[Red Envelope] Withstood Two Days of Sharp Decline! How Did I Forecast the Risk Starting March 15th with Continuous Warnings?

Hello everyone, I am Xiaoxin. My trading system can be summarized with words like “timing, main trend, leading stocks, low frequency,” which is the Long Kong Long model. [Taogu Ba]
Follow me, and let’s catch the leading stocks together. If there are leading stocks in the market that I haven’t commented on, just unfollow! Since last Wednesday, Huadian Liaoning has been gaining strength with continuous comments!

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1. Leading Stock Practical Trading Analysis**

Pre-market review:

Pre-market, I basically had no hope because the half-year moving average is known as the “bull-bear dividing line.” After resisting repeatedly last Friday, the market accelerated and broke below it in the afternoon, so I had to continue to be bearish on the index. I’m not maliciously bearish; last Friday before the market opened, I still believed in the national fortune, expecting mysterious funds to support the market and prevent the index from breaking the half-year line. I was optimistic and bullish, but the results speak for themselves.

But trading is like this; you need to respect the market. When the market doesn’t match your expectations, you must make timely adjustments. Since last Friday the index broke the half-year line, I can only continue to be bearish before the market opens today, which should be fine.

Trading aspects:
Meiliyun: Bought on last Friday’s small red day. Today, when it strongly surged near the cost line, I was planning to sell, but it fell too fast, and I didn’t have time to sell. Today, it held up against the market plunge; the trend isn’t bad. Not selling might be a blessing or a curse. If the market remains unrecuperated tomorrow, it might continue to fall.

Sharing trading logic:
From last Friday’s pre-market outlook, I was optimistic about the market’s bottom recovery because I believed mysterious funds would hold the half-year line. At 9:47 am, after the index plunged and turned green, Meiliyun’s support was very strong, showing contrarian support; from a short-term perspective, if the market recovered last Friday, the 2nd and 3rd echelon would be very important. That day, besides Shenhua Development and Huadian Liaoning in the 4th and 5th echelon, the 2nd and 3rd echelon was crucial—an echelon that can attack or defend. Meiliyun’s divergence and turnover route indicate active funds.
However, because the market didn’t show bottom recovery that day, Meiliyun failed to advance and was dragged down by the market, turning green. It was a failed gamble. I think stock selection wasn’t a big issue; the mistake was in the market’s overall direction prediction. These past two days, it has mostly withstood the market plunge, which is quite good.

2. The Three Steps to Find Leading Stocks
(1) From the emotional cycle analysis:
Since March 13, the market has entered a retreat phase (mentioned in the review post that day). These days, the decline has accelerated, especially today, with over 5,100 stocks in the red, 71 hitting the limit down (excluding ST stocks), and only 28 hitting the limit up. This is a typical market crash-level bottom data. According to normal logic, such a crash-level bottom suggests a rebound is near, likely within the next day or two. But there are two issues: First, the index hasn’t stopped falling, and support may need to be near the annual moving average; second, Huadian and Liaoning, as well as Yunnan Energy, are still active. Before a new wave of market movement, the old cycle needs to end completely, though crossing leading stocks is possible. So, I remain cautious, waiting until the index approaches the half-year line and Yunnan Energy’s cycle ends before betting on a new trend.
(2) From thematic speculation analysis:
The market is in a kill state, with no sustained themes, only stock groupings.
(3) From individual stock analysis:
Huadian Liaoning had a volume divergence last Friday; today, it opened strongly with weak volume, then accelerated higher, showing the aura of a major leader.
Yunnan Energy: At the top of the trading range, funds are betting on a double top before the JG exit.

