Buy above expectations, sell below expectations

1. Last Friday’s Focus

Last Friday, I paid attention to Xianglu Tungsten. The main logic was that last Friday, the small metals sector overall strengthened, with the sector soaring by 7 percentage points. There were only four trading days last week, and I mainly focused on the small metals sector. On Tuesday, I paid attention to Jiang Tungsten Equipment; on Wednesday, to Zhangyuan Tungsten; and on Friday, again to Xianglu Tungsten. All gave positive feedback. The market performed better mainly due to the price increase theme. Over the weekend, tensions between the US and Iran intensified, and safe-haven assets like gold and non-ferrous metals are highly likely to surge next Monday. Xianglu Tungsten is also expected to continue opening high.

2. Last Friday’s Market

Last Friday morning, influenced by the sharp decline of US stocks overseas, the main index opened lower. However, after the opening, it recovered and moved higher, showing relatively strong performance. It was the first trading day after the Spring Festival holiday, mainly digesting the news during the holiday week.

After opening last Friday, small metals quickly strengthened. Zhangyuan Tungsten and Xianglu Tungsten hit the limit-up immediately, driving the sector higher. Within the sector, stocks like China Wuxi Nonferrous Metals, Xiamen Tungsten, Zhongtung High-tech, Tin Industry Shares, and Baowu Magnesium all hit the daily limit, making it the strongest sector during the day, mainly driven by the price increase theme.

Similarly, in the chemical sector, which also follows the price increase logic, only Jinzhengda and Chengxing Shares hit the limit last Thursday. On Friday, their performance in the opening auction was below expectations. Chengxing Shares hit the limit but broke the limit later, while Jinzhengda managed to stay at the limit but closed at the limit with no further gains, leaving it as a lone ranger.

In the computing power sector, Thursday saw a rally, but on Friday, many stocks underperformed again, marking a day of profit-taking. Only Yunnan Energy Holding quickly hit the limit-up and advanced to seven consecutive limit-ups. Other large-cap stocks like Tianfutong and Changfei Optical Fiber followed the five-day moving average trend. Huasheng Tiancheng also broke the limit. Since many stocks in the computing power sector are large-cap and institutional holdings, a continuous surge is unlikely. More often, they move up and down, making low buy and high sell around the five-day moving average more cost-effective.

Additionally, during the day, the rare earth and photovoltaic sectors showed more rotation. Currently, only the small metals and computing power sectors, driven by the price increase theme, show more sustained strength.

In terms of height, Yunnan Energy Holding broke through seven consecutive limit-ups, opening up space. However, Farsight broke the limit after four consecutive limit-ups, and Jinzhengda only advanced to the third and fourth limit-ups. The success rate of consecutive limit-ups remains low. Before the holiday, the heights were mostly below five limit-ups. After the holiday, Yunnan Energy Holding broke through the space restriction, and the profit-making effect of consecutive limit-ups is gradually returning. Short-term trading can be expected next week.

Overall, last Friday, the small metals and rare earth sectors performed strongly, while the computing power and chemical sectors continued profit-taking. Funds are rotating between price increase and computing power themes. Without a main theme, the correction cycle remains light on positions, waiting for a main theme to emerge. From Yunnan Energy Holding’s continuous height expansion, a new cycle is already on the way.

The macro cycle focuses on core themes, while the short cycle pays attention to the first limit-up stocks. During disorderly rotation periods, maintain a neutral or trend-following stance, review daily, and make static three-day forecasts. Use dynamic three-day forecasts during the next day’s auction. Repeating this daily will improve prediction accuracy.

The stock market always values following the trend—aligning with the overall market and sector momentum. During major downturns, control drawdowns; during uptrends, increase profit-taking. Engage more during positive cycles and reduce activity during negative cycles. This approach ensures stable compound growth with small losses. Never chase daily big gains; act according to the cycle’s stage. Repeated review and disciplined trading are key. This advice can be read multiple times for better understanding. Wishing everyone to find the rhythm each week, reach new account highs, and improve a little every day. As the account blossoms like a sesame flower, it will rise steadily.

