[Red Envelope] Huadian Liaoning Energy hits the limit down. Is there still optimism for the power sector? The short-term turning point has arrived. Actively seize the next phase of profit opportunities!

The most painful thing about short-term trading [Taogu Ba]
is that I’ve already told you the successful method
but no matter what, you just can’t do it
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Knowing and doing are worlds apart!**
Because human nature is in the middle!
**
And human nature is the toughest opponent to beat**
Laziness, greed, fear—human nature
Only by eliminating these desires
can you truly achieve unity of knowledge and action!

Welcome friends passing by to browse Vita’s review. My personal trading philosophy is based on three principles: heavy positions, core holdings, and certainty. My approach is extreme dragon-free, avoiding ineffective trades and only taking high-probability opportunities for short-term excess profits. Welcome like-minded friends to follow!

1. Market Sentiment Cycle
2. Market environment and theme development
   Today’s market played out a script of divergence, recovery, and divergence again, with the index oscillating downward throughout the day. After two days of market highs, today finally saw a quiet pause after the peak. The tech sector’s pullback remains quite sharp.

Looking at the intraday trend combined with the index, the strongest direction in bidding was aerospace, but the market opened with low volume and gradually declined. Power sector continued to fight for consensus in the morning, with Yunnan Energy Holding diverging, and ultimately Huadian and Liaoning Energy failed to hold, dropping sharply. Sector divergence began, but the move from divergence to consensus was completed in the morning. Many core stocks also rebounded, with Huadian and Liaoning Energy eventually reaching the upper limit. At the same time, commercial aerospace only started resisting in the afternoon, with a significant rebound, which limited the strength of the power sector, though some funds still supported the rebound. This kind of movement is already quite abnormal, especially since yesterday’s market did not fully release divergence, and in the last second of closing, there was a sell-off, completing the day’s narrative.

This intraday pattern is actually caused by yesterday’s insufficient divergence, which is a key point. As discussed in yesterday’s review, if the leading stocks in a sector diverge but the themes do not, it’s easy for the sector to collapse when the leaders diverge the next day. Today, Huadian and Liaoning Energy clearly faced exaggerated negative feedback but still moved upward, including Yunnan Energy Holding, which opened sharply lower in the morning, continuing divergence. That’s why the entire sector was very tangled today.

2. Index Cycle
   As discussed in yesterday’s review, the pattern resembles the two-day recovery after the decline on April 7 last year. Today’s market is also based on expectations of divergence. The market opened with low volume and declined intraday, but this is a normal pattern after a two-day peak, and it doesn’t break the upward trend of the current index. This cycle still needs to bottom out at the key support on 3.24.
   (1) The market decline cycle started on 3.12 and ended on 3.23, similar to the continuous recovery after the decline on April 7 last year. The subsequent upward strength will indicate the continuation of this rally. Tomorrow’s focus is on the recovery strength. If the market consolidates upward, it shouldn’t cause significant losses; if it consolidates downward, it’s unlikely to be a major decline, but we should stay alert for a theme retreat.

(2) The current rally started on 3.24 and is now on its third day. As discussed yesterday, except for military and computing sectors which did not succeed in upgrading, all others have upgraded. We still need to observe feedback from the three-board stocks.

(3) Power sector retreat started on 3.13, with a first retreat on 3.16, a bottoming out on 3.17, and a second wave beginning on 3.18. On 3.24, the index strengthened again, with further resonance on 3.25, Yunnan Energy Holding’s first wave, and on 3.26, Huadian and Liaoning Energy’s first wave. Theme sectors should also pay attention to divergence strength tomorrow.

(4) Intraday, the photovoltaic sector still has some momentum left, but military opportunities were missed, and the Strait sector was also realized. Currently, only sectors like healthcare, power, fiber optics, and batteries remain active.

