4.3 Review: Qingming Market Memorial Drops Thousands of Stocks, Ice Cold Market Awaiting Breakthrough

Qingming hasn’t arrived yet, and A-shares are already paying their respects first! A-share stocks have fallen for two straight days; all three major indexes opened higher and then trended lower. The Shanghai Composite Index has once again slipped below 3,900 points. Total turnover for the whole day was only 1.65 trillion yuan, hitting a new intrayear low. In 14 trading days, the benchmark made 8 “ice-point” events. In communications, stocks strengthened against the news; medicine, power, and aerospace all fully fell back. Under the quant “butcher’s knife,” a stock that hit the daily limit on the previous day was directly crushed the next day—short-term difficulty at an “inferno-level.” The overall trend isn’t stable and no breakthrough is in sight; for now, the only thing to do is stay in cash and observe, preserve strength. The more you trade, the more you lose—patience is the way! [Taoguba]

Trade with the trend to get to the point
Even the indexes have to “pay respects” to Qingming: after two straight days of declines, today all three major indexes opened higher and then sank lower. Throughout the day there was basically no resistance; in the end, all indexes closed lower together. Both the Shanghai and Shenzhen indexes dropped by one point, and the Shanghai Composite Index once again fell below 3,900. Daily turnover was 165.65 billion yuan, shrinking by 18.65 billion yuan, again setting a new intrayear low. Here, the index’s technical structure is still in the adjustment range, maintaining a choppy pattern. But if it keeps falling from here, it may once again form a breakdown. What makes it even harder is that turnover keeps shrinking significantly and steadily; not only does it make any follow-up rebound unlikely, it also makes things even more difficult on the theme/front.

For themes, this is both the worst time and the best time. The worst is for the broad retail investors—right now it’s basically “hell-level” difficulty. The best is for quants: with high-frequency, speed, and even more advantage in shorting under the presence of news, the theme rotation width is widening but height isn’t; that’s exactly when quant “harvesting” gets most savage.
Today communications strengthened, but it also can’t be separated from overnight-news catalysts. There were 10 stocks that hit the daily limit throughout the day, with limit-up amounts totaling 16.5k yuan. Huiyuan Communications and Xinneng Taishan both got to 2 consecutive limit-ups; 8 were first-time limit-ups. In weights, Tonghuan Optoelectronics touched the limit and then pulled back. Stocks like Feiyang Optical Fiber, Changguang Huaxi, Tengjing Technology, and others surged and closed higher. In terms of sentiment, Falai Sheng continued to “control limit-up” behavior at the extremes to prevent abnormal movement; Hangdian saw a rise then a pullback and churned. The optical fiber concept index confirmed it had climbed above all moving averages, and an uptrend has preliminarily formed. Going forward, if it breaks out on increased volume, it’s worth paying even more attention.
Medicine still hasn’t strengthened—now it’s entering divergence. Today there were only 4 limit-ups, with total amount 5.005 billion yuan. Jinyao Pharmaceutical got a T-shaped progression to 6 limit-ups; Chongyao Holdings went from 1 to 2; 2 were first-time limit-ups. But yesterday’s assist from Beida Pharma and Yibai Pharma both surged at the open and then pulled back, delivering negative feedback. Lianhuan Pharmaceutical hit a limit-down. Wanbangde traded in the red all day. MeinuoHua saw a late-session plunge on the closing auction. There are already signs of negative “money-losing effect” in the sector, and afterward it feels like the difficulty of any fund rotation back in will be relatively high.
The power direction still hasn’t managed to stop the decline. Intraday, high-level stocks like Huadian Liaoning and Yu Energy both tried to repair, but the sector didn’t follow. In the end, it was mostly pullback. Guangxi Energy continued its slide and hit another limit-down. Liaoning Energy, Hunan Development, and others have been dropping for 6 straight days, nearly cut in half—truly brutal.
Commercial aerospace also lagged with follow-through declines. Shenjian Co. fell sharply and closed lower. After the rebound and then further rise, it still churned—at low positions, Tongyu Card positioning is filled with calculations.

Sentiment rises and falls
The market’s sentiment is in a second-day “ice point.” Today is even worse than yesterday. More than 4,400 stocks closed down for the day; fewer than 700 closed up. Since March 17, when the Shanghai Composite broke down and lost the 60-day moving average, in just 14 trading days the market has hit 8 ice-point events. After the level of weakness in the broad market increased, it has never received an effective improvement.
Speculative sentiment originally led and seemed to improve, but then it was dragged down by the broad market. The “losing money effect” throughout the day was severe. There was only 1 stock that advanced to the next consecutive limit-up. Of those that performed better yesterday, most ended in a miserable finish under the quant “butcher’s knife.” Zhongli Group and Zhongli Zhongyu?—(the one with zero premium; also)—SinZhong? [Note: keep original?] Xinzhong?—“Xinzhong” (no premium) was a daily trading limit; Zhongli Group and Datong?—both had no premium and closed flat after the bell. At the close, stocks that originally resisted lower, such as MeinuoHua and Huadian Liaoning, all plunged.
Since LEO Group was suppressed by regulators without regard for rules back then, market confidence has never fully recovered. Even yesterday there were media pieces doing “quant cleansing.” Thinking back to 2022’s incident with Zhongtong Bus, it was also regulators quietly changing the abnormal-movement rules. After that, short-term sentiment has stayed under pressure for a long time. The index also only bottomed after more than two years of adjustment. Now, under regulatory suppression, it will be increasingly hard for short-term sentiment to return to its earlier peak conditions.

Thoughts for tomorrow
Keep waiting. Keep staying in cash—or in an “entertainment” position. Continue to observe signals of a breakthrough.
Today communications was strong and still hasn’t escaped being driven by news-level stimulation—that is, the quant boost effect under the context of scripts/copy. But in communications specifically, it’s relatively better in two ways: first, the sector trend has formed preliminarily; second, capacity stocks are moving higher in bulk, and most stocks are making new highs. It’s not purely a battle of sentiment. Later, if capacity keeps playing out and the sector’s volume strengthens, there may be a chance for a “through-trade” continuation.
As for other themes, most are still a rotation after quants have laid them out flat under scripts/copy, and the most severe case is that a stock surged big the day before and then got harvested directly the next day—causing the most damage to the market ecosystem.
Also, in terms of style, after Xinghui HuanCai did a big 3-limit-up, it tried to hit the board again today. Although it ultimately pulled back, it still provided a positive feedback. Today it also stimulated the 20cm direction. Throughout the day, there were 8 limit-ups at the 20cm level. Going forward, you can pay attention to whether style will switch over this way.
No matter what, as long as the overall trend hasn’t changed and no breakthrough appears, the short-term priority here is still mainly to preserve viable “living strength.” Right now it’s越努力越亏损—the more you work, the more you lose. Only observing and waiting can keep a good mindset.

Trading lessons
Yesterday was an entertainment position, but it was also a “sit-and-eat-a-loss.” Zhongli Group was so strong—those big boards didn’t