3. Next Week Outlook

Last week, the first trading week after the holiday had only four days, mainly digesting holiday news. The small metals and computing power sectors performed best. Small metals are driven by price increase logic, while computing power is mainly influenced by the overseas Nvidia stock performance. From last Friday’s strength in small metals, it’s clear that the price increase theme is favored by funds. Computing power is closely tied to Nvidia’s stock price, which has a significant impact. Next Monday, the small metals sector is expected to continue its relative strength.

The biggest news over the weekend is the US-Iran conflict escalation. The most direct reflection is the rise in safe-haven gold and silver prices. Next Monday, safe assets like gold, silver, and oil are likely to rise again. Due to unexpected events, funds are seeking safety, so avoid large positions in high-tech computing sectors and non-ferrous metals, which may surge. The rise in non-ferrous metals will also boost related sectors. Therefore, next Monday, focus on the non-ferrous sector; other sectors can be temporarily ignored.

As for the remaining four days, since the upcoming meeting is approaching, watch for themes emerging during the meeting. Each year, expectations around such meetings often generate significant themes, forming a larger cycle—spring market. Short-term, it’s advisable to be more active next week. Funds are opening space through Yunnan Energy Holding, indicating a new cycle is on the way. Wishing everyone to stay in sync with this new big cycle, reach new account highs, and see tenfold growth in the Year of the Horse.

4. Buy Surprises, Sell Below Expectations

Many friends in the comments ask what constitutes a surprise exceeding expectations and what is below expectations. Today, I’ll discuss this topic. Long-term followers of this blog know that I often pay attention to stocks after they exceed expectations—for example, last year’s Pan-Taitung development, HeFu China, China Satellite, Tongyu Communications, and other strong stocks. These are often stocks that break their limits and then continue to exceed expectations during the rebound phase. Recently, stocks like Xianglu Tungsten and Zhangyuan Tungsten also participated after breaking limits. Why do these often bring positive feedback? I’ll explain the logic.

First, understanding what constitutes exceeding expectations, meeting expectations, and falling below expectations is key. Exceeding expectations means that if a stock hits the limit-up or breaks the limit, the funds inside are usually eager to buy the next day. Normally, the expectation is a big gap-down or limit-down opening the next day, but if the overall sector is strong during the auction, the stock may open higher or flat, and the initial rush of funds gets absorbed. This is an exceeding expectation scenario.

Meeting expectations means that if a stock hits the limit-up or breaks the limit, the next day’s opening is as expected—either limit-up or flat. Falling below expectations means that a stock with a strong one-word limit or heavy buy orders opens flat or even lower the next day, which is below expectations.

These are the three types of expectations, with some examples.

Why is exceeding expectations a focus? Because it indicates genuine buying interest—funds are actively absorbing panic selling, often contrary to human nature. Funds don’t buy to lose money; they are usually attracted by the overall sector strength and the bidding during the auction. This often leads to a volume-limited limit-up during the day and a high open the next day. The premise is that the sector is strong overall. If the sector is weak with many limit-downs, the situation is different—funds are mainly self-saving, and it’s often a trap to induce false signals. These two scenarios—absorption during a strong sector and self-saving during a weak sector—occur in different phases of the market cycle.

Falling below expectations, on the other hand, is the opposite. If a stock hits the limit-up or has heavy buy orders but opens flat or lower the next day, it indicates a lack of genuine buying interest and is often a sign of panic selling. For new investors, they might think they are picking cheap chips, but they don’t understand the essence—buying the dip versus panic selling. It’s a typical rookie mistake to think low is a good entry point when it’s actually a sign of panic.

This is the logic behind exceeding and falling below expectations. Think carefully about the psychology of funds behind these behaviors.

Today’s discussion is brief but hopefully helpful. Those who follow me through multiple cycles will understand better. Exceeding expectations often occurs in large cycles, while in smaller or disorderly rotation cycles, focus on first limit-up stocks or trend-following stocks. Don’t be overly rigid; learn to adapt. The insights shared today are valuable. If you’ve learned something, please comment.

That’s all for today. Next week’s strategy has been updated. Wishing everyone to find the rhythm, make big gains, and see their accounts reach new highs. May your accounts multiply tenfold in the Year of the Horse.

If this helps, please like, support, and tip. Your support is the motivation for my continuous updates. Wishing everyone all the best—keep going strong!