Risk signals emerging, error tolerance declining, sentiment game entering alert phase

March 13, 2026 Review [Taogu Ba]

I. Market Overview

March 13, 2026 Morning Review

Influenced by the broad decline in overnight global markets, today’s A-shares opened slightly lower and remained weak with oscillations. Trading volume across both markets slightly shrank compared to yesterday. Although the Shenzhen Component Index briefly turned green and the number of advancing and declining stocks was balanced, market sentiment was noticeably weaker than the past two days. Recently, short-term hot spots have generally corrected. Apart from a slight performance in the chemical sector in the morning, most other hot sectors cooled off. The previous days saw rotation among sectors, but today even rotation seemed to have lost interest. Overall, the indices and sentiment are not bad, but short-term hot spots have completely cooled, leaving the market dull and somewhat lackluster. As the weekend approaches, risk aversion has increased to avoid weekend news uncertainties. Overall, the morning market was neutral—neither optimistic nor pessimistic, with limited risk and opportunity. However, in the afternoon, the decline of high-flying stocks continued, with Yunnan Energy Holdings starting to plunge intraday, shaking market confidence. Following Yunnan Energy’s drop, the index continued to fall, further reducing short-term tolerance for risk.

Throughout the day, total market turnover was 2.4003 trillion yuan, down 41.6 billion from the previous trading day. There were 1,436 stocks up and 3,606 stocks down, indicating a weak, volume-contracted correction.

II. Major Market Trends

Compared to external markets, today’s A-shares showed some volume contraction but remained relatively resilient. The Shenzhen Index continued oscillating above the gap and below previous highs, roughly aligning with prior expectations. Over recent periods, the overall performance of A-shares has been better than external markets, demonstrating strong risk resistance from a broad perspective. However, from a strategic standpoint, recent difficulties are evident—sector rotation is too rapid, with only the power sector showing sustained strength, while others rotate frequently with poor continuity. Overall, funds are neither actively nor放弃, especially large funds tend to rotate out of overextended sectors. The main trading approach remains high sell and low buy, making chasing gains and cutting losses very uncomfortable and prone to repeated setbacks. Trading on the right side (buying after confirmation) requires patience, waiting for a breakout with volume.

From an index structure perspective, the current pattern remains a fluctuation above the original trend line. The longer this sideways movement persists, the greater the likelihood of a sustained trend when a new direction is chosen. If next week continues this oscillation, traders should prepare for potential shifts. A volume breakout would be an immediate buy signal; a confirmed decline could lead to temporary position reduction. Even in such cases, the adjustment is mainly a small wave correction; as long as the main mid-term support holds, the overall upward trend remains intact.

III. Market Sentiment

Since Yunnan Energy Holdings broke out, short-term speculative sentiment has remained highly tolerant, lasting over two weeks. During this period, major leading stocks rarely experienced extreme losses, and even if mistakes occurred, recovery opportunities were abundant. Today, the morning saw good performance among leading stocks, with a high proportion of gains. Yunnan Energy continued steady, but by afternoon, this trend changed—red days decreased sharply, and stocks like Hanliang and Shun Na also declined significantly. Overall, some negative signals emerged, such as Wang Li Security showing persistent decline, and high-flying stocks experiencing large downward candles. While these do not yet signal a complete reversal of speculative sentiment, vigilance is necessary. If losses continue to expand, sentiment could shift; if these high-flying stocks recover quickly, confidence remains stable, and risks are temporarily alleviated.

In summary, speculative sentiment has shifted from a phase of minimal risk to one requiring careful observation. The golden period for blindly low-buying high-flying stocks is over. Monitoring large downward candles and limit-down stocks in high positions is advisable—if persistent large declines occur, caution is warranted.

IV. Sector Analysis

1. Power Sector

In the morning, the power sector experienced expected divergence, with Huaneng Power rebounding to hit the daily limit, attempting a recovery. However, overall recovery strength was limited, and the sector表现分裂—some high-profile stocks like Hanlian and Shun Na saw significant adjustments, while low-priced stocks continued to show localized gains. The previous logic of coordinated growth faced divergence today, as the market began to debate low-priced sectors like wind power, which have “non-oil and gas energy” narratives. This caused sector performance to become fragmented, with internal logical splits. Recently, wind power has been relatively strong, with continuous volume-driven advances and new narratives. It’s worth watching whether wind power can break away from the broader power sector and develop independently. After a sustained rise, chasing these stocks is less attractive; waiting for a healthy correction is preferable.

2. AI Hardware

The resilience of AI hardware mainly hinges on optical components. However, with US stocks’ optical module sector entering consolidation after a strong rally, the difficulty of strategic positioning has increased. The lack of a clear leading core for continuous breakout—despite a brief rally by Longfei and Guangxun—was invalidated when Guangxun weakened today. The sector has entered a phase of high randomness, requiring patience until a new core leader emerges. The mid-term logic remains unchanged, but short-term left-side trading has diminished. Notably, MLED and optical stocks remain active, with no signs of invalidation, and leading stocks are clear, so tracking continues.

3. Computing Power

Today’s performance of computing power stocks was disappointing, especially with significant corrections in the lobster concept stocks. Monday may be the last chance for the lobster sector to recover; if no performance occurs then, future expectations will weaken, possibly requiring news stimuli. The mid-term logic for leasing computing power remains valid, but some leading stocks have shown active counter-moves, reducing left-side trading confidence. The focus now shifts to waiting for right-side opportunities—once volume increases, consider participating. Currently, there are few standout stocks for bottom-fishing, and randomness is high.

The sector today shows a lack of consensus—funds rotated for two days without clear direction, and today’s market was essentially abandoned. The most uncomfortable aspect is that many leading stocks, such as Huasheng, Tuowei, Youkede (UCloud), Guangxun, and Shun Na, experienced active limit-downs or large declines. This severely damages sector momentum and is rare across multiple sectors simultaneously, disrupting the left-side strategic balance. The market has entered a phase where right-side opportunities are scarce, and left-side randomness is high. Only when this situation shows clear reversal signals can better trading strategies resume.

Market tolerance has plummeted; I have personally gone to zero holdings, observing until clarity or risk reduction. Wishing everyone a good weekend. Any new insights over the weekend will be posted in the pinned comment on Sunday.

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