Two indices are recovering, beginning to test and experiment

When mentioning the main trend, I often refer to three resonances: emotional resonance, weight resonance, and index resonance.[Taogu Ba]

The discussion on emotional cycles has decreased recently and is gradually losing effectiveness. Weight and index resonances remain valid. Looking back at the market since September 24, each upward wave of the All A Index has shown a short-term profit opportunity. In fact, if we go back three or five years, all major cycles also resonate with the index.

The top chart shows from September 24 to April 2025. The bottom chart shows from April last year to now.

It can be seen that during the index’s upward phase, leading main lines are often led by medium-cap stocks. During the chaotic or volatile initial stages of the index, it’s more suitable for independent stock groups to form clusters. This week, the CSI 2000 and CSI 1000 hit new highs, the CSI 500 is close to a new high, and the All A Index also reached a new high. As more indices hit new highs, a new round is brewing. Currently, trading volume is not yet active enough, and incremental funds have not yet formed a collective force. It is expected that in the next phase, a consensus will gradually form amid fluctuations. The worst-case scenario is a sideways movement with a few sectors rotating. The result of stock rotation before the holiday was a decline; after the holiday, fluctuations continue, with disagreements and some recovery, and the market’s loss-making effect has begun to diminish. This is reflected in another index (yesterday’s turnover of 20), which shows that the loss-making effect is starting to stabilize.

The top chart shows the sector index of yesterday’s turnover of 20. It tracks the performance of the top 20 stocks by trading volume in the previous trading day. For traders focusing on yesterday’s volume stocks, this index is similar to the previously used yesterday’s limit-up index and yesterday’s consecutive limit-up index.

The chart clearly shows the technology acceleration driven by Cambrian and the aerospace acceleration driven by aerospace development. This index clearly reflects the profit and loss effects of market-cap stocks. From the chart, it’s also evident that during the market’s sideways phase in Q4, the trends of China Fortune Land Development and Pingtan Development were not reflected in this index, as they were only localized trends. During the holiday before Chinese New Year, the index continued to decline, making losses easy. In the last two days of this week, attempts to stabilize were made, combined with the new highs of the All A Index. Subjectively, I believe this is a good point to start arbitrage and gradually test the waters. If the market deteriorates again during this process, you can compare the two indices, adjust positions, and control trading frequency.

The stocks I am watching have already been mentioned in the comments on Friday; I will update if there are new developments.