Last Friday's market review, next week's market outlook, and expectation gap management

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 likely to surge again on Monday. Xianglu Tungsten is 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, a week mainly digesting news during the holiday period.

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, 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 bidding was below expectations. Chengxing Shares hit the limit but broke the limit during the day, while Jinzhengda managed to close at the limit but lacked follow-through within the sector, becoming a lone ranger.

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

Additionally, during the day, sectors like rare earths and photovoltaics showed rotation. Currently, only small metals and computing power sectors with price increase logic are more sustainable.

Yunnan Energy Holdings made a strong move to seven consecutive limit-ups, breaking the previous resistance and opening up space. However, Farsight broke the limit after four consecutive limit-ups, and only Jinzhengda advanced to the next level among the three times it attempted. The success rate of consecutive limit-ups remains low. Before the Spring Festival, the heights were mostly below five limit-ups, but after the holiday, Yunnan Energy Holdings broke through the resistance, and the momentum of consecutive limit-ups is gradually returning. Short-term trading can be expected next week.

Overall, last Friday, small metals and rare earth sectors performed strongly, while computing power and chemical sectors continued profit-taking. Funds are rotating between price increase and computing power sectors. Without a main theme, the correction cycle remains light on positions until a main theme emerges. From Yunnan Energy Holdings’ continuous breakout, a new cycle is already underway.

The overall cycle focuses on core themes, with short-term attention to first-limit-up stocks. During disordered rotation periods, maintain a neutral or trend-following stance, review daily, and make static three-day forecasts. Use dynamic three-day forecasts during bidding. Repeating this daily will improve prediction accuracy.

The stock market always favors following the trend—align with the market and sector momentum, control drawdowns during major declines, and focus on profit cycles. During profit cycles, do more; during loss cycles, hold back. This approach ensures stable compound growth. Never chase daily big gains; act according to the cycle’s stage. Repeated review and understanding of these principles will be immensely beneficial. I wish everyone to stay on rhythm weekly, reach new account highs, and improve a little each day—like a sesame flower blooming higher and higher.

3. Next Week’s Outlook

Last week, the first trading week after the holiday lasted only four days, mainly digesting holiday news. 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 renewed 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 is highly influential. On Monday, the small metals sector is expected to continue its weak-strong pattern.

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

Regarding the last four days of next week, as a meeting approaches, expect themes to emerge during the meeting. Each year, anticipation of meetings often spurs significant themes and cycles, typically leading to spring market opportunities. Short-term, it’s advisable to be more active next week. Funds are opening space through Yunnan Energy Holdings, signaling a new cycle is on the way. I also wish everyone to stay on rhythm during this new cycle, reach new account highs, and see accounts multiply tenfold in the Year of the Horse.

4. Buy Unexpectedly, Sell Below Expectations

Many friends in the comments ask what constitutes an “unexpected” or “below expectations” event. Longtime followers know I often pay attention when events are beyond expectations. For example, last year’s big cycles like the Pingtan development on both sides of the Taiwan Strait, HeFu China, China Satellite, Tongyu Communications, and other strong stocks all broke their limits after continuous surprises. Recently, stocks like Xianglu Tungsten and Zhangyuan Tungsten also participated after breaking limits. Why do these often bring positive feedback? Today, I’ll explain the logic behind this.

First, understanding “beyond expectations” means that if a stock hits the limit-up or breaks the limit, the funds inside are normally quick to jump in the next day. The normal expectation is a large gap-down or limit-down opening, but if the overall sector performs strongly in the bidding, the next day’s opening can be higher or flat, absorbing the panic selling. This is “beyond expectations.”

“Meeting expectations” means that if a stock hits the limit-up or is strongly bid, the next day’s opening should also be a limit-up or at least a high open. If it opens flat or lower, it’s “meeting expectations.”

“Below expectations” refers to a stock that opens with a strong one-word limit or heavy buy orders, but the next day opens flat or even lower, which is “below expectations.”

These are the three definitions with some examples.

Why is “beyond expectations” a focus? Because it indicates that genuine funds are absorbing panic selling, often contrary to human nature. These funds are not losing money; they are usually participating because the sector’s overall bidding is strong, driven by institutional buying. When the market opens, continued buying can lead to a short-term limit-up, and the next day, high opening continues. This relies on sector strength. If the sector is weak and many stocks hit limits down, the situation is different—funds may be self-saving, leading to false signals. These “absorption” actions mainly occur during main upward phases, while “inducing” or “trapping” occurs during downturns.

“Below expectations” is the opposite: a stock hits the limit-down or is heavily bid, but the next day opens flat or lower, indicating panic selling and a lack of confidence. Many new investors see this as a buying opportunity, thinking they can scoop cheap chips, but they often misunderstand the nature—this is typical “chicken rib” behavior, expecting to buy cheap but ending up with more limit-downs. It’s crucial to distinguish between “buying the dip” and “panic selling.”

Understanding these behaviors and the psychology behind fund actions is key. I hope this brief discussion helps. Those who follow my analysis through cycles will find it more insightful. “Beyond expectations” often occurs in large cycles, while in smaller or disordered cycles, focus on first-limit-up stocks or trend-following stocks. Don’t be overly rigid; value what I share today. If you learn something, please comment.

That’s all for today. Next week’s outlook has been updated. I wish everyone to stay on rhythm, make big gains, reach new account highs, and see accounts multiply tenfold in the Year of the Horse.

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