Hexun Investment Advisor Li Ying: Tech Weakness VS Risk Aversion Rise, Tech Adjustment Just Beginning

On March 17, technology weakened, failing at a critical time point, reflecting new directions and defenses in the market. Hexun Investment Advisor Li Ying analyzes that first, let’s review some voting data from this morning’s live broadcast. I reminded everyone yesterday that today is an extremely critical day. Yesterday, Monday, the entire market shrank by 75 billion, and today it shrank again by 117.5 billion. In the morning, despite the Shenzhen Composite and ChiNext opening higher, the Shanghai Composite index was not much higher, with 3,151 stocks rising. In the first 45 minutes of the morning, it was still okay. I will later analyze the trend structure to show the emotional extremes today. The first day, the market saw 4,278 stocks decline and 822 rise, indicating that 80% of stocks are at emotional lows.

We need to watch tomorrow. Normally, the market struggles to sustain two consecutive days of decline. So if such an opportunity appears again tomorrow, based on short-term trading, you can allocate 10%–20% of your capital for a small short-term trade to attempt a rebound from emotional lows. Also, there were no stocks hitting the limit down, which indicates an extreme emotional low. Now, let’s briefly discuss the trend structure. First, we clearly stated our view this morning. I mentioned the importance of the first index, and I will quickly review it. The first is our Hang Seng Tech Index, which is our second-largest external capital breakthrough. It showed a better bullish candle above the yellow line. Yesterday and today, it surged then pulled back, which is slightly better. The core concern is the ChiNext, which I have been warning about. The ChiNext index touched the yellow line based on previous data, and this morning it hit a downward retracement of the 5-day, 20-day, and 60-day moving averages with a large bearish candle.

I mentioned last night during the review that today is critical. Strictly speaking, I would give it only today, but if there is a repair tomorrow, there might still be opportunities in tech. However, I believe the probability of that happening is very small because this morning’s opening was decent. We must accept that this has become a short-term or recent high point. The relevant news or GTC conference reactions should have been reflected by now. If tomorrow, a rare event occurs and a bullish reversal or stabilization happens, we will consider other plans. The key issue now is that some tech-related stocks should not be blindly bought in large positions. If they have some gains or turn red, we should reduce holdings at high points. The core principle is that we do not need to pay too much attention to the STAR Market or the ChiNext. Looking at the Shenzhen Component Index, it is similar. I believe the space for ChiNext is larger than that for Shenzhen.

Recently, the Shenzhen Composite hit a new high while the Shanghai Index declined. It’s clear that the yellow line at 4,100 points has been a long-standing reference point. The best start was around January 30, but the real cooling began on January 14. Since then, the market has been oscillating, and today, a large bearish candle appeared, although it only slightly below yesterday’s low of 4,048, closing at 4,049—this small difference is no longer important. Why? Because today’s decline occurred amid insurance and brokerage sectors’ efforts, with the Shanghai Index only falling 8.5%, and the Shenzhen and ChiNext indices dropping about 2%. This signals a tech correction.

For us, the 15-minute chart makes this clearer. Without volume, the market’s rise can be described as “water rising with the boat.” The water is the trading volume and enthusiasm. With trading volume, prices naturally rise. Today, we saw some upward fluctuations. Looking at the overall ranking of gains by industry, insurance led with over 2% increase, followed by chemical fiber, which is also under risk control. A few days ago, I warned about high-level profit-taking on Thursday, with precious metals ranking second or third, along with real estate and banks, which surged then pulled back.

I want to remind everyone that when tech stocks pull back, the precious metals sector, with a total market cap of about 700 billion, still offers good hedging potential. The market lacks volume, so it doesn’t need much trading, but it must not break the February 6 lows. For other sectors, I advise gradually reducing positions and waiting. Energy and metals can be better opportunities to wait for. Yesterday, we mentioned data centers breaking during the session, but some stocks that did not break yesterday’s lows can still be watched tomorrow. This is trading.

Therefore, it’s crucial to pay attention to the tech correction, which I believe is just beginning, with detailed internal logic to follow.