3. Leading Stock Comments

1. Huadian Liaoning: After last Wednesday’s review, it continued to advance. Refer to the March 18 review post for detailed leader comments.
   After the first board on March 6, it showed a strong trend. On March 13, it completed a deep water shakeout during the power divergence, and on March 16, power continued divergence, but Huadian Liaoning topped the previous high with a straight line, forming a “one-word pass to the Tianshan” leader chip structure (Yunnan Energy was similar before becoming a leader); it hit the first limit-up with a bid at open, driving the power sector to recover and establishing its position as a rebound leader! Last Friday, it had a volume divergence, and today, with weak volume, it opened strongly and accelerated, passing the test of volume divergence and showing the aura of a major leader! Despite recent market crashes, Huadian Liaoning has been resilient and continues to lead the weak group!
   However, it also has drawbacks: First, it is still positioned as a rebound of Yunnan Energy, unless Yunnan Energy crashes sharply and Huadian Liaoning separates, it cannot escape the rebound label; second, the market hasn’t finished its retreat, Liaoning still needs to go through a trial, or if the market warms up, such group stocks may disintegrate; third, there is no supporting theme now, as power themes have been highly divergent recently, Liaoning’s trend is more independent; fourth, it faces a test of abnormal movement tomorrow, and today Huadian Energy didn’t dare to confront abnormal movement, which is not good for Liaoning to challenge tomorrow!
   Trading suggestion: Given the above drawbacks, it’s better to wait and see tomorrow, treating it as an emotional indicator.

2. Yunnan Energy: The overall power leader, currently in a consolidation phase. Funds are betting on its double top before the JG exit, meaning the closer it gets to the exit, the closer it is to the previous high, and the more eager funds are to realize profits.
   Trading suggestion: Also a weak group, once the market recovers, this weak group may disintegrate easily. The previous high is near, and the double top will be completed soon, with only selling points and no buying points.

4. Tomorrow’s Observation

1. Will Huadian Liaoning face abnormal movement and advance to 7 boards, leading speculative sentiment?
2. Huadian Energy avoided abnormal movement today; observe feedback tomorrow. If there is significant negative feedback, it means avoiding abnormal movement is not a solution. To break out, it must face the abnormal movement issue.
3. Today is a market crash-level bottom; until now, the trend hasn’t improved, and the targets that resisted the plunge today, such as Shunhao Shares, ReesKanda, Meiliyun, etc., are worth watching tomorrow.

5. Market Risk Reminder

On Sunday, March 15, I clearly warned of risks, cautioning against the main decline wave and entering a retreat phase, reminding everyone to stay in cash and observe!

On Monday, March 16, I continued to warn of risks, indicating that the “three-needle bottom” might be a technical trap. Many bloggers were overly optimistic because of it!

That day, I also shared how to judge the market bottom! So far, we haven’t seen any signals that truly indicate a market bottom!

On Tuesday, March 17, I again reminded everyone to stay in cash and observe!

On Thursday, March 18, I still warned of risks, clearly stating that the index had broken support levels and might need to fill the gap downward. The next day, the gap was filled! Still, I advised staying in cash!

I’ve been consistently urging everyone to stay in cash, which makes me a relatively conscientious blogger. If you’re still rushing in despite this, then even the twelve golden signs can’t bring back your desire to recover your losses! Remember, staying in cash is also a form of trading!

Regarding today’s market: the index still shows no signs of bottoming. Although today was a market crash-level bottom, there’s no sign of emotional recovery. When can we open positions normally? The three major signals in the chart indicate the market bottom!
Currently, support is near the annual moving average, around 3740 points. The previous decade-long top was at 3731 points. Based on the current trend, this ten-year top is likely to be tested, and it may take several retests before a reversal occurs. Until then, even if the index rises, it should be regarded as an oversold rebound!

One sentence to comment on today’s market:
Green everywhere, yet stocks hit limit down and still bounce back!

That’s all for today! Thank you all for your recognition and support!
Thanks to @Dongzang2022, @DonghuAgan, @Milianqi, @008Feng, @DaoweiDao, @XingyunLianyi, @YunmenXinqing and others for their tips!
If you have any questions, feel free to discuss in the comments!
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