[Red Envelope] Healthy disagreement, the next potential leader is here!

Today’s market is like a cup of lukewarm water. The Shenzhen Component Index initially bubbled up a bit, then gradually calmed down. The big caps are sipping honey from AI and new energy sectors, while small stocks settle at the bottom of the cup, with even adjustments tasting faintly bitter. [Taogu Ba]

Review on 2026-03-11

1. Market Overview

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Influenced by the overall rise in external markets, the Shenzhen Component Index opened slightly higher today and continued to advance in the early session. AI hardware and new energy big caps took turns boosting the index, pushing it close to previous highs. Market volume also shifted from a shrinking expectation in the early session to a slight increase in volume. However, during this process, big caps kept draining small stocks, resulting in weak follow-through among small stocks. The Shenzhen Index and ChiNext both performed as the sole dancers of the index. In fact, in the early trading session, 2,076 stocks rose while 3,239 fell, indicating a market leaning towards correction. But individual stock adjustments were mild, mostly within one or two points, representing a healthy correction overall.

In terms of direction, the morning continued yesterday’s benign rotation, with small gains in AI hardware, photovoltaics, energy storage, power grids, computing power, LEDs, and lithium batteries, but none of these sectors formed a focused rally. Currently, although new energy sectors are relatively stronger, the gains are mainly driven by big caps, with few limit-ups, so operational opportunities are limited. Fortunately, the rotation remains healthy, with no sharp pullbacks after gains. Leading companies in various sub-sectors still hold some playability.

Regarding speculative sentiment, it remains very tolerant, with a good speculative atmosphere. Recent hot topics are also showing benign differentiation today, with no obvious signs of deterioration. Overall, the morning market was a broad-based but unfocused healthy rotation.

The total trading volume across both markets was 2.5084 trillion yuan, surpassing 2.5 trillion for the first time, an increase of 110.5 billion from the previous trading day. There were 1,926 stocks advancing and 3,126 declining.

2. Major Indices

Although the Shanghai Composite Index was relatively restrained today, the Shenzhen Component and ChiNext performed well intraday. After this wave of external factors, A-shares demonstrated a phase of strong risk resistance, making it unlikely for large risks to re-emerge in the short term unless more extreme external shocks occur. From a broader structural perspective, the previous zones ① and ② have now merged into a larger central pivot. This pivot has been oscillating for quite some time, with ample turnover, and technically, it is gradually poised for an upward breakout. Keep an eye on a valid breakout above the upper boundary of zone ①. If the closing price reaches a new high, the probability of further upward movement increases. Even if performance is slightly weaker, yesterday’s gap remains a strong short-term support, while the lower boundary of zone ① is an important medium-term support that is unlikely to be broken in the short term (unless driven by strong external factors). Overall, external shocks are gradually fading, and the volatility caused by recent external factors has washed out a large portion of panic selling. Market volume is stabilizing around 2.4 trillion yuan. If it can further stabilize above 2.5 trillion, the probability of the Shenzhen Index breaking higher will increase.

Looking ahead to tomorrow, the small gap created by today’s gap-up will serve as minor support. The resistance at the previous high of zone ① will still exist but has weakened after today’s test. With another attempt, the chances of breaking through resistance will increase.

3. Market Sentiment

Short-term speculative sentiment has remained very positive recently. Although the explosive power isn’t as strong as the recent wave in Taiwan and aerospace sectors, the tolerance level remains high. High-quality stocks rarely trap investors, and even if mistakes are made, most opportunities for recovery or even profit from reversals still exist. The reason for the relatively modest explosive power is not due to a lack of direction but because there are too many directions, all maintaining positive expectations without turning bad. This disperses short-term capital, making it hard to focus and generate explosive gains. However, this situation won’t last long. As some directions weaken and others strengthen, the overall explosive potential will gradually emerge. Currently, the leading stock Yunnan Energy Holdings remains strong, with no major hidden risks seen. Tomorrow’s speculative sentiment should stay positive, and traders focusing on momentum can continue to act freely. Based on today’s strong sectors, participation remains favorable. Overall, the second half of the week should not be too weak for speculative sentiment. If risks increase, we will promptly alert.

