It's highly likely to open lower tomorrow!

$Shanghai Composite Index sh000001$ This week, A-shares can be said to have been led by external situations, with particularly high volatility. We are now in a stage of repeatedly grinding the bottom.

On Friday, the trading volume of the two markets was only 1.85 trillion yuan, hitting the lowest level this year. Normally, when volume shrinks to an extreme, the probability of a rebound or reversal later is very high. However, the external troubles haven't been resolved yet. Even if the selling pressure weakens, it's not easy to completely break out of the adjustment in the short term.

But there's no need to be completely bearish either. The market has already started to see rotation among oversold rebound sectors. For example, lithium mining has rebounded consecutively, and innovative drugs collectively warmed up on Friday. This shows that after such a big drop, some capital has already started positioning ahead of time, preparing for the later market trend.

Everything has two sides. A crisis can be split into danger and opportunity. Mindset is really important for investing. With a different mindset, the market looks completely different. Conservative people only see the risk of adjustment and are extremely anxious; those who dare to act, on the other hand, think it's a good time to pick up chips at low prices.

There's no absolute good or bad in the market. People still lose money in bull markets, and some can make money in bear markets. The key is to understand the rhythm of rises and falls, find the right direction when opinions diverge, and dare to act when others panic.

In this rapid decline of A-shares, many stocks have indeed fallen badly. But precisely because of this, many good sectors and good companies have been wrongly sold off, with valuations returning to very attractive levels. Once the panic sentiment gradually fades and capital returns, the recovery could be substantial.

Let's talk more about external markets. The conflict over there has been going on for a month with no sign of easing, and external markets have been hit hard again.

U.S. stocks fell sharply across the board on Friday, with nearly 7,900 stocks declining. The three major indices recorded their fifth consecutive weekly decline. Crude oil prices hit a new high since July 2022.

U.S. tech stocks collectively plunged, and Chinese concept stocks also came under pressure. The Nasdaq Golden Dragon China Index fell nearly 2% on Friday.

The surge in the external fear index is mainly driven by the escalation of the conflict and the sharp rise in oil prices. There's no sign of easing in the current situation yet. However, looking back at previous weeks, tensions typically escalated over the weekend, and signals of easing emerged at the start of the week. The situation has become tense again this weekend. Whether it can cool down next week is hard to say; only the parties involved know.

With the external market's big drop, A-shares will definitely face pressure in early trading tomorrow; that's unavoidable. However, the market is actually slowly digesting the impact of the geopolitical conflict. Don't scare yourself or be overly pessimistic.

From a medium to long-term perspective, the longer the U.S.-Iran standoff lasts, the greater the pressure on U.S. inflation and public opinion, and the stronger our bargaining chips will be in future economic and trade negotiations.

With such high external uncertainty, A-shares may still test lower, solidifying the bottom a bit more. Technically, if the current lower bound of the trading range is broken, support might be sought around the annual moving average. This level is actually a node suitable for short-term speculation.

 Let's discuss sectors and hot spots below:

1. Commercial Aerospace
There were several pieces of news over the weekend: Two government departments introduced a policy to charge frequency fees based on the actual bandwidth occupied by satellites, which is equivalent to reducing the burden on enterprises;
The 2026 Space Computing Power Industry Conference will be held in Beijing on April 3rd;
Also, a foreign institution plans to launch a 2x leveraged long ETF for SpaceX and Anthropic.

At the policy level, the country is already supporting commercial aerospace as a pillar industry, with national-level funds also investing. The level of importance is very high.

The next one to two years are a critical window period for space computing power. Whoever builds the satellite network first, lowers costs, and gets applications running will gain a first-mover advantage. Although there will be short-term volatility, the long-term direction is very clear.

The sector index is currently at a low level, suitable for phased left-side positioning.
However, to achieve a continuous strong rally, sustained positive news catalysts are still needed. Until then, holding patiently is fine.

2. Conflict Beneficiary Sectors
EGA, the largest aluminum company in the Middle East, was attacked by missiles and drones, with its main refineries severely damaged.

This company accounts for about 4% of global aluminum production capacity. Overall Middle Eastern aluminum supply accounts for nearly 10% of the global total. Combined with the previous production cuts at Bahrain's aluminum company due to Strait transportation issues, global aluminum supply is directly affected, which is a clear positive for domestic aluminum companies.

If the situation continues to escalate, previous energy substitution directions, such as power, energy storage, lithium batteries, and coal, will still have rotation opportunities. However, these sectors should only be bought on dips; never chase highs. Geopolitical changes can cause very large volatility.

Let's talk about the power sector separately:
As mentioned before, the stage where everyone could make money by buying any power stock is over. Now it's entered a stage of expert-level competition, with significantly increased difficulty.

The two core stocks in the sector are still oscillating at high levels, with no significant loss-making effect. The lack of further strong gains is mainly to avoid the 200% regulatory red line. Last year's commercial aerospace rally ended completely after a batch of stocks triggered regulatory scrutiny, so a direct hard charge here is very unlikely.

The old leader hit a strong limit-up on Friday. The key is to see if it can smoothly exit regulatory scrutiny tomorrow. If it can, it might lead another wave while the core stocks avoid the red line.

Next, focus on three key points: whether the two core stocks can stabilize at high levels without big drops, and whether the old leader can continue to strengthen. This will directly determine the future direction of the power sector.

3. Earnings Season Play
April is approaching, with the intensive disclosure of annual reports and Q1 reports. According to past patterns, earnings-related plays are likely to have opportunities.

The logic is simple: To avoid risk, capital will stay away from stocks with poor earnings. Conversely, companies with pre-announced earnings growth, early disclosures, and exceeding expectations are more likely to attract capital and generate rallies.

Especially directions with Q1 reports exceeding expectations, which indicate strong certainty of high industry growth, are institutions' favorite types of targets.

Although the market is volatile now and short-term trading is difficult, from a swing trading perspective, it's completely possible to track this continuously.