Hexun Investment Advisor Du Yehua: Analysis of Anomalous Sector Movements

Yesterday’s Baijiu trend was worth noting. When the market was particularly weak right after opening, it moved strongly against the trend, creating a rhythm difference with semiconductors. Semiconductors were very weak in the morning, then bottomed out and rebounded in the afternoon, driven by it; while Baijiu was very strong in the morning but stagnated in the afternoon. Besides Baijiu, food processing and manufacturing also performed well yesterday, showing a bullish line. These sectors belong to our traditional large consumer sectors. When large consumption sectors strengthen, they sometimes move counter to the market. When the market is poor, they are often thought of because of their defensive nature.

What is your view on this? It depends on your medium-term outlook for the market. If you believe the market will weaken in the medium term, you can focus on large consumption sectors, which tend to be more resistant to declines and may even rise against the trend. Dividends from banks and other sectors are similar. But if you think the medium-term outlook is not bad, you usually don’t pay much attention to this because, frankly, they won’t go up. Previously, large consumption sectors did show some intraday movements, but food processing and manufacturing performed relatively well, maintaining a broad central oscillation with clear upper and lower bounds, currently near the lower bound. Baijiu, however, is not doing well; it had volume spikes earlier, but that day it failed to hold its position and hit a new low, with a downward trend.

Therefore, investors now face a choice: if they want to catch hot spots, large consumption is a relatively conservative sector that experienced significant correction earlier; whereas computing power, global power shortages, and similar sectors are clearly different. Generally speaking, I still pay more attention to global power shortages and computing power sectors. If the market rises, these sectors will have greater opportunities. If the market really struggles, some sectors may also move against the trend, but under the big industry wave, I find it hard to believe they will stay completely stagnant; there may be a divergence trend.

Currently, each sector’s logic for strength is different. Agriculture and breeding can also be classified as large consumption; yesterday’s food processing, manufacturing, and liquor are in the same category. But large consumption sectors lack a sustainable foundation for strength; the popularity boost is insufficient, so observation is needed. Breeding is somewhat different; historically, during pig cycles, it had good elasticity, but overall, traditional large consumption sectors are relatively weak. In chemicals, agrochemical products were very strong yesterday morning; when the market was weak, they surged, but in the afternoon, they stagnated, which is quite frustrating. Investors can observe geopolitical tensions, as volatility tends to narrow after past events, which might present opportunities. Lastly, whether power grid equipment can stop falling is crucial because global power shortages have multiple subdivisions, but power grid equipment has a relatively high weight. Yesterday, I mentioned a gap as a bottom line that must not be broken. It has now reached the 20-day moving average, with yesterday’s shadow line touching there. It has not yet stabilized; a bottoming pattern is needed. Currently, it has not appeared, so we can only wait to see if it can bottom out, and wait for the bottoming pattern to form before making judgments. Power grid equipment moves slowly, and the controversy is that it hasn’t declined badly or been sold off twice. Is there a rotation opportunity here? If so, leading stocks will appear within the next 1 to 3 days. From this perspective, opportunities can be identified early. Although it has not yet bottomed, I remain quite concerned and believe it should be viewed as bullish for now.