4/7 Review Notes

Today the index is still holding a volume-contracted, range-bound consolidation pattern. During the session it surged to around 3900 and then rolled over, but luckily it still closed red at the close—it didn’t finish green. Over in Korea and Japan, their trend is pretty similar to ours, but compared with A-shares today, their swings are a bit larger in terms of amplitude only. Right now, the main thing on the news front is that before the market opens tomorrow on the 8th, Huang Mao said the timeline has arrived—let’s see what reaction he actually gets. Is it really going to resolve Iran in a single day and take all the oil he wants? Haha. Because as far as we can see just up to now, Iran’s Khark Island is still being bombed, and one oil refining and petrochemical plant in Saudi Arabia was also hit by an explosion. So looking at today’s trading action, both coal and chemical performance are doing quite well. [Taoguba]
Earlier I also said that coal is the little brother of crude oil. When crude oil rises, coal will most likely follow higher. The logic is completely normal: if crude oil prices rise, other alternative energy sources also need to rise in price, so this reasoning holds water. At the same time, if petrochemicals’ prices go up, coal-to-chemical products will also catch up—because the bigger the coal-oil price spread becomes, the stronger the expectation for coal’s catch-up rally. And now many large coal companies have started to focus on laying out the coal-to-chemicals segment. What can be expected is that across 2026 full-year results of coal companies and coal-to-chemicals companies, their performance will definitely be outstanding—exceeding market expectations. So with this support, their stock prices will likely be actively traded (rallied) in the first two quarters, then grind higher in a consolidation upward trend; in the third quarter it’s basically wrapped up—after the earnings expectations have been pulled forward to the limit and the stock price reaches new highs, it starts to decline earlier in the fourth quarter. Because in the stock market, it’s always about trading expectations, not about the realized outcome. Money enters early to trade; it runs away before earnings are actually delivered. So besides crude oil, you can still pay more attention to the coal-to-chemicals sector—especially those coal-to-chemicals “leading” names with expectations. You may not need to rush in at the top, but after making a new high and then typically pulling back 20%-30%, when price returns to the support area within the prior trading range below, in my personal view that’s where you can position for a “battle” and game of entries and exits. Set your stop-loss, watch that support level—if it breaks, just clear out. Because coal-to-chemicals is also a sector that has clear year-2026 expectations for major earnings improvement. Also, the main thing to watch is the first-quarter report data of the specific coal-to-chemicals stocks you want to buy. If the first-quarter report comes out and it’s clearly very strong, then the half-year report and subsequent earnings will most likely also be quite good. Then you can hold for the next leg up. Even if the Middle East conflict and that war end within a short 1-2 months, crude oil prices won’t quickly fall back to around 70 yuan per barrel before the conflict. Many refineries still need time to recover. So looking at the whole of this year, both coal-to-chemicals earnings and the logic of coal-oil substitution are present. If the war drags on, it’s very possible that next year’s earnings will also stay at a very excellent level.
Meanwhile, in the chemicals sector, I believe it’s also a similar kind of sector where you can do the above “battle” based on those expectations. Because most likely this year’s earnings in chemicals will also perform very well. Especially after many chemical stocks have already pulled back a lot from their highs. I’ll use an example: the chemical sector leader, Sinopec. Sinopec at 8 yuan—no way, absolutely not, even if it’s basically free I’d still be afraid it’s sitting right on top of a mountain. But now Sinopec has fallen into the 5-plus range, and I think that’s when you can start adding it to your watchlist. The key strong support level for this stock is at 5 yuan. First add it to the watchlist, then take a look at the first-quarter report disclosed on April 29. If earnings show a clear improvement, then at that time the stock price will be at a relatively low level. Other stocks are similar too. The main thing is to focus on the first-quarter report data for these coal-to-chemicals or chemicals sector leading stocks. If they’re earning a lot, read in detail why business improvements drove it in the financial report. If there’s a loss, look closely at which businesses caused the loss. If it’s losses caused by oil prices, then you should also pay more attention to those stocks—because when China-US and Iran ultimately reach an agreement and talks, it’s basically when his earnings bottom out. And a bottom basically represents, in the short term, the bottoming trading range. That’s when you should pay even more attention. So the first-quarter report in 2026 is extremely important for every sector. It’s a crucial financial report for everyone whether you’re trying to buy the dip or adding positions. To a large extent, it can help you anticipate that company’s future earnings level this year. You can even estimate using the future expected oil price. For example, a company that benefits from a rising crude oil price: if its first-quarter results show earnings up 70%, and you basically know the average oil price in the first quarter, then by early April the oil price has already reached 110 and then kept rising—so you can likely estimate the half-year level as well. That’s what tells you whether to add or cut positions; you can already have a sense of it psychologically in advance. Because in the market, the hardest support for a stock rising is the logic of future expected earnings coming in “above the charts.” That’s the most solid underlying foundation for driving stock prices higher.
