3.27 Month-End Effect!

Huadian Liaoning (sh600396) Brief Note: Many experts have said that this March has been the most difficult in recent years, mainly due to external conflicts causing a decline in indices. With liquidity exhaustion in the U.S., our A-shares and Hong Kong stocks have also experienced indiscriminate deleveraging. Institutional caution has gradually made the market more challenging. For example, recently, as negotiations between the U.S. and Iran gained momentum, the news of liquidity exhaustion in the U.S. was amplified by domestic institutions. So, institutions are still reducing positions and waiting, with trading volume dropping below 2 trillion yuan again. Regarding hot topics, leading cloud computing company Huadian Liaoning started to hit the limit on Thursday. Other sectors like cloud computing and computing power have already declined over Wednesday and Thursday. If Huadian Liaoning begins to consolidate or fall, this sector is likely to see further retreat, which confirms the pre-market analysis from Thursday’s article that predicted this computing sector downturn. Lastly, while discussing risks, I also want to mention some opportunities. At the end of March and early April, two directions may present opportunities: one is oversold sectors, such as recent military industry and commercial aerospace, which are quick-in quick-out types, with rebound potential; the other is performance-related sectors like lithium battery materials, lithium mines, and energy storage, which can be accumulated on dips. Next, I will analyze index levels and sentiment cycles:

1. Index Cycle Thinking:

After a two-day rebound, the index reached the gap level and started to decline, then filled the lower gap. From this perspective, the recent rebound has been relatively weak, mainly because institutions are still reducing positions to hedge against external uncertainties, putting pressure on the index’s upward movement. Therefore, the outlook for the index is likely to be range-bound, continuously searching for upper and lower bounds. This is my analysis of the index cycle.

2. Sentiment Cycle Projection:

First, Dragon Analysis: After the decline of the conflict-related concept driven by JinNiu Chemical, and now Huadian Liaoning hitting the limit, but with the latter already falling for two days, it indicates that March has been dominated by speculative trading. Currently, during Huadian Liaoning’s 9-day streak of limit-ups, it encountered its first break after a late-session rush. In the short term, funds may attempt to gamble on high-level fluctuations. If Huadian Liaoning truly hits the limit, a rebound is inevitable. If not, and it only consolidates at high levels, then low-level rebounds will be more difficult. Therefore, at the end of the month, it’s best to observe more when betting on leading stocks.

Second: Opportunity Analysis: On Thursday, amid continuous institutional deleveraging and downward pressure on the index, almost all sectors declined except a few new energy sectors, resonating with the overall index decline. Looking at the entire power sector, short-term speculation seems to have peaked, and the market is likely to enter a phase of high-level consolidation and rotation. However, due to ongoing institutional deleveraging, trading volume may shrink, shortening the duration of sector rotations. In this environment, investors can choose to participate in group stocks, oversold sectors, or fundamentally strong sectors to position for April’s market. For group stocks, most of the recent winners are small-cap stocks at low prices—be cautious to distinguish them. Other sectors have been discussed in my previous notes. Overall, when leading stocks start to hit the limit, the market’s profit-making ability tends to weaken, so risk control and trading rhythm are important.

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