2. Core Sector Analysis
(1) Power
Second wave led by Huadian and Liaoning Energy
A sector break is expected today because yesterday’s divergence was not fully developed. After divergence in the morning, there was a rebound, and the second wave’s leading stocks have completed their upward move. Since 2.25, the power sector has been driven by Yunnan Energy Holding’s large volume breakout, initiating a major cycle. Short-term limit-ups were suppressed, but Huadian and Liaoning Energy broke through, completing a one-month trading cycle. If the sector can diverge again and rebound, it could have a third wave like the commercial aerospace sector. It depends on how the market plays out. The feedback from Huadian and Liaoning Energy is crucial; as long as they don’t fall sharply, the sector remains promising.

Leading stock Yunnan Energy Holding
Yesterday’s divergence continued today. It almost hit the limit down in the morning but still resisted. Tomorrow’s regulatory announcement on 3.27 will reveal fund attitudes. The best scenario is for the sector to continue diverging, either fully or with divergence turning into consensus, leading the sector into a third wave. Tomorrow is very critical.

Leading stock Hunan Development
Today’s volume breakout in the three-board market was discussed repeatedly. If the sector divergence turns into consensus tomorrow, this stock should quickly upgrade; otherwise, it’s a point to exit.

Trend leader Huadian New Energy
As discussed in yesterday’s review, this stock’s pattern depends on whether it can break through. Short-term, watch the 5-day moving average for support. When Huadian and Liaoning Energy hit the limit down, this sector remained intact, similar to the aerospace cycle.

Capacity trend in energy-saving wind power
The key point is whether the three-wave resonance in the sector can continue upward together. Jinkai New Energy was directly hit with a clear signal, and the stock followed the sector’s decline at the close. Future rebounds will be more random; I suggest focusing on energy-saving feedback.
Others include Liaoning Energy, Zhejiang New Energy, Shao Energy, Gaoqie Low, Zheng Electric Power, Guangxi Energy, and Huitian Thermal Power.

(2) Batteries
Leading stock Rongjie Shares
This stock was also weak today, mainly because of power sector divergence. The morning’s support was obvious. The next focus is on the divergence strength in the power sector. If the divergence turns into consensus, this sector could face difficulties, so watch for sector rotation.

The intraday arbitrage opportunity is Haike New Source.

(3) Commercial Aerospace
Trend leader ZaiSheng Technology
SpaceX’s IPO in June is a catalyst. As the strongest direction in the morning, this stock led the trend. However, the sector did not strengthen collectively in the morning; instead, it declined. In the afternoon, during the sector rally, there was also a divergence with the power sector, indicating capital positioning rather than genuine sector strength. So, it’s necessary to consider the power sector’s movement.

Flexible stocks include Xic Testing, LaoLong Aerospace Development, and Western Materials.

(4) Chemical Industry
Sentiment leader Jinniu Chemical
In the short term, focus on the power sector divergence, including whether the double top pattern can break through. Today’s movement was in line with expectations; as long as the power sector diverges, this stock is expected to have multiple waves of upward movement, as repeatedly emphasized in the comments.

3. Sector Analysis

1. Power sector: Yesterday, Yunnan Energy Holding’s second wave led the first, today Huadian and Liaoning Energy’s second wave led the first. For tomorrow, there are two main scenarios: short-term, the main theme is power sector trading, with divergence first and then rebound, or a quick clear-out for next week’s continuation. Currently, avoid mid-cap stocks without clear recognition, focus on core sector stocks, and observe who can support sentiment in the third wave.

2. Photovoltaic: There’s still a chance for a rebound. The key is whether it can break through, with Zhongli Group as the core. It’s a theme based on expectations, but if the sector cannot strengthen tomorrow, it may lose value.

3. Commercial aerospace: Supported by news, including previous analysis of a potential rebound. But it hasn’t yet. The IPO in June is a factor to watch. The main focus is SpaceX-related industry chain. It’s better to separate this from power sectors. The late-day divergence is not ideal, especially since the morning was dominated by clear signals in the battery sector.

4. Batteries: The morning was a direct boost, but the strength was moderate. It also supported the power sector divergence. Personally, I think participation here is not very valuable. Since the power sector is the main theme, avoid arbitrage plays. Focus on the overall aesthetic.

4. Trading Plan for Tomorrow
Today’s market disrupted the rhythm of observation. Tomorrow, focus on the divergence strength and whether funds can successfully support the theme, then choose the core operations accordingly. Continued observation is necessary!

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