[Red Packet] 【Attack and Defense Dao Live Trading Strategy】——March 18 Pre-Market Thoughts

Objective Information [Taogu Ba]

The index finally broke below 4050 points, and this occurred after a valid support in the previous trading day, followed by a rapid rebound. It effectively broke through the 60-day moving average, trend line, and 4050, continuing the downward trend since 4197 points. There are still no clear signals of ending, meaning objectively, it remains in a wave adjustment process since 4197. The ChiNext Wuling and ChiNext 100 indices both closed at new lows, with a longer trend duration since their peaks. The Shanghai Composite and Shenzhen Component Index are both showing weekly MACD divergence at the top. Additionally, their weekly trend lines are temporarily broken.

In the short term, market sentiment has stabilized somewhat today, reflected in Yunnan Energy Holdings stopping its decline, with most of the previously halted stocks rallying during the session, and all the stocks that hit the daily limit-up advancing further. The previous day’s short-term rally was weaker than the overall market, but yesterday was stronger.

In terms of sectors and themes, the market still hasn’t shaken off the “chaos” character. The persistence of themes is short-lived: from wind power equipment, which could still be played for a couple of days, to storage chips, which only lasted a day, and today many sectors surged early but peaked quickly, only lasting half a day.

Personal Reflection

The key levels of the index have been repeatedly broken, and the weekly MACD divergence signals a rare two- or three-year adjustment, leaning towards a technical correction. Coupled with the strong correlation between tech stocks and the index, multiple dimensions suggest there is still room for further adjustment. The next critical technical level is the low of February 3rd at 4002, which is highly likely to be tested. It’s also reasonable to expect a retracement of the lower gap. Therefore, the current correction has not ended; this is quite clear. Of course, there may be some recovery attempts during this process, but their strength should be limited.

Regarding market style, the shift from emotion-driven to trend-driven, as discussed yesterday, has been temporarily disproved with the tech sector’s adjustment. The short-term rally’s tolerance has slightly increased, but lacking good thematic support and with overall market weakness, it provides some soil for group-based stocks. Currently, there are signs of core stocks like Shun Na and Guo Sheng gaining recognition. However, whether this group-based approach is sustainable still needs further observation; for now, it’s just a budding sign.

In the previous trading day, the index’s issues stemmed from high uncertainty in sentiment and poor theme sustainability. Currently, the problems are the risks of index adjustment and poor theme sustainability. These three key dimensions have always maintained at least two of them in a high-risk state of uncertainty. This is the fundamental issue we’ve been discussing over the past two days: the market problem has not been solved. Only when these issues are resolved can we have the conditions for a strong move. For themes to sustain, at least two trading days of continuous strength are needed to reverse the situation; a single-day rebound can only be considered a temporary bounce.

Overall, at this critical juncture, short-term opportunities are more likely to be in pure sentiment-based ladder trades or core group recognition, both of which are relatively high-risk, high-reward strategies. These are not suitable for most short-term traders, especially beginners, who should be cautious.

A larger structural opportunity still requires waiting for clearer market signals.

Writing is not easy; the core logic of this review is summarized above. If you find it helpful, please give a like and leave a comment to boost the post’s visibility so more brothers can see it. Let’s work together to avoid pitfalls in this market. Thank you all for your support!

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