Whether it’s coal-to-chemicals or other sectors that benefit from rising crude oil prices, people should best choose stocks that have already done a pullback from a short-term high and returned back toward the support area, or returned back to the consolidation range level before the previous up move. This kind of stock represents that some profitable funds who wanted to exit have already exited during the earlier rally; and because the support is right there, you have a psychological anchor. If it breaks, you can just clear out. Also remember: don’t deploy your full position at once. Build your position in batches to further reduce risk. So personally, I think this is a relatively solid approach. In the current market, the method for doing the “battle” is: pick sectors that have future expectation, and also choose leading stocks that have already pulled back 20%-30% from their highs and are now approaching support. That’s the better selection.
Remember one point: support levels are the point of the battle—not a place where you just buy and never sell. What you’re doing is a battle-game. The closer you are to the support level, the more you add positions to battle. If it breaks, it means this battle you’re pressuring the long side fails—because the longs lost. Once it breaks support, you should quickly admit defeat, cut and leave. So support isn’t where you just buy and add without selling—it’s the place where you and the long side fight against the short side. If you add at support but don’t reduce when it breaks, that means your strategy is “left-side averaging down,” and you’ll keep adding, increasing exposure, and the more you add, the more you get stuck and trapped. But after it breaks support, the stock will most likely continue with a downtrend and then move lower in a consolidation downward pattern. When it falls to the next support level, you can continue adding positions to battle for a rebound—the method is the same as above. Or for many stocks, after breaking one support, the next support might be far away, or during the process of consolidating downward there may be catalysts like favorable news that cause an early stabilization and bottom-reversal signals. In that case you can also enter to battle for a rebound. Similarly then, if there is no support level, the price you added at becomes your support reference. You also need to set a new stop-loss in advance—e.g., if it falls 3% below your buy price or some amount you choose, then you clear out. Because that means your earlier decision was wrong—you must stop losses in time and not make the same mistake repeatedly. So at that moment, the buy price—your re-entry add price—is extremely important. That’s why when there’s no support level, it’s indeed harder to choose a good entry price. Everyone can experience this more through practice.
Also remember this: in the order of how commodity prices rise, the third category includes oil, coal, and chemicals; the fourth category is agricultural products like grain. Now it’s clear that crude oil is surging upward. So its “little brothers” are very likely to show a range-bound upward trend as well. As for the fourth-order agricultural products like grain, in the long run they definitely have a catch-up rally with a consolidation-uptrend. But in the short term the rise may not be as fierce, because they’re in the fourth category while the third category is already rising. Once the third category gradually reaches new historical highs, then the fourth category will start to show up. That’s because when funds make new highs in the third-category sector, they begin to gradually withdraw and then rotate into the fourth category. Only with large amounts of funds entering will a sector—or a single stock—start to get pulled up quickly. Without funds entering, stock prices can’t be lifted. Everyone knows that.
Also, lithium battery materials and innovative drugs: recently it’s also quite obvious that funds are entering the innovative drug sector. And this year many lithium battery companies’ energy storage battery orders have already exploded and been pushed to next year, because they can’t get it done. So energy storage batteries’ growth this year will definitely be astonishing. This will provide stronger upward support for lithium battery materials. At the same time, crude oil prices also promote the importance and future development of another alternative energy source—new energy—which must be brought back up to a new level. Many people don’t watch my posts every day on Moments, so I’m saying it again today. Because I’ve said this many times before.
