May 13, 2024 morning trading strategy: IPO good news for securities firms

The index has been rising in May, hitting new highs almost every day, but most people's accounts are shrinking daily. The market hasn't improved much compared to last month.

Although the index closed strong last Friday, the ChiNext plummeted, with nearly 4,000 stocks falling and over 70 hitting the limit-down. It's still a dire situation.

Over the weekend, the social financing data was released, showing a year-on-year decline in cumulative growth. Although the relevant departments provided some explanations for the drop, the overall sentiment remains bearish.

The index is still in an upward trend. The Shanghai Composite Index rebounded after testing the 5-day moving average, and new highs are still possible this week. However, the 赚钱效应 (profit-making effect) has completely decoupled from the index, so watching the index is less useful than monitoring trading volume.

The 缩量 (low-volume) market has led to chaotic and fast rotations. Hesitating even slightly or trying to hold positions longer can quickly turn profits into losses.

Before the holiday，合成生物 (synthetic biology) was hot. After the holiday, Monday was 化工 (chemicals), Tuesday was 商业航天 (commercial aerospace), Wednesday was 干细胞 (stem cells), Thursday was 锂电小金属 (lithium and minor metals), and Friday was 电力房地产 (power and real estate). New themes learned overnight become obsolete the next day. No wonder people say A-shares are a 'knowledge 付费平台 (pay-to-learn platform).'

As for today's trend, despite the four major bearish factors over the weekend—IPO resumption, financial data, sanctions, and capital flight—these negatives have already been priced in. The IPO resumption, in particular, benefits 券商 (brokers).

The weak financial data suggests the central bank may cut interest rates or reserve requirements. Sanctions benefit 国产替代 (domestic substitution). Additionally，医药 (pharmaceuticals) and 民生 (consumer staples) sectors are likely to stabilize the market today. Thus, the 大盘 (broad market) is expected to rebound after a dip, so there's no need for excessive worry.

Now, let’s look at themes and 个股 (individual stocks):

1. Brokers
The Shanghai and Shenzhen exchanges announced IPO review meetings for May 16, including one 深市 (Shenzhen) IPO and one 沪市 (Shanghai) refinancing application. This marks the official resumption of IPO reviews.

IPO 重启 (IPO restart) benefits 券商 (brokers), as IPOs are a major revenue source. From any angle, the 券商 (broker) rally isn’t over yet. Breaking through 3,200 points will still rely on 券商 (brokers).

Additionally, last Friday was the 8th trading day of 国联证券 (Guolian Securities)’s '10-day trading halt.' Counting inclusively, it resumes by next Tuesday, keeping expectations alive.

2. AI
Over the weekend, OpenAI announced a new product launch for May 13, rumored to be another game-changer.

The approval of the《制造业数字化转型行动方案》(Manufacturing Digital Transformation Action Plan) also benefits 大数据 (big data) and 算力 (computing power) sectors.

The sector has adjusted for a while, so watch for 轮动 (rotation) early this week.

3. Synthetic Biology
Last Friday saw major 分歧 (divergence), but 人造肉 (lab-grown meat) surged, with 双塔食品 (Shuangta Food) limit-up. Monitor its performance Monday. These sub-themes maintain 热度 (hype) and eventually benefit core 标的 (stocks) like 鲁抗医药 (Lukang Pharma)，星湖科技 (Xinghuo Tech), and 川宁生物 (Chuanning Bio).

If 合成生物 (synthetic biology) doesn’t rebound today, it enters 退潮 (downturn). A 主线 (main theme) must rebound within three days; otherwise, trouble looms. If it 退潮 (downturns), observe first. If it rebounds, focus on 短线 (short-term) 活跃标的 (active stocks).