro-cap stocks has not been significantly expanded compared to yesterday.

On the contrary, the volume of the "big infrastructure" line has increased a lot today, and two differences have been resolved during the trading session.

That is to say...

The line of small and medium-sized stocks and micro-cap stocks has rebounded rapidly after this wave of rapid market conditions.

It is highly likely that it will have to go through the test of divergence under the dual pressure of heavy historical trapped positions and recent profit-taking positions. Only after the divergence turns into consensus with a large volume of volume can the hardness and height of this line be truly determined.

At present, it is definitely better to view it as an 'oversold rebound'.

When the market is hot, it is important to lower your expectations appropriately and take profit positions at the right time when the emotions are at their peak, so that you can take the initiative in the market. "

"Mr. Zhang, what you mean is... based on the current market feedback, the 'big infrastructure' line is still stronger?" Zhao Zhiyuan asked, "And you think that the current uncertainty of the small and medium-sized and micro-cap lines is still very high, and it is difficult to develop a sustainable trend?"

Zhang Wei nodded and responded: "From the current market trend, the trend of 'big infrastructure' is definitely healthier. The trend of 'big infrastructure' has been rising all the way, and basically all the differences have been resolved during the trading session. The volume has increased and then decreased, and then the volume has increased again, and then continued to decrease and rise in unison. A lot of funds have flowed in and out, and the trend of the entire main line has been maintained in a virtuous cycle.

Moreover, there are many major capital groups that have intervened in the "big infrastructure" line in the early stage.

Now, the position is still locked.

Overall, don't underestimate the small and medium-sized stocks and micro-cap stocks, which have been rising sharply in recent days. In the past two days, the increase has been greater than that of the "big infrastructure" line, and it appears to be stronger on the surface.

But if we analyze it carefully, we can easily see that...

In terms of chip structure and actual buying, the "big infrastructure" line is the strongest main line in the entire market.

I think it is definitely not the right time for the so-called market investment style to change. As for whether it will really change in the future, we will have to wait and see."

"I agree with Lao Zhang's point of view." Liang Jiucheng said, "Look at the many core hot concept stocks that have rebounded from oversold prices, such as Quantong Education, LeTV, Huawen Online, Maruda Film and Television, Netspeed Technology, Baofeng Technology... These monster stocks and bull stocks in the last bull market still have a relatively poor internal chip structure. Under the same conditions... at this point in time.

I would definitely prefer to take over stocks such as 'Oriental Yuhong' and 'Huaxin Building Materials'.

But they are unwilling to chase high prices and take over stocks such as "Quantong Education" and "LeTV".

I believe that there are quite a few investors in the entire market who share the same ideas as Lao Zhang and I.

Therefore, I think that the line of small and medium-sized stocks and small and micro-cap stocks... is at a high point at the moment, and the corresponding stocks in the entire sector have begun to generally hit their daily limit.

You should still focus on taking profits, not be greedy, and not have too high expectations.

Think about it…

Faced with the heavy historical trapped positions concentrated in front, as well as the large number of profit-taking funds that intervened in the previous two days, there has been no major improvement in the fundamentals of the corresponding industry sectors such as Internet software, Internet applications, electronic information, etc., and there has been no major news stimulus.

These funds that are temporarily chasing high prices based on sentiment are really brave enough to release these historically trapped positions.

Will you take over these profit-taking orders with strength?

At the same time, with so much buying money in and out of the market, can we take advantage of the sentiment to stage a crazy speculation on small and medium-sized stocks like last year? I think it is difficult. "

"Well, the overall market environment now is definitely not comparable to last year." Zhao Zhiyuan agreed with Liang Jiucheng's comments on market liquidity and overall buying power, and responded, "However, the position of small and medium-sized stocks and micro-cap stocks is completely different from last year.

The share prices of many small, medium and micro-cap stocks are compared with last year's highs.

Basically, only two-fifths or even one-fifth is left.

At the same time, many heavyweight stocks, especially those in the A50 index, have mostly returned to their highs in last year's bull market.

Even though there are emerging industry sectors such as Internet software, Internet applications, film and television media, and electronic information.

There is no scenario where the fundamentals change or improve further.

But if we look at it from a longer-term perspective, will these industries still have relatively good prospects in the future? This should be undeniable, right?

Since future prospects remain good.

At the same time, the growth stocks in these emerging industries have almost digested their previously overvalued valuations after a brutal and continuous sell-off. Many stocks have even fallen to historical lows, resulting in a discount effect.

In this situation, it would be inappropriate to simply use the current chip structure for analysis, right?

in my opinion……

Although the main capital groups in the market are currently affected by the shadow of the stock market crash caused by the speculation of concept stocks last year and can only choose large-cap stocks for heavy holdings due to the liquidity crisis, a number of heavyweight stocks have been driven up by these institutional main funds and are gradually losing their investment cost-effectiveness.

I think these main capital groups will switch between high and low sooner or later.

In fact, in recent days, hasn't the internal chip structure of a number of heavyweight stocks, mainly those that make up the A50 index, been gradually loosening?

At this point, sentiment is positive and overall market expectations are gradually improving.

I feel like there is a shift in the main investment style of the market.

Moreover, one is relatively high and the other is extremely low.

Under this situation, it is reasonable to invest in high-quality growth stocks in Internet software, Internet applications, film and television media, electronic information, etc. that are severely oversold and have already squeezed out the valuation bubble, even if the wind does not come in the end and the expected change in market investment style is not achieved.

