The flames of war, A-shares ultimately could not escape!

Yesterday, I underestimated the flames of war; this morning, I was shocked to see bloodshed and coldness.[Taogu Ba]
Since February 28, when the US and Israel launched a targeted operation against Iran, the development of the situation has been completely unexpected. In just three days, Iran has carried out 14 rounds of strong counterattacks, with no signs of stopping. While the outside world thought Iran would fall into chaos after losing its top leader, the battlefield has delivered a series of heavy blows that caught the US and Israel off guard.
Before his death, Khamenei made strategic arrangements: he delegated significant autonomous command authority to various sectors of the Revolutionary Guard. If contact with Tehran was lost, each sector could independently initiate counterattack plans. After losing the top leader, the Revolutionary Guard actually relaxed political constraints and fully mobilized for counterattack. The younger faction within the Iranian Islamic Revolutionary Guard, already extremely anti-American, has now been freed from Khamenei’s restrictions, allowing them to act more aggressively. This is the fundamental reason behind Iran’s 14 waves of counterattacks in three days.
If this mode of decentralized warfare continues, it could drag the US and Israel into a prolonged consumption war. For the US and Israel, who aim to eliminate Iran’s leadership decisively, this is turning into a real nightmare. The mastermind behind this nightmare is precisely Khamenei, whom they tried to eliminate but failed to sever completely. The war has just begun, and anything can happen. Let’s watch patiently!
The recent market has also been extreme. Over the weekend, the US and Israel launched a surprise attack on Iran, and the market’s first reaction was: lightning warfare, quick victory, limited impact. So on Monday, the indices remained steady, and everyone breathed a sigh of relief.
Today, the plot has reversed. Signs of a prolonged conflict are emerging, with the shadow of closing the Strait of Hormuz still looming, and oil prices continuing to soar. The market’s second reaction was: this could last a long time? Will it escalate?
Panic selling ensued. Small-cap stocks plunged sharply, resource stocks stood out, and other sectors saw bloodshed. The heavy volume sell-off this afternoon was a typical panic-driven stampede. There was no substantial negative news; it was just emotional reinforcement. This is human nature’s pendulum: always swinging between excessive optimism and excessive pessimism, rarely staying in the middle.
Yesterday, I thought this time would be different, but I couldn’t hold on. Since the market’s reaction is objective, we should go with the flow. Today, the major indices all broke below the 5-day moving average in unison.

In the short term, we are entering a correction phase. At this level, don’t rush to buy the dip; wait for the panic to subside. The old rule still applies: when the three major indices re-establish above the 5-day line, it will be the start of the next rebound. Alternatively, if the Shanghai Composite Index tests 4,000 points again and holds, that will also be a good entry point for low-cost buying.
The technology sector today resonated across the board, with high-level head-cutting signals appearing.

This pattern at a high level, if it cannot quickly recover within three days, indicates a temporary peak. Short-term caution is advised. However, the technology sector’s rally is not over; after a correction, the next phase will still focus on technology stocks, waiting for the risk to be released and the right-side opportunity to emerge.
Currently, only the oil and gas sector stands out, with both major oil companies hitting two consecutive limit-ups. This is a rare phenomenon during special times. Tonight, crude oil futures surged over 7%, further strengthening the oil and gas sector. Tomorrow, the core stocks at the front will continue to be strong, but the follow-up stocks will start to differentiate. Participating now is more difficult; be cautious about chasing highs. The biggest benefit from this conflict is oil—if the war doesn’t end, oil prices will keep rising. There will still be opportunities to participate later.

From a sector rotation perspective, today’s morning session was a point of one-in-two continuation. Especially in the ChiNext, the oil and gas stocks that hit the limit yesterday are now almost all upgraded to consecutive limit-ups. Tomorrow will be a key point for short-term profit-taking, leading to significant differentiation. Some strong core stocks will continue to rebound and strengthen after the split. Such events can produce several big winners with 3-5 times gains, but due to regulatory restrictions, the full potential won’t be realized all at once.
This kind of market is hard for most people to grasp. If you can hit the right point, you might hold a bunch of stocks hitting the limit-up. If you miss, you could end up with a bunch of limit-downs. Although I haven’t shared specific operations in recent articles, my holdings are mostly stocks with 20% limit-ups. The previously studied ChiNext one-in-two model has become quite mature. Combining quantitative and subjective strategies has increased success rates and reduced volatility. Since 2025, based on the one-in-two model, I’ve also addressed the issue of early entry points—pushing the buy-in one day earlier, entering before the limit-up day, effectively front-running the first limit-up of the ChiNext. This model has now become standard. For quant traders, following the hottest stocks of the day and letting the quant system lead the way, rather than taking over the risk, has also solved the issue of capital capacity. During unstable market phases, it’s best to observe more and act less, waiting for opportunities after emotions settle.
The Middle East conflict is far from us; account fluctuations are very close.
But the closer the panic, the more we need to use distant calm to hedge. Today’s big drop, in a week’s time, might just be a deep squat in the slow bull market.
When others panic, ask yourself: Is this overreacting?
When others despair, take a closer look: Is there anyone being wrongly killed?