Extreme Rotation Stirred by Middle East Conflict: How to Achieve Smooth and Seamless Flow? Refer to this

Hello everyone! The current market exhibits extremely dynamic rotation characteristics. I wonder how everyone is doing? My feeling is: if you grasp the rhythm well, you can navigate smoothly; but if you don’t, it’s very easy to fall into the trap of chasing gains and selling losses. So, how should we approach such extreme rotation markets? I shared detailed insights during last Thursday’s live broadcast, and today I will summarize them in writing, hoping to help more friends. [Taogu Ba]
1. Quantitative + news chaos intensifies market rotation
** (1) Quantitative trading amplifies market volatility.**
Quantitative trading is a keyword we often mention. Over the weekend, discussions about quant strategies heated up again. A well-known fund manager pointed out that the scale of quant funds continues to grow, mainly holding small-cap stocks. Once the market turns, it could cause significant impacts on overall wealth. The Two Sessions also pay close attention to this. On March 6, during an economic press conference, regulators explicitly stated the need to “deepen and refine high-frequency quantitative trading regulation,” with the overall principle of: seek profits, avoid harms, regulate development, and control risks effectively. The top-level guidance is clear, and we expect specific regulatory rules to be introduced soon. We’ll wait and see.
** (2) Confusing information environment increases market volatility.**
Recently, the Middle East situation has escalated unexpectedly. Contrary to widespread expectations that the situation would calm quickly, the developments have been complex and volatile, with regional tensions persisting and global risk aversion rising. Both the overall trend and hot sectors in A-shares have been disturbed by external news to varying degrees, making market rhythm harder to grasp.
** (3) Specific market volatility: Hotspot rotation as an example**
According to Tonghuashun’s “Hotspot Cycle Table,” the top three hotspots last week were: oil and gas extraction, small metals, and power grid equipment. Let’s review their rotation trajectories:

1. Oil and gas extraction and services: ranked top from March 2-4, but fell to the bottom of the market last Thursday and Friday. Based on our “W-shaped” rotation thinking, this sector is likely to rebound to the front in the next session.
2. Small metals: ranked eighth on Monday, dropped to second last on Tuesday, rebounded to sixth on Wednesday, fell again to fifth last on Thursday, and continued to seventh last on Friday. Given this high-low switching rhythm, it’s quite possible to return to the top of the gain list tomorrow.
3. Power grid equipment: ranked among the top two on Wednesday and Thursday, but not in the top gainers on Friday, though its performance was not weak. According to the “Hotspot Cycle Table” and rotation rules, whether it continues strong or adjusts tomorrow depends on intra-day capital flow analysis.

These cases show that if you only chase gains and sell losses, losing money is inevitable—and losing quickly too. But if you excel at using contrarian thinking to catch the rhythm, you could become a master of timing and dominate the market!
2. Recent hot topics and their logic
** (1) Review of last Friday’s hotspots**
Last Friday, the three major indices all closed higher, with normal relationships between the yellow and white lines. However, due to uncertain news over the weekend, funds preferred defensive sectors. Leading sectors included agriculture, chemicals, and electricity, with some performance in AI-related sectors.

From a sustainability perspective, power and computing sectors were the strongest that day. The main reasons are:

