Likes ReceivedApril 24, 2024 Morning Trading Strategy: Focus on profit-taking at highs.
The Shanghai Composite Index has experienced a pullback after three consecutive days of rising, hesitantly returning to the lower edge of the box near 3,000 points. Today is also the ETF option settlement day, and the support test at 3,000 points will once again be faced.
Although it may not fall further, as this level is guarded by the national team, the downside is limited. However, there won't be any major or new trends before the holiday. The last five trading days are likely to see rotational fluctuations until after the holiday, making it suitable for buying on dips.
On one hand, the month-end effect and the pre-May Day holiday have led to insufficient liquidity, and large institutions lack trading motivation. Yesterday's trading volume directly fell below 800 billion, a more severe contraction compared to the previous day. Such low trading volume is insufficient to support a major rally.
On the other hand, the last 2-3 days of April are when the most "bombs" are reported, and external funds are hesitant to participate deeply. Therefore, the overall strategy is to reduce positions and take profits on rallies.
The market sentiment is unusually fragmented, especially with the severe polarization between 20CM and 10CM stocks.
Look at 10CM stocks like ChunGuang/TongWei/BeiFang, which were all limit-down and pinned to the floor, while LaiShen T Ling stabilized but then suffered two more limit-downs.
However, ZhengDan Co., which held up for a day, plunged at the close. If it opens lower and continues to decline today, funds might flow back to 10CM stocks for arbitrage.
In contrast, 20CM sentiment saw over 15 limit-ups yesterday, clearly far better than 10CM. Previously, short-term sentiment was driven by 10CM, with 20CM for arbitrage, but the opposite has been true recently. This might be due to the unexpected outperformance of the leader, ZhengDan Co., which has surged over the past five days. As the saying goes, funds always flow to the path of least resistance.
Now, let’s look at sector/stock opportunities:
1. Low-altitude economy
After a major drop the day before yesterday, the sector rebounded as expected yesterday, mainly due to positive Q1 earnings reports from several low-altitude companies, which were well-received in the market.
For the low-altitude sector, the rule remains: after a significant adjustment, stability presents a buying opportunity, especially for high-profile stocks. Last night, there was also regional news supporting the sector:
1) Guangdong Provincial Committee emphasized focusing on new growth points like the low-altitude economy.
2) Anhui Province established a 1-billion-yuan low-altitude economy industrial fund.
Rarely, foreign media are also paying attention to China's low-altitude progress. British media: China's low-altitude industry is gradually leading the world.
2. New listings
Since March 15, A-share IPOs have entered a freeze, with zero acceptances and zero reviews for two consecutive months. Nearly 100 companies voluntarily withdrew their applications. Latest: 120 IPOs terminated! 98% due to withdrawal. Regulatory scrutiny has intensified, with LZL demanding "strict entry checks for listings." The slowdown in new listings and stricter IPO oversight have created a gap, benefiting high-quality recent listings with valuation catalysts!
April is also earnings season, with dense annual and Q1 reports. New listings are the best safe haven—look for strong recent performers to buy on dips.
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