March 10 Review - Frustrating Market, Quantitative Control, Profit Next Day, Watch More, Act Less

1. Index Level, [Taogu Ba]
After a secondary pullback, the index has experienced a sharp rebound mainly driven by trend-following stocks. Over the past two weeks, the indices have been like a seesaw with oil prices—rising oil prices cause the index to fall, and falling oil prices cause the index to rise. Currently, the main trend for March remains wide-range volatility. Neither the index nor various sectors should be overly expected. Apart from the computational collaboration sector, which shows some persistence, most indices and stocks are just oversold rebounds that are unlikely to sustain. Many established trends are more about moving from 2 to 1, or from 1 to 2, or from 3 to 1, etc.

Currently, 4125 is a resistance level for the index. I expect a rise tomorrow followed by a pullback. The current average volume of 25 trillion yuan is insignificant for the index. It’s best for March to close with a downward candle, and April will be more promising. Since the market has already fallen sharply, trying to force a rebound now would be counterproductive. First, volume is thin, and a forced rally would just cause frantic rotation, making it hard for retail investors to profit. Second, attempting to push the index up now could lead to a correction in April because the focus is scattered, and unstable chips could cause a reversal. If a rally cannot generate profits, and a correction in April also yields no gains, it becomes meaningless. Therefore, after a sharp decline, it’s better to let the market oscillate thoroughly, using time to gain space. This will make it easier to focus and for retail investors to profit after April.

2. Sector Direction,

Given the current market characterized by low volume, wide-range volatility, and uncertain external conditions, focusing on sectors at this moment seems unwise. The environment involves shrinking volume, rapid rotation, quantitative control, and external conflicts, making sector focus difficult. Only localized sentiment exists, whether benefiting from external conflicts or other themes.

For example, last week’s external conflict benefit sectors—oil, chemicals, natural gas, non-ferrous metals, military industry, shipping—lacked clear focus. Except for oil, other sectors experienced significant dips on subsequent days. Chasing into them with hesitation often results in deep traps. Even in the most directly related sector, oil, which appeared strong, was just a quantitative flattening. By the third day, it also saw sharp declines. How many retail investors are still caught in oil positions? They can only hope for escalation of external conflicts to push prices higher again.

(Note: Futures are zero-sum games, stocks are positive-sum. Futures involve pure contract betting, with balanced long and short positions. The profits of longs are the losses of shorts, and vice versa. There’s no scenario where everyone profits. For example, even if crude oil futures rise to $120/barrel, many shorts will be forced to cover or face bankruptcy, which limits further gains. When longs are forced to close or short positions increase, the trend may reverse. The same applies to other sectors—if the market moves sharply, the imbalance between longs and shorts will cause a reversal. This is the fundamental rule of futures trading—it’s a zero-sum game. When the market is unbalanced, prices tend to reverse short-term. Unlike stocks, which can appreciate due to valuation increases, performance growth, or equity issuance, futures are purely contractual bets. Even in a bullish trend, there are large losses on the short side. Once the market accelerates and longs and shorts are unbalanced, a reversal is inevitable. For example, when crude oil hit $120, many shorts exited or were forced to cover. Without enough shorts, the price cannot go higher, and longs cannot profit. They will close positions or reverse to short. For the trend to continue, longs and shorts need to balance again. This is the core idea. Explaining it in detail takes more than a few words.)

Other rotation themes, like LED panels, diamond heat dissipation, are just short-term quant-driven moves with no real focus. The technology sector itself is affected by external conflicts, which tend to cause declines, and recent rotations are just temporary corrections without sustainability. There’s little to analyze. The recent “lobster concept” is essentially a new branch of AI applications, driven purely by quantification, with localized sentiment. The current environment offers no meaningful focus or sustainability. At most, some leading stocks like Youke, Ningbo, and Meili have expectations. I don’t recommend paying attention to others—they are just rotations, and chasing them risks getting trapped.

