3.25 How similar!

Huaneng Liaoning Power (600396) Brief Note: Previously, I mentioned that the US-Iran conflict was expected to have a resolution soon. The night before I wrote the article, Trump announced that negotiations had already begun. Although Iran later denied this, subsequent news confirmed signs of negotiations starting. This is very important because the market rebound only needs a trigger. As a result, the index began to shrink in volume and rebound from oversold levels, forming a rare large bullish candlestick. Looking at the index pattern, it closely resembles the pattern during the Russia-Ukraine war last year, but the current index level and trading volume are higher, so don’t get too caught up in the drama. In the short term, focus on filling the gap.

From a macro perspective, if the US-Iran conflict begins to gradually negotiate and ease, becoming less intense than before, funds will start to look for the major trend of the year. At that point, public and private funds, institutions, and medium- to long-term capital will gradually enter the market. The two themes I mentioned earlier are: one, the growth of computing power and cloud services driven by token exports; and two, the logic of energy substitution through photovoltaic exports. Keep an eye on some core stocks, especially those that rebound early and hit new highs. Next, analyze based on index levels and sentiment cycles:

1. Index Cycle Thinking:

After the US-Iran situation eases, the index has begun a large rebound with decreasing volume. From the perspective of volume contraction, the index is likely to test the bottom further, continuing to challenge support levels at 3800 and 3850 points. Once support is confirmed, the index will attempt to break through upward, aiming to fill the gap. This is my view on the index cycle.

2. Sentiment Cycle Projection:

First, Dragon Analysis: In March, there were quite a few leading stocks. During pessimistic markets, opportunities for group manipulation of speculative stocks emerged. Earlier, conflicts favored sectors like Jinniu Chemical, and later, electric power-related stocks such as Huadian Energy and Huadian Liaoning Power. Of these, Huadian Liaoning Power, with seven consecutive limit-ups, is currently the most volatile. Based on recent news, this stock is unlikely to die in the short term. The electric power sector also has repeated rebound opportunities. As we approach next month, the strength of the electric power sector reflects the strength of energy substitution. Since they share the same logic but are different segments, in April, during the quarterly earnings release, finding stocks with good performance to lead the trend is the market’s focus. Pay attention to photovoltaic export opportunities.

Second: Opportunity Analysis: As I wrote before, after continuous overselling, the index has started to rebound. There are mainly two sectors with the most opportunities: one is the current main theme, such as energy substitution, which includes electric power cooperation, various power sectors, and photovoltaic exports; the other is sectors that have fallen significantly, like military stocks that surged on Tuesday, which are expected to rebound from oversold levels. Other heavily fallen sectors include AI applications and computing power, which can be actively explored. However, at this point, the market has produced big volatile stocks like Huadian Liaoning Power, with seven consecutive limit-ups, and the index has started to rebound again. Although oversold stocks are more attractive now, institutional and sector funds, as well as medium- and long-term capital, may seize the opportunity to build positions in main themes, especially since the index has risen to a high level.

Overall, when the index declines, it’s more about left-side trading, as summarized in last Friday’s and Monday’s articles. When the index begins to rebound, it shifts to right-side trading, focusing on leading rebound sectors and new highs. These are the key points moving forward. I still believe there will be big opportunities similar to last year’s CPO, although the gains may be smaller due to the index’s high level. I recommend actively deploying and gradually participating.

Special Reminder: The above information is for reference only and does not constitute investment advice. No stock recommendations are provided! Investing involves risks; please trade cautiously!