1. Complete ladder of consecutive boards: the highest was 3 boards; power sector had a full 3-2-1 ladder (Shun Na Shares + Han Lan Shares 3 consecutive boards, Taihao Technology 2 boards, Jinkai New Energy first board with a straight-up limit);
2. Most limit-ups: 13 power sector stocks hit the daily limit, ranking first in the market;
3. New branches emerging: “Compute-Electricity Collaboration” attracted market attention, with 6 stocks hitting the limit. Why did “Compute-Electricity Collaboration” ferment? The core logic is: “Computing power’s ultimate is electricity.”
   ** (2) Hotspots fermenting over the weekend**
   Over the weekend, the most discussed directions were “Little Lobster” (OpenClaw) and Middle East tensions (non-ferrous metals, oil). Additionally, commercial aerospace also gained some attention, as a direction with expectations gap.
   ** 1. About “Little Lobster”**
   Whether from media or institutions, over the weekend, the “Little Lobster” concept was widely promoted, even with policy support from local governments—hot topic level. Many friends tend to analyze based on facts, but students in the training camp should realize: “Little Lobster” is essentially a new branch of computing power application. OpenClaw, as an AI agent capable of autonomous task execution, depends entirely on computing power; its high token consumption also makes it a “super engine” driving demand for computing resources.
   By clarifying this, we see a clear logical chain: electricity (the foundation of computing power) → computing power → “Little Lobster” (a new direction for computing power application). Only by understanding this path can you more accurately catch the rhythm of hotspots and identify core stocks.
   ** 2. Middle East direction**
   Over the weekend, Middle East tensions escalated, with Brent and WTI crude oil prices soaring, the Strait of Hormuz shipping being obstructed, and supply risk premiums rising rapidly. It’s expected that oil, gas, and chemical sectors may perform tomorrow. But a reminder: the hottest hotspots over the weekend often see high opening and then retreat or fall back on Monday. How to respond?
   If you want to participate, wait for intra-day “divergence turning stronger” signals—after a rise, a pullback, then a renewed strength—these are safer entry points. This strategy can effectively avoid many risks of opening high and falling. Of course, based on our system, a better approach is to have already positioned last Friday using rotation thinking, and tomorrow is the day to realize those expectations.
   ** 3. Commercial aerospace**
   The meeting clearly states that in fields like integrated circuits, satellite internet, domestically-made large aircraft, and national integrated computing networks, major projects with long chains and large scale—trillions of yuan—will be built to lay foundational, long-term “national heavy equipment.” Don’t think that “commercial aerospace” is dead just because the words aren’t explicitly mentioned. Without commercial aerospace, there’s no satellite internet. It’s a future expectations gap direction.
   Note that: expectations gap directions don’t necessarily perform the weakest the next day. In hot market rotation, the sectors fermenting most over the weekend often surge high and then fall back, while those relatively low-key over the weekend may rise through capital rotation.
   3. Main recent patterns and strategies
   Recently, the training camp has focused on three main directions: price increase lines, new hotspots, and commercial aerospace, each with different tactics. As a member of Taoxian “Hall of Fame,” we strictly follow platform rules, avoiding specific stocks and performance disclosures, but that doesn’t mean we’re not excellent or that our sharing lacks value. Please understand.
   ** (1) Approach for new hotspots: “Trust early, trust fast.”**
   For newly emerging hotspots, our core idea is “trust early, trust fast.” The advantage is: if the direction is correct, the effect is often significant; if wrong, because the entry point is relatively low, the drawdown is manageable, and overall cost-effectiveness is high. Last Thursday’s optoelectronics breakout and last Friday’s “Compute-Electricity Collaboration” fermentation were both timely followed according to this principle, achieving good results.

Here is a small table on “Compute-Electricity Collaboration” for reference:

** (2) Approach for price increase lines: master rhythm or “the strong get stronger”**
Price increase lines are usually “logic-driven” opportunities with some sustainability. So, in trading, we consider two strategies: focus on “the strong get stronger” stocks and also on those that have retraced to support levels, doing T+ or adding positions at key points.
** 1. High-priced stocks: key breakout points**
Last Wednesday, the following cases retraced to the 10-day moving average, and we trained based on the “two in place” principle; on Friday, the stock broke through key levels, and we followed up. Similar logic was applied when Huagong Technology broke 100 yuan, with “key level breakout” training.
** 2. Low-priced stocks: rhythm-based T+ trading**
For low-priced stocks, we prefer to combine rotation rhythm, adding at support levels and reducing at resistance, repeatedly doing T+ to accumulate.
** (3) Commercial aerospace: rhythm-based T+ trading, waiting for the main wave**
Although recent commercial aerospace stocks haven’t shown sustained trends, they fluctuate significantly. If the rhythm is well grasped, following the “dip buy, rise T+” approach, even with modest overall gains, the wave profits can be substantial. More importantly, once the sector starts a second wave of main rise, early positioning allows heavy participation. Capturing three or four major opportunities a year is enough for good returns! Be patient and learn to accumulate at low levels.
From industry logic, the first beneficiaries are usually rocket components (structural parts + recovery), then satellite manufacturing, and finally satellite internet applications. Recently, the focus is on rocket-related stocks. When the stock price crosses the 20-day moving average into a strong zone, pay attention; when it retraces to the 10-day and stabilizes, consider re-entry or T+ training.

That’s the overview of current hotspots and strategies. The previous article had no “Yuan coupons,” indicating low enthusiasm, so I kept it simple today. We’ll share more details during Thursday night’s live broadcast.
Thanks to everyone who has supported my creations and live sessions recently! Wishing everyone a prosperous stock market and all the best! @幸福的四叶草 @八一台021 @大姐炒股 @生余海 @chianjiaren @多彩涂料陈工 @小李的炒股 @海之愿 @紫藤花开紫娇美 @守望麦田的幸福 @哈密瓜2020 @zymdfd @Cdasui @悠然yyrrrrrrfd @宛洛科 @卓尔不群 @平凡的三件事

Disclaimer:
Investing involves risks. Trade cautiously. Plans are never faster than the market; follow the market’s movements. The content reflects personal ideas and records, only sharing my understanding and review of the market, not investment advice. Trade at your own risk!