Market Index Direction:
On the last trading day before the holiday, it was confirmed that after a significant rise, one should focus on individual stocks rather than the index, and not chase the surging solar sector. On Friday, stocks broadly rose, with 4400 shares closing higher. The market wasn't bearish before the holiday, mainly because institutions like private and public funds needed to beautify their year-end net asset values. It was a rare sight to see Xingye Bank, with a market cap of over 300 billion, hitting the upper limit at the end of trading! Reviewing the annual trend, it's no wonder fund managers are anxious: The CSI 300 Index fell by 11.38% over the year, marking the first time in history with three consecutive annual declines. The mixed equity fund index fell by 14.48% annually, a historical first with two consecutive annual declines. The heavily-weighted funds in stocks also fell by 15.67% annually, another first. However, we are currently in a mid-to-long-term bottom zone, and both institutions and individual investors should aim for a turnaround in 2024.
Short-term Sentiment (Consecutive Limit-Ups) Direction:
The short-term sentiment continues to improve, consistent with yesterday's expectations: Yashi Optoelectronics had 8 consecutive limit-ups, and Qingyuan Shares had 7. The transition from 2 to 3 and multiple promotions were seen (yesterday, 7 stocks hit the limit, 5 of which continued). As per the New Year trading tradition, stocks like Yashi Optoelectronics and Qingyuan Shares will open at a high premium, and those that successfully advanced on Friday will perform well. However, this year's short-term speculation is characterized by quantitative methods shortening the emotional cycle, with peaks often quickly followed by rapid declines; the duration of the low and freezing periods are also shorter. Thus, the next trading day is likely a selling point, not a buying one.
Sector Direction:
Yesterday's analysis of the MR sector proved to be stronger than expected, with stocks like Goertek hitting the upper limit, and Yabaoxuan at Beizheng having three 30cm large limit-ups, and Weida Optoelectronics having its first limit-up. Like short-term sentiment, the sector peaked on Friday, and will diversify in the next trading session. Similar to the solar sector, which peaked on Thursday and pulled back on Friday (as analyzed yesterday). The view on solar is that the front row can sustain, but the back row needs to adjust for two to three days. Therefore, Friday was a day of adjustment for the back row, and continued adjustment in the next trading session presents a good short-term opportunity. The opportunity in sectors in 2024 lies in the high-low switch. Sectors that rose this year might bear in 2024, while sectors like new energy and real estate that fell this year might bull next year. The stock market is a cycle of repetitions. Keeping pace with the rhythm, one can profit in a bear market; failing to keep up, one can still lose in a bull market.
2024 Outlook:
The index is expected to return above 3000 points in 2024, entering a local bull market, with focus on sectors like new energy solar and lithium batteries that have adjusted for two years. Another focus is on high-dividend sectors, offering investment opportunities. If not profiting from stock appreciation, at least earn high dividends annually, which are better than bank interest rates.