It shouldn't be a huge loss, right?

Overall, the investment and speculation cost-effectiveness of small and medium-sized stocks, as well as micro-cap stocks, are still relatively high.”

"The formation of a market investment style is not forged in a short period of time." Zhang Wei said, "Naturally, even if you want to change it, it cannot be changed in a short period of time. As I just said, the main funds of institutions are limited by liquidity, and it is relatively difficult to reduce, increase, and adjust positions.

For these major institutional capital groups that are large in size and have a greater impact on market trends.

What they care more about is certainty.

In terms of certainty, the current weighted main-line stocks and the "big infrastructure" main line that has formed a consistent expectation logic should be more in line with the logic of building and increasing positions of these major institutional funds.

As for the line of small and medium-sized caps and micro-caps.

Even at this level, many stocks have already fallen out of value for money.

However, without significant improvement in market liquidity and the release of more liquidity in the macro situation, the main institutional capital groups will certainly tend to be cautious about this line and will not easily intervene and increase their positions to go long.

In this market...

Undervaluation does not mean that the stock price will rise.

And relative overvaluation does not mean that the stock price will definitely fall.

When the bull market last year concentrated on speculation on small and medium-sized and micro-cap stocks, couldn't a lot of funds and investors see that the corresponding component stocks of the ChiNext, CSI 500 Index and QX 1000 Index were already seriously overvalued, overdrawing expectations for many years?

At that time, the so-called undervalued main-line stocks continued to underperform the market.

Did it go up because of underestimation?

We are not one of the main institutional funds with a long investment time span. When we trade, we take into account expectations and logical factors, but more importantly, we also pay attention to the power of trends.

From the perspective of trend development, the current market trends.

Undoubtedly, the strong trend of going long is still on the weighted main line, as well as the core main line of 'big infrastructure'! "

"Old Zhang is right." Liang Jiucheng said again, "From the perspective of the market trend, we should follow the trend instead of predicting it."

"Okay." Zhao Zhiyuan pondered for a moment and felt that what Liang Jiucheng and Zhang Wei said made some sense. He responded, "Then let's reduce our positions and take profits first, free up our positions, and wait until the subsequent trend is confirmed."

After saying that, he turned his attention back to the two markets and was preparing to sell off some of his stock holdings in the main sectors of emerging industries such as film and television media, Internet software, Internet applications, electronic information, etc.

As the three of them discussed...

The market trends have undergone new changes.

As the market trading hours progress further, in the main area of ​​'oversold rebound' that has already shown a trend of batch limit-up, many non-popular core concept stocks that had originally hit the limit-up board before 2 pm have begun to see a sharp decline in the limit-up orders.

At the same time, some small and medium-sized cap and micro-cap concept stocks that are not very popular have followed the trend and hit the daily limit.

At this time, the stock price has already started to explode.

Under the cover of the still hot bullish sentiment, many short-term capital groups with first-mover advantage are secretly dumping stocks and reducing positions to lock in profits.

Even after 2:40, when the market enters the final 20 minutes of trading session.

This situation of further increasing selling pressure and profit-taking by selling stocks to lock in profits began to appear more and more frequently in many popular core leading stocks.

At 2:43, the stock price of "Netspeed Technology" which had hit the daily limit suddenly collapsed.

At 2:45, the share price of LeTV fell back to around 6%.

At 2:49, the Shenzhen Composite Index, ChiNext Index, CSI 500 Index and CSI 1000 Index all showed a fluctuating downward trend, and the gains of the two market indices began to narrow again.

At 2:51, the hot stocks related to the main line of "big infrastructure" also came under pressure.

At 2:53, the daily limit orders for Quantong Education, which had hit three consecutive daily limit increases, dropped sharply, showing signs of an imminent collapse.

At 2:55, the stock price of Quantong Education fell.

At 2:56, the share price of Quantong Education plummeted to 6%. At the same time, the stocks related to the main line of "oversold rebound" of small and medium-sized stocks and micro-cap stocks, as well as the industry sector index trends, were driven to dive rapidly, and the growth rate of the ChiNext Index fell rapidly.

Finally, when 3 o'clock in the afternoon arrived, the two markets officially closed.

The core concept leading stock 'Quantong Education' saw its market increase drop sharply to 5.11%, while the ChiNext Index's market increase dropped sharply from the highest intraday level of 3.09% to 2.01%, and in the last ten minutes of the closing, it plunged by 1%.

At the same time, the Shanghai Composite Index fell back to close at 3007.29, barely standing above the 3000 point mark.

"Alas, I thought the trend would accelerate at the end of the trading day, but I didn't expect... another dive." Seeing the final closing situation of the two markets, Zheng Jinming, one of the main speculators of the 'Gusu system', said speechlessly, "I watched for a while and didn't reduce my positions in the end of the trading day, so I had a little more hope. It's really... a little disappointing. With this trend at the end of the trading day, the market will most likely be under pressure when it opens tomorrow morning. It's hard to say whether the 3000 points that we barely stood at today can be maintained tomorrow."

"Indeed, this late trading trend is really disgusting." He nodded and responded, "It's only how much it has risen, and the group of funds that took advantage of the late trading have begun to generally rush to run. Sigh... these guys in China really lack a pattern. It has come to this point, can't they just make a concerted effort to push the index point up first and create space first? As long as the index has space, investment confidence will be restored as a whole. Whether it is short-term or long-term, it will be much easier to do. This dive... the original certainty has been destroyed again."