4. Sector Analysis

1. AI Hardware (Optical Modules, Storage Chips)

Longfei Fiber: The sector leader, in a second wave of movement. After a correction earlier, it has recently regained momentum, and will continue to be a focus for short-term left-side trading. It has already surged significantly, so chasing at this point isn’t cost-effective; focus on opportunities during healthy sector corrections.

Guangxun Technology: Among the recent movers, it followed the trend of Longfei Fiber most clearly. It didn’t perform well in the previous wave but has shown a notable rebound from low levels this time, with some connection to Longfei Fiber, serving as a reference point. Same as above, only consider left-side opportunities during sector corrections.

In the short term, optical modules still outperform other directions within AI hardware, which mainly rotates around other sectors. The mid-term logic has been repeatedly discussed and remains valid; no need to reiterate. The short-term rhythm is suitable for left-side trading during corrections, while mid-term and swing entries are better during dips or after significant declines. Currently, after two days of continuous rise, it’s not an ideal entry point. The next good entry will be either during a healthy correction or when the sector drives the market to new highs with increased volume (entering the right-side phase). The best timing is still during a sharp decline in US stocks when our resilience is evident.

2. Computing Power

Ningbo Construction: 4 consecutive limit-ups, related to computing power and lobster concepts. It’s a key sector with high consecutive gains, and today it withstood volume divergence pressure, with a 60% turnover and limit-up, maintaining good market recognition. Tomorrow, watch for whether a shift from weak to strong can drive the sector higher, which is a crucial reference. If successful, it could further boost the sector’s potential and possibly produce a new leader.

UCloud: A core stock in the lobster sector, today showing divergence within the sector. Its position remains intact; if the sector recovers, it should perform again. Expect continued volatility and active trading, mainly focusing on left-side opportunities.

TuoWei Information / Huasen Tiancheng: Popular stocks within the sector, tend to move whenever the sector moves, maintaining a pattern of repeated activity. They have left-side trading value during sector strength.

Recently, the pace of the computing power sector has diverged from the electric power sector, so we analyze it as a whole. The current trend appears healthy, with no mid-term invalidation of the logic. As more large firms join the lobster track, demand for computing power will further increase. Given the high safety margin in the market, the sector is expected to continue oscillating upward. Both left- and right-side funds participate, and during strong intra-day performance, there are opportunities on the right side. During corrections, waiting for stabilization points to trade on the left side. Overall, computing power remains a key sector to watch. Tomorrow, focus on whether Ningbo Construction can turn weak into strong and drive sector recovery, which could present some right-side opportunities.

3. Smart Grid

Yunnan Energy Holdings: The sector leader, maintaining a healthy slight upward oscillation, supporting a mid-to-low level rebound expectation.

GCL System Integration, Shun Na Shares, Hangdian Shares, Hanlan Shares, Southern Grid Energy, Southern Grid Digital: Mid-tier stocks with moderate popularity.

The sector remains in a benign state, but there’s some dilemma: many mid-tier rebound stocks are scattered, with no clear leader, and the rotation pattern means limited explosive power but good resilience. This makes right-side trading almost without premium the next day, while left-side trading relies on luck and may not hit the right stocks. The current state is a repeated active expectation with high randomness, making it somewhat challenging to trade.

4. Photovoltaics, Energy Storage, etc.

Currently, photovoltaics and energy storage are still in normal rotation, with no clear change in industry logic or sustained expectations. Recent strong gains in Ning Wang have provided some momentum for the entire new energy sector. Overall, future outlook remains uncertain; I do not recommend chasing high.

Overall, recent short-term hot sectors continue to show healthy differentiation but lack sustained explosive power. Monitoring continues, but only sectors confirmed with intra-day strength will have better right-side trading opportunities. The stocks mentioned in sector analysis are just relatively active recent stocks for observation and positioning, not investment advice.

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