The only sector with some persistence is computational collaboration. Given the current chaotic market—shrinking volume, wide oscillations, rotations, external conflicts—this sector is more driven by sentiment focus rather than sector fundamentals. Besides a few leading stocks, most are changing daily, and even the leaders aren’t necessarily stronger. Use computational collaboration as sentiment-driven, not sector-based. Focus on a few top stocks like ShunNa, Guodian, GCL, Xidian, Nengjian, Nanjing Grid, Dongfang, Jinkai, Hangdian, etc., for low buy-ins. Avoid chasing highs. Even if a trend emerges, it’s likely to weaken the next day. Always buy low, don’t chase high.

3. Sentiment Direction,

Currently, there’s little short-term sentiment. Market style has changed. The big short-term capital players who once led sentiment are now hard to find. Without their influence, maintaining strong short-term sentiment is difficult. Recently, the market has been weak, with quant control and various rallies based on initial setups and stories, then flattening out. Previously, divergences might have caused a 3-4% correction, but now divergences are deep, with many quant-driven stocks experiencing sharp dips after rallies, sometimes even breaking lows before rebounding. Most retail investors can’t withstand this rhythm.

Therefore, there’s no real short-term sentiment atmosphere now.
For example, the concept of consecutive limit-ups has lost its height. Even after a rare breakout like Yunnan Energy, it failed to break through. Last week’s maximum consecutive limit was only two. These are just rebounds after a limit-up pause, with low market expectations. After three or four limit-ups, most funds prefer to exit rather than continue. Today’s top stock, Langli with five limit-ups, and Ningbo with three, have no chance to break out. When opportunities arise, they’re often missed or lead to traps.

Similarly, sentiment-based groupings are no longer visible. Most are trend-based now.

For example, single-direction trades driven by large orders—like Ningbo’s overnight 10 billion yuan block—fail to sustain. In the past, such a move would trigger a big rally, but yesterday’s early action was quickly reversed today.

Likewise, arbitrage strategies like “watch A, do B” are almost nonexistent now. If you try such trades, you’re likely to get trapped.

In summary, the current market style doesn’t support short-term sentiment strategies. It’s not worth forcing it. Wait until genuine sentiment recovery appears. Using short-term sentiment to trade now, apart from a few top stocks, will mostly lead to losses. Focus on trend-following low buys. The computational collaboration sector has some resilience, so stick to a few top stocks, buy low, and avoid chasing highs.

4. Brief Summary,

For indices, don’t hold high expectations. Expect mainly wide-range oscillation. Only some local sectors may show slight persistence, but most won’t. Tomorrow, if the index can’t hold above 4130 after a rise, be cautious of a pullback.

For sectors, don’t focus on sector themes now; wait until April. Most intra-day hot spots are just quant-driven rallies, often reversing the next day. Even if some sectors like computational collaboration show some persistence, only a few top stocks are suitable for low buy-ins. Avoid chasing highs. Most secondary stocks in these sectors rotate daily, making trading less meaningful. Besides the top stocks, a few other trend-leading stocks like Huagong, HuiLv, Kexiang, etc., can be bought low, but don’t chase high or buy into the strongest stocks.

Regarding sentiment, there’s no short-term sentiment atmosphere now. Old strategies like short-term groupings, consecutive limit-ups, arbitrage, and divergence trading are no longer applicable. Even among top stocks, few can be grouped into short-term sentiment plays. Don’t try to force these strategies now. Once the market’s sentiment recovers, then consider it. Currently, using short-term sentiment to trade, apart from a few top stocks, will mostly result in being trapped. The only somewhat reliable sentiment is in computational collaboration, focusing on top stocks, buying low, and avoiding chasing highs.

In conclusion, the market is difficult to trade. Ordinary retail investors are advised to watch more and act less, keep positions light, and wait for clear bullish signals before taking action. There’s no rush to buy now; acting prematurely may lead to traps and passive waiting for recovery.