March 24 Review Notes

Today, the index opened high and then declined, only to rally again and close higher. Everyone knew about the high open, and the intraday dip was predictable—after all, the main strength of the A-shares is their volatility. Fortunately, other Asian markets like Japan and South Korea also rallied in the afternoon, so the A-shares followed suit, which was good. Another reason for the afternoon rally was that crude oil prices retreated back to around $100 without a V-shaped rebound, which was the fundamental reason the A-shares could rally in the afternoon. [Taoguba]
However, the core issue is that today’s trading volume continued to be sluggish, only 2 billion yuan, 400 billion yuan less than yesterday, indicating that this rebound lacks volume support. The index again tested the 3800-point level and rebounded, reaffirming that 3800 is a strong support level. Currently, the Middle East situation is extremely complex, with about 800 news reports a day—many false and true, confusing everyone. Goldman Sachs predicts that if the Strait of Hormuz remains blocked until the end of April, Brent crude could rise to $150. Currently, it fluctuates around $100-110. On the other hand, Yellow Hair (a nickname for a certain political figure) says he is preparing for talks with Little Iran, but Little Iran immediately denies having any negotiations. Meanwhile, Yellow Hair is also deploying ground forces in the Middle East.
In my personal opinion, short-term negotiations are unlikely because negotiations require leverage. Without leverage, you cannot sit at the bargaining table. Yellow Hair understands this. I believe his current talk of negotiations is a delaying tactic; he wants more time to deploy the next move, possibly to seize islands or strike Iran’s critical points. He’s not fully prepared yet because he needs to first gain the initiative in the war situation and secure advantageous conditions before seeking talks with Little Iran. Only then can the U.S. hold a dominant position at the negotiation table. Currently, Yellow Hair has no leverage—oil prices have risen from $70 to $100, and as long as Little Iran continues to block the Strait of Hormuz, oil prices will keep rising, which is Iran’s biggest leverage. Meanwhile, Yellow Hair is suffering domestically and internationally, having failed to inflict serious damage on Iran in recent weeks, which has instead fueled anti-American sentiment within Iran and led to the rise of hardline leaders. Therefore, Yellow Hair has no chips to negotiate with Iran. Iran has already made some high demands, such as demanding the U.S. close all military bases in the Middle East, which is a bluff since they know the U.S. will not agree. It’s normal for Iran to ask for sky-high terms before negotiations, but the U.S. currently has no bargaining chips.
During the Korean War, our revolutionary ancestors repeatedly forced the U.S. back to the negotiation table, demanding unconditional withdrawal from the 38th parallel. That set a precedent. If we hadn’t defeated the U.S. there, they would have continued to make excessive demands at the negotiation table, risking territorial concessions and reparations similar to the Qing Dynasty’s loss of territory and payments. I believe that when the U.S. has no bargaining chips, Yellow Hair will not truly sit down to negotiate with Little Iran. Most likely, the U.S. will organize a force to strike Iran, prompting Yellow Hair to seek negotiations afterward, so he can gain an advantage at the bargaining table. Otherwise, if he directly negotiates with Iran now, Iran will demand sky-high terms, which Yellow Hair cannot accept. He also cannot accept a war that ends without any “victory fruits,” as that would mean no mid-term election. So I think this is just the calm before the storm.
Based on these views, I believe that in the short term, global stock markets will continue to rebound before the U.S. and Little Iran face a decisive battle. When that happens, crude oil will surge sharply, possibly above $130. The next day, global stocks will plummet, wiping out the gains from the recent rebound, trapping those who kept adding positions during the rally at high prices. I’ve always believed that the best time to add positions is when the Shanghai Composite breaks above 4200 with volume, as other times are not ideal for accumulation. Alternatively, wait until the U.S. and Iran actually sit at the negotiation table and reach a consensus, then re-enter the market. That would mean the biggest external uncertainty has been resolved. If they don’t reach an agreement, sitting at the negotiation table is meaningless because, during the Korean War, we repeatedly sat down, fought again, negotiated again, until the U.S. unconditionally withdrew. Negotiation is a process of back-and-forth tug-of-war. With the U.S.-Iran talks, it’s unlikely they will reach an agreement in one go. That’s my personal view.
These opinions are just my personal thoughts and for reference only. They do not constitute any advice. My views may not be correct; everyone should gather more information, form their own judgment, and make decisions. Don’t rely solely on my words or other bloggers’ opinions—think for yourself. Currently, I prefer a strategy of low-buying crude oil because I believe the conflict will continue, and there won’t be negotiations in the short term. I think crude oil can still rise. At around $100, I see it as undervalued. Recently, I’ve been doing crude oil T+0 trading: when crude drops to around $100, I buy oversold oil stocks at the bottom, and when Brent crude rises during the day, I reduce my positions. That’s how I do high-low trading. I also trade coal LOF (listed open-ended fund), but I don’t recommend everyone to trade LOFs because they are very volatile. Just understand that today’s coal LOF hit the daily limit up, but stocks that hit the limit can also fall to the limit down the next day. If you can’t handle big risks, don’t touch these. The same applies to crude oil LOFs or crude oil stocks—they carry significant risk. If the U.S. and Iran reach a short-term deal and Brent crude drops to $80, your oil stocks could fall at least 20%. So, consider whether you can bear the risk before buying these stocks or sectors.
Today, most stocks rebounded. For example, Yiwei Lithium Energy was oversold intraday; if you didn’t dare to buy low, just sell the stock and stay out. It indicates you don’t truly believe in it or haven’t practiced high-low trading. Someone asked if they can buy low; I’ve said this a hundred times and am tired of repeating. Manage your own account. Yuntianhua also declined with volume today. When it was high at around 40 yuan, I said the spring planting hype was over. It’s now down about 20%. The support level for Yuntianhua is around 33 yuan; below that, it could fall to about 28.5 yuan. I won’t go into other stocks.
Also, pay attention to which sectors fell less during yesterday’s big drop and which rebounded more today. That indicates those sectors are strong, with strong capital support. They can maintain their positions even during panic selling, showing the main players have a broader view. Such sectors and stocks are more suitable for holding now because they fall less and rise more. Look for similar sectors or stocks; these are good stocks to hold.