Strong Narrative Supports the Market, Weight Adjustment Cannot Stop the Profit-Making Hotspot

14 consecutive positive days + external market fluctuations + Bitcoin pullback + market curse day, investor sentiment is indeed a bit tense, especially among retail investors with significant short-term gains, who are probably thinking it’s time to take profits. At the same time, many missed the opportunity and are trying to jump in during high volatility. As long as trading volume doesn’t shrink excessively, there’s no need to be overly pessimistic; the battle between bulls and bears will remain highly tense.

In the morning session, mainstream coins and blue-chip sectors were hammered down, with most traditional financial concept coins hitting the limit down; meanwhile, technology sector coins seemed to have taken a calming pill, with hot topics like AI chips, commercial applications, and Web3 infrastructure soaring, spilling profit-making effects across the screen! The divergence between small-cap coins (yellow line) and large-cap coins (white line) is very obvious, with small caps far outperforming large caps.

First, look at the overall market trend. Although the weightings dragged down the index, concepts like Chinese stocks and power sector (especially renewable energy and infrastructure in these new directions) are supporting the market. The index is fluctuating at high levels, still some distance from the 5-day moving average—remember, as long as the price stays above the 5-day moving average, there’s no need to panic. However, in the morning session, trading volume shrank quite a bit within an hour, and net outflows of main funds reached around 24 billion, so these signals should be watched carefully. Continuous observation of market movements is necessary.

Will there be a straight dive in the afternoon? How to respond after 14 consecutive positive days?

Straightforward conclusion: the risk of a dive in the afternoon isn’t particularly high, but volatility is inevitable. Why? First, the technology sector is very resilient! As long as the main line of commercial applications holds steady, there’s little to fear. Even if there’s a sudden reversal, as long as the chip concept doesn’t completely give up, it’s manageable. AI + industrial applications are supported by policies (official documents promoting large-scale digital transformation), and these sectors are attracting concentrated capital, with new stories building on old ones—funds simply can’t stop flowing. Second, power concepts and large-cap coins, these “stabilizers,” are still exerting effort. The market has mostly digested the heavy selling pressure from weightings, and the divergence between small and large caps in the morning indicates that funds are actively playing in hot sectors, making a quick exit less likely.

Regarding “how to respond after 14 positive days,” here are two practical suggestions:

Don’t mess with your holdings: If you hold main sector coins like technology and power, just keep holding as long as they don’t break below the 5-day moving average. Don’t be scared by weightings’ decline.

Don’t chase highs! Don’t chase highs! Don’t chase highs! In sectors with large internal differentiation like commercial applications, avoid chasing after already high gains. Shift your focus to those still at low levels and haven’t started moving yet (such as industrial software concepts, navigation applications).

What signals indicate a market top? Keep an eye on these 3!

Although profit-making effects are booming now, you must stay alert. The market can’t rise infinitely; the hotter it gets, the more cautious you should be. Don’t be fooled by current happiness—losing money can happen just as fast. Protecting profits is more important than continuously making money. If you see these signals, be alert:

Sudden increase in trading volume + stagnation of the index: For example, if the daily trading volume of both markets suddenly surpasses a very high level, but the index doesn’t rise and instead falls, with a large bearish candle at high levels, it indicates funds are quietly withdrawing.

Main sectors fall behind collectively: If leading sectors like technology and power start to decline broadly, with many stocks hitting the limit down, it’s time to consider reducing positions.

5-day moving average turns downward: If the price falls below the 5-day moving average and can’t recover in two consecutive periods, a correction may have truly started.

Overall, today’s market still follows the rhythm of “light on large caps, heavy on hot sectors.” The afternoon is likely to continue with volatility, but as long as the main technology line doesn’t completely collapse, profit-making effects will still have room to grow.