3.24 Reflections After the Sharp Decline!

Huadian Liaoning Energy (sh600396) Brief: The index was at 3,968 points in 2026 and rose to a high of 4,197 points, nearly a 230-point increase. It then fell from 4,197 points to the current 3,794 points, a decline of over 400 points. This can be understood as the decline this year being nearly twice the rise, indicating that the short-selling force far exceeds the buying force. The main reason for this is the changing US-Iran situation, which has suppressed the A-shares index and even the global markets. Currently, the index has already fallen. From a technical perspective, it resembles the suppression of the A-shares by the Russia-Ukraine war in early April last year. Suppose the US-Iran situation reaches a rough conclusion around late March or early April—similar to what Bridgewater founder Ray Dalio described as a decisive battle in the Strait of Hormuz, akin to Britain’s Suez Canal crisis—then the index might have a chance to stop falling. The exact day is unknown, but it’s very close to late March or early April. If this hypothesis holds, it could form a deep pit similar to last year’s Russia-Ukraine crisis. After all, Wall Street has no new tricks, and speculation remains as old as the hills. If a deep pit appears, opportunities like the tenfold increase seen with CPO last year could be replicated in other sectors this year. This is the main focus of my article today: the more the market falls, the more opportunities there are. While panic on the left side can easily lead to irrational decisions, in the long run, it’s undoubtedly the best opportunity. Potential sectors for big opportunities include the expected benefits of token overseas expansion—such as computing power, cloud services, or IDC—and energy substitution sectors like photovoltaic exports and energy storage. Overall, until the deep pit or the US-Iran situation truly materializes, most investors should watch more and act less, reduce positions, and avoid losses from declines. Next, I will analyze the index levels and sentiment cycles:

1. Index Cycle Thinking:

The index, as predicted, is in a bearish arrangement, breaking down all the way. It fell over 200 points in three days, with an accelerating downward trend. Based on the movements of GJD’s mysterious funds, there are no signs of significant market rescue measures in the short term, so the decline is largely being allowed to continue. Reflecting on GJD’s various sell-offs and reductions in January, it becomes clear that GJD had remarkable foresight. After the index broke down and plunged, it accelerated further. In the short term, the index is expected to oscillate, with the possibility of new lows. If policy measures provide reassurance and trigger a rebound from oversold levels, it’s more likely to be a continuation of the decline. Patience is advised. This concludes my thoughts on the index cycle.

2. Sentiment Cycle Projection:

First, Long Analysis: In the first half of the month, a leading stock related to the conflict in JinNiu Chemical appeared, then peaked and retraced. In the second half, the electric power sector led with GCL System Integration, followed by ShunNa, Jinkai New Energy, Zhongnan Culture, and now Huadian Energy and Huadian Liaoning. These are essentially extensions of thematic hype. Many core stocks in this sector previously showed signs of distribution, so the remaining stocks like Huadian Energy and Huadian Liaoning are mainly short-term capital consolidations, serving as sentiment indicators rather than actual investment targets.

Second, Opportunity Analysis: During the single-direction decline of the index, with the index breaking through 3,900 and 3,800 points within a day, any thematic logic can become convoluted—such as the attempted recovery in photovoltaic exports, energy storage, and power sectors this week. In this context, fundamental research becomes especially important. The recent revival of photovoltaics is driven by rumors that Tesla has placed orders for photovoltaic equipment, with expectations of delivery in early May. This transition from concept to actual performance underpins the rise in photovoltaic equipment stocks. Meanwhile, with fossil fuels like crude oil continuing to rise, and the acceleration of offshore wind installations in Europe, along with developments in U.S. power grids and energy storage, China—being a major new energy country—will not lag behind. Whether it’s the trillion-yuan investments mentioned in key meetings, North American power shortages, European photovoltaic orders, or opportunities from Middle Eastern conflicts in energy storage, capital is rushing into these sectors. Regarding trading strategies, the short-term decline impacts various sectors significantly. If the situation eases or market demand stabilizes, a rebound from oversold levels is expected. The more a sector declines, the greater the opportunity for a rebound. Additionally, sectors with stronger earnings expectations tend to attract more institutional capital. I won’t specify sectors here again, as I’ve mentioned many times before. Overall, before the index hits bottom, it’s wise to remain cautious.

Special Reminder: The above information is for reference only and does not constitute investment advice. No stock recommendations are provided! Investing involves risks; please proceed cautiously!