Hexun Investment Advisor Liu Yu: An emotional turning point has emerged, but the thematic direction still remains unclear. In a weak market environment, will there be a breakthrough in sentiment?

In the weekly review video at the beginning of this week, it was mentioned that the lower boundary of the early trading range has some resistance and support strength. However, after three touches with gradually weakening momentum, the market is prone to move down to the next level. Especially if it cannot break out of a volume-driven bullish candle on the right side, the adjustment pressure will increase further. On Tuesday morning, the market showed a volume contraction while pushing higher, mainly supported by the major financial sector. The afternoon decline was not surprising. Data from Tuesday’s close shows that 822 stocks rose while 4,289 fell. From a data perspective, the market has not yet reached an emotional bottom.

Based on the downward trend observed at the end of Tuesday’s session, the morning session today continued to decline, testing support near the 4000-point level. From the market performance, there is indeed some resistance around 4000 points, but trading volume has not yet effectively increased, so the rebound strength is limited. Going forward, it is important to monitor changes in volume: if volume can increase and be maintained, a phase bottom may form. It should be noted that even if a bottom signal appears, it is still a left-side signal, and confirmation on the right side is still needed. Overall, the core indicator for market levels remains trading volume.

From an emotional perspective, Tuesday can be defined as the start of an upward cycle. Based on the performance of consecutive limit-ups, the success rate reached 100%, expanding market enthusiasm. Meanwhile, some previously popular stocks showed signs of stabilizing, with no obvious negative feedback in the market. Although there are still stocks hitting the limit down, they are no longer the previously hot and popular stocks. Overall, the pattern shows a gradual easing while moving upward, with features of alternating between new and old cycles. It should be clarified that this so-called new cycle does not refer to a major upward trend, but rather, in the current market environment, where sentiment and indices diverge, funds are attempting to shrink and regroup in a weak market. The idea of “big monsters emerging in a weak market” is rooted in this logic.

Today’s market shows a diversified evolution of sentiment carriers—some stocks advance through consecutive limit-ups, while others demonstrate a second wave of trends or rebound from breakouts. Different styles represent different fund attributes, and future divergence and competition are possible. Overall, the divergence between sentiment and index continues.

The overall performance of thematic sectors is not very encouraging. Although sentiment is rising, the carriers of sentiment stocks are not necessarily thematic, but more about stock grouping or sentiment battles. The chemical sector shows clear differentiation; the previous trend-leading stocks have been adjusting continuously. Quantitative-driven sentiment stocks have some logical support, but high-trend stocks are weakening, with only a few sub-sector directions remaining relatively strong. The operational approach in this direction is either to focus on high-sentiment stocks at high levels or to identify low-level, logically supported rebound opportunities. The overall sector recovery and reversion require waiting for high-trend stocks to stabilize before further observation.

The oil sector continues its volatile pattern, with large intra-day fluctuations, making it more suitable for funds capable of rolling operations. Its overall strength is weaker than chemicals, but there is potential for follow-up rotation. Going forward, attention should be paid to whether oil can absorb some of the rotation funds after chemical stocks weaken.

The grid, electricity, and computing power sectors have not yet shown significant recovery today. For these sectors to effectively rebound, a stabilization of mid-tier stocks is a prerequisite. Currently, the daily chart has not stabilized, with only some sentiment stocks showing early signals. A full recovery may be delayed, and it is necessary to observe when the overall sector stops falling.

Wind power and energy storage sectors started slightly later than smart grids, with a first sign of rebound on Tuesday, forming a relative separation from the power grid sector. However, intra-day strength was limited, and no further rebound was seen today. If sustained recovery cannot be achieved, it may only reflect a short-term grouping of funds into less resistant directions. Continued focus should be on leading companies in the industry’s overseas expansion; if they show clear negative feedback, the sector is unlikely to have an overall rally.

In the technology sector, as mentioned in the previous review, storage-related stocks mainly reflect stock grouping rather than sector-wide trends, which has been confirmed by the market. The technology sector has experienced a relatively large correction recently. When technology stocks stabilize and stop falling will largely determine the extent of downward adjustment in the index.

Overall, under the background of a weak overall index, funds continue to seek breakthroughs through grouping and speculative “monster stocks.” The focus in the coming week will be on whether the market can break through higher levels and whether sentiment and the index can form new resonance.