Be mindful of the rhythm when participating in rotational trading markets. Pay attention to the market cycles and adjust your strategies accordingly to avoid unnecessary risks and seize opportunities as they arise.

1. Last Friday Focus

Last Friday, we paid attention to Juli Rigging and Hangzhou Electric股份 at low levels. The main logic was that the bidding exceeded expectations, with strong support after the opening. Last Friday also featured a rotation market; since the rotation didn’t continue, it was only a matter of trial and error.

2. Last Friday’s Market

Overall, last week’s market was a rotation market. On Monday, gold, silver, non-ferrous metals retreated sharply, with the entire day showing a bottoming out. On Tuesday, there was a rebound in general aerospace, AI applications, and space photovoltaics. On Wednesday, these sectors weakened again, with funds rotating into coal, real estate, and other sectors. On Thursday, coal and real estate weakened again, and funds rotated into consumer, film, and television sectors. On Friday, consumer and media sectors weakened again, with funds shifting into robotics, chemicals, and pharmaceuticals.

Overall, last week was characterized by a fan rotation market. Because the sectors that rotated all showed signs of overheating, the overall difficulty remained high. The rotation was due to a lack of consensus among funds. As the Spring Festival approaches, there are no major news catalysts, and funds have early withdrawal needs. The overall market last week was a rotation market. Currently, it’s important to control attention because there are no main themes; funds are not focused. Today’s gains may turn into tomorrow’s declines, with no clear pattern. These days are about trial and error, so pace should be carefully managed.

Focus on the core in the long-term cycle, and monitor the first board in the short-term cycle. During disordered rotation cycles, hold cash or trend stocks to respond. Conduct daily reviews, make static three-day forecasts, and prepare dynamic three-day forecasts for the next day’s bidding. Over time, predictions will become more accurate.

The stock market always values following the trend—align with the market’s momentum and sector trends. During major downturns, control the drawdown; during up cycles, increase participation. Engage more during profitable cycles and hold back during losing cycles. This way, big gains and small losses lead to stable compound growth. Never pursue daily big profits; always act according to the cycle’s stage. Doing what is appropriate at each point in the cycle is most important. Revisit this advice multiple times for endless benefits. Wishing everyone to keep pace weekly, reach new account highs, and improve a little each day. As the account blossoms like a sesame flower, it will rise step by step.

3. Market Outlook for Next Week

Next week is the last trading week before the Spring Festival. Since the holiday break is quite long, there is usually a pre-holiday effect every year. Last week, sector rotations occurred daily, and as the Spring Festival approaches, most funds have already withdrawn. Next week, there might be a “red envelope” market, so I am not bearish on the market. It’s appropriate to be somewhat more active.

Last Friday, U.S. stocks surged significantly, so the A-shares are likely to perform well on Monday. Sector themes are still rotating; sectors that performed strongly last Friday, such as chemicals, robotics, and pharmaceuticals, will need to see if the strength continues on Monday. Most likely, rotation will persist. As I said before, sectors that perform strongly on one day should not be chased the next day.

Because next week is the last trading week before the holiday, the last three days are likely to see a halt in rotation due to fund battles over post-holiday “red envelopes.” During the Spring Festival, sectors like robotics and AI applications are expected to have positive news. I personally guess these two sectors might cross the New Year, but that’s just a guess; we will see the specifics during trading.

4. How to Participate in Rotation Markets

Participation in rotation markets is inherently paradoxical. The stock market has cycles—large cycles, small cycles, and disordered rotation cycles. The difference lies in the duration of themes: large cycles usually last one to two months, like recent cross-strait directions or commercial aerospace. Small cycles typically last one to two weeks, such as transitional themes during the retreat of commercial aerospace. Disordered rotation cycles are like last week’s market—sectors that rise today and fall tomorrow, with no sustainability.

In fact, anyone who has survived long enough in the stock market knows that ultimately, it’s about making money from the market’s trends. During good times, participate more; during bad times, participate less. This way, each cycle’s big gains and small losses compound into steady growth. Large cycles, lasting one to two months, often have main themes with deep capital involvement, leading sectors with high leaders, mid-tier and lagging sectors, and continuous sector strength. By consistently participating in these main themes, one can keep earning big and losing small, and finally, during downturns, control the urge to overtrade, achieving big gains with small losses.

In small cycles, since themes last only one to two weeks, capital can continue to participate in the first boards of sectors to realize arbitrage.

Disordered rotation cycles, by definition, are chaotic. On the surface, sectors rise today and fall tomorrow, with daily fluctuations—like a one-day tour. Because themes are not sustained, capital cannot focus; it only pays attention to the sectors that perform strongly on the day. The next day, arbitrage might be possible, but sometimes it’s only a half-day tour—sectors that are strong in the morning weaken in the afternoon. During such times, the first boards of sectors that performed strongly may not even emerge. The market features resemble last week’s pattern—no clear rules.

Some friends ask how to participate in disordered cycles. My advice is that since they are fundamentally about capital trial and error, with no sustainability, the best approach is to hold cash or focus on the sectors that perform strongly on the day. In fact, experienced traders will notice that after each major cycle retreat, there are five or six days of chaotic capital rotation, mainly because funds are ending an old cycle and trying new directions. As they rotate, new cycles emerge. Since funds don’t know which direction will last, they rotate daily, causing the trial-and-error pattern.

Again, the key is that each cycle’s big gains and small losses compound into steady growth. Over longer periods, during the main upward phase, increase positions; during downturns, hold back. In small cycles, participate in the first boards; in disordered cycles, try small positions or stay in cash. Doing this consciously at each stage will steadily grow your account.

This is also the reason I have been focusing on core development in the cross-strait big cycle, such as Pingtan and Hefu China, and on core aerospace development during the commercial aerospace cycle. Different cycles require different strategies—adapting to change is the key to victory.

I also want to remind everyone that the above insights are based on my 17 years of experience in the stock market. Since the market is always changing, the only certainty is uncertainty. Just like policy changes can influence market preferences, everyone must learn through practice, continually refining their understanding. The journey to understanding market laws is endless, so keep summarizing and learning.

Overall, trial-and-error cycles are still a challenging phase. Next week, be cautious with pace. Keep trying, and new cycles and themes will emerge. During this process, control your attention.

That’s all for now. Feel free to comment on what you’ve learned.

Additionally, my outlook for next week has been updated. Wishing everyone a profitable last trading week before the Spring Festival, reaching new account highs, and enjoying the post-holiday “red envelope” market.

If this has been helpful, please like, support, and tip. Your support is the motivation for my continuous updates. Wishing everyone all the best—keep it up! 666