Today during the session I posted a suggestion to everyone: when it hit 3900, reduce positions. From now on, you can understand these kind of intraday reminders from me as follows: at the time and moment when I post, my suggestion is whether to reduce or add positions. This suggestion’s effectiveness exists only within that day’s intraday price action—because it’s basically just me reminding everyone to do better intraday trading (buying and selling to capture swings), to improve your success rate at doing T. For example, today clearly Korea and Japan were surging and then pulling back, while A-shares at that time had just stood above 3900, and crude oil prices were still moving upward. So I sent a reminder during the session: you could gradually reduce positions if the stock is up red and rising a lot. After you reduce, you can add back near the close. That usually amounts to successfully doing one T. Many people say they never succeed when doing T. Then you can look at my reminders as a reference for your T. For example, the article I posted at 10:06 today suggested that everyone reduce when up red—back then the index level was basically around 3898, which was also basically today’s high point. And then in the afternoon the index clearly pulled back, so for most stocks, if you finished reading and reduced around 10:10, then in the afternoon the price would likely be down more than 2% from your reduced level. You can choose to add back your reduced shares at that time—that’s a successful T. Earning 2% is still better than staying idle. So after my intraday reminders, you can do some T. One is to train your ability to do T; two is to learn the way of thinking behind it through my sharing—like how I thought about it and what I said. Since it indeed pulled back, you can learn from that way of judging intraday volatility in A-shares based on moves in the external markets. After that, you’ll gradually become more proficient with T, and your success rate will be higher too. T depends on luck to a large extent, but it also relies heavily on your experience—how you handle intraday volatility and external market news, as well as your market “feel” and your understanding of that stock. All of that needs to be constantly tested through practice to improve your T proficiency. So in a range-bound market, you still need to do more practice at T. That’s why sometimes the intraday reminders I post only indicate that day’s market-action judgment—they’re for everyone’s T reference. Don’t treat them as a long-term growth line. Because the news flow keeps changing. The latest viewpoint always takes the latest post of my daily recap as the standard. That’s also why I write daily recap notes every day. Otherwise, if I wrote only once a month it might be enough—but it’s not, because the price action changes in real time.
Also, what I say applies only to most stocks that follow the index—not 100% to every stock. Because not all stocks rise when the index rises; they may also fall when the index falls. On the contrary, many stocks and sectors move opposite the index, and many stocks and sectors are completely unrelated to the index, controlled entirely by internal strong players. So what I share is for you to make decisions. If you hold a stock for a long time after buying it, you need your own judgment. Because if you’ve held a stock for a long time, it’s like raising a pet for a long time—after spending so much time together, you’re already familiar with its life habits, and you’re already familiar with many times of how it moves. So what I share is only for reference. More importantly, you should receive the information and then judge based on your stock’s own behavior. If you understand it well and it often also drops when the index drops, then you can reduce positions based on my shared viewpoints. If your stock often rises when the index drops, and falls when the index rises—then you can make the opposite decision. That’s it for the viewpoints I shared, which mainly concern the index and intraday price action.
Individual stocks haven’t moved much today, so I won’t go into them. Also just now, Yiwei disclosed a first-quarter earnings performance forecast. Net profit is 1.4 billion yuan, up about 30%. With a share price around 60 yuan, I think it’s absolutely cheap. This is also the point I mentioned above: the share price dropped from 94 at the high to 60, a drawdown of more than 50%. At the same time, this year’s earnings growth expectations are fully priced in again—net profit hitting a new high again. You don’t need that much. If Yiwei gets around 5.5 billion yuan in net profit this year and the P/E is given at about the same multiple as the growth rate, say 35x, and the market cap stands around 200 billion yuan, then the stock price this year can consolidate upward and reach 100+—isn’t that a good expectation?