Yesterday's rally may be followed by a pullback and consolidation today.

$SentinelOne(S.US)hanghai Composite Index sh000001$ Yesterday, the index surged across the board, but the overall market capital outflow was 7.4 billion. In terms of individual stocks, there were more gains than losses, with trading volume increasing by 312.7 billion, reaching a total of 2 trillion, returning above the active line. Overall, the market sentiment has warmed up quite a bit.

From the trend perspective, the index has already filled the gap left by the low opening on November 21st and is still in a short-term rebound trend. From a technical chart perspective, the position has reached the b segment of the 30-minute chart, forming a 5-minute B central pivot. Given this situation, there might be a pullback and consolidation today, but this won’t affect the short-term rebound trend.

The current index movement has actually slightly exceeded last week’s expected consolidation script. Why? Mainly because after Friday’s close and on Saturday, two market-favored "heavyweight" positive news were released. This also highlights the limitations of technical analysis—it’s like weather forecasting; you can’t predict positive or negative news that hasn’t happened yet. In physics, this is called the "uncertainty principle." However, the upward momentum this time isn’t particularly strong, barely qualifying as a variant of consolidation.

Considering that an economic meeting might be held in the next few days, the market should remain relatively stable before the meeting concludes. Even if a high point appears, it doesn’t necessarily mean an immediate decline, but volatility will definitely intensify. After two consecutive days of rebound, especially with today’s volume reaching 2 trillion, short-term risks have temporarily subsided. But I must remind everyone to stay calm and not rush to see a reversal. Lower your expectations and treat it as a rebound for now.

Today, focus on two main points: First, in the first half-hour after the market opens, see if the financial or tech sectors can take the lead. Yesterday, several major sectors were in retreat during the closing session, with commercial aerospace plunging sharply. Even brokers with weekend-positive news showed various upper shadows, indicating a sideways market with sector rotation. If today’s opening continues yesterday’s closing trend, market sentiment might cool rapidly.

Second is trading volume. Yesterday’s volume was driven by various positive news, especially from the financial sector, but today will be a test, particularly this afternoon’s volume, which is crucial. If there’s a significant drop in volume, it won’t be good, leading to unfavorable negative feedback. So, all things considered, I think it’s not yet time to relax and celebrate. A bit more caution is safer.

Now, let’s look at the sectors and individual stocks:

1. Commercial Aerospace
Commercial aerospace finally saw significant differentiation yesterday. Last week, this sector was quite hot, and with weekend-positive news, it surged and then retreated—a textbook move. Especially in this era of quantitative trading, this provides a great opportunity for quantitative funds to sell off. Now, the question is whether this sector is over. My view is no—don’t worry about the sector’s trend just because of one surge and retreat.

Today’s rhythm is critical. If the morning session sees a downward trend, ideally washing out yesterday’s high-chasing positions, the divergence will be almost resolved. But if it rebounds right at the opening, it’s not good for this sector, and reducing positions might be wise. The first wave of broad gains is over, and some stocks might see recovery, while others will likely stagnate.

2. Tech Sector
Yesterday’s tech strength was mainly in computing power, especially CPO and optical communication. For such large-cap sectors, institutions usually dominate, so rapid acceleration is unlikely. A trend-based movement is more probable. Those not yet in the market shouldn’t chase highs. Instead, focus on storage, especially storage equipment, as there’s still a lot of expectation disparity. For example, Yangtze and ChangXin might expand capacity later, directly benefiting related equipment firms.

3. Price Increase Trend
This trend has always been relatively independent. Recent observations show that once a trend starts, the price increase direction often persists. For instance, the chemical sector’s rally in April-May, rare earth in July, and lithium batteries and memory chips in September-October were all essentially driven by price increases. Now that the trend is improving again, price increase sectors like tungsten and lithium materials might see expectation disparities.

4. AI Applications
After the last round of hype, AI applications have been adjusting for a while. Previously, market attention was on commercial aerospace. With commercial aerospace likely entering a divergence phase, AI applications might see short-term speculative interest. Besides AI software, also watch "AI + consumer" related sectors mentioned in official documents, like AI home, AI healthcare, and AI + elderly care concepts.