Shanghai Composite Index rises for six consecutive days!!

The Shanghai Composite Index (sh000001) today showed a clear trend of rising on shrinking volume, with technical divergence still moving upwards. The 30-minute divergence has shifted to 60 minutes, and the short-term trend remains intact, but the upward momentum has noticeably weakened. Additionally, the next two days are Christmas holidays in Europe and the US, with most markets closed, so incremental capital is unlikely to move. In short, this rebound is just "internal rotation" by existing funds, with no external liquidity. Veteran investors know the saying: "Shrinking volume leads to rotation; staying steady and observing is the safest bet."

Keep a close eye on support levels: around 3,920 for the Shanghai Index and 13,370 for the Shenzhen Index—these levels must not be easily broken. If they are, the short-term market could enter a shrinking-volume sell-off mode, leading to a messy situation of "longs killing longs." Market sentiment is like the weather: yesterday it was freezing, today it’s boiling—4,100 stocks rose at the close, a sharp rebound that clearly shows fast-moving capital.

Be wary of a rapid cooling in sentiment tomorrow, as a high-open, low-close pattern is highly likely. So those who missed today’s rally shouldn’t panic—if there’s divergence tomorrow, it might actually be a better entry opportunity.

The Shanghai Index has risen for six straight days, and the credibility of this reversal is growing. The trend has long stabilized, and the so-called "deep correction" is just wishful thinking. In the coming days, focus on the breakout signal from the STAR Market Index: once it stabilizes above key moving averages and confirms a breakout, the overall market’s upside potential will fully open, with profit effects spreading from core themes to more sectors—leading to a full-blown rally.

Looking back, commercial aerospace has been active for almost a month, from aerospace systems to satellite segments, from high-flying leaders to low-flying laggards, with consistent heat and strength. This strong performance will likely be replicated in more sectors, as the third wave of the main uptrend is just beginning, with plenty of untapped potential.

We’re in the early stages of the third wave—stay patient and steady. Don’t obsess over daily fluctuations or rush to cash in on short-term gains. Hold onto bottom-fishing positions. We’ve long predicted that A-shares will peak in Q1 next year, with new retail investors flooding in by mid-year and trading volume potentially hitting 4 trillion. That’s when we’ll need to watch for post-celebration risks—but we’re far from that point now!

This is still a golden window for positioning, with clear trends and ample opportunities. Seize this early-stage uptrend, follow the main themes, and you’ll likely reap unexpected returns. The third wave is coming—get ready for an exciting future!

Now, let’s talk themes and stocks:

1. Liquid Cooling
Like lithium batteries yesterday, the liquid cooling sector has quietly risen in sync with the index, though without a strong acceleration rally, so it’s gone unnoticed. Logically, with the year ending soon, AI-driven hard-tech plays like CPO, PCB, and liquid cooling have been institutional favorites.

Before next month, companies will release annual report forecasts, and AI hard-tech earnings expectations will likely be rehyped. This sector hasn’t exploded yet—besides tracking Jietai, look for slow-rising trend stocks to position early.

2. Tech
CPO large-caps are oscillating at highs, with capital rotating to mid- and low-cap stocks—liquid cooling and optical comms rose earlier, now PCB fabrics, power supplies, and oversold memory stocks. Funds are betting on tech’s potential right-side trend and post-dip left-side opportunities.

Tech moves with the index—to stabilize, either finance keeps pushing or tech must lead. Two entry points: (1) ride index-strength expectations—every tech dip is a chance; (2) after six green days, the first pullback could be a tech-rebound play.

3. Consumer
Retail has corrected for three days but held support, showing resilience. If markets cool tomorrow, defensive plays like retail could rebound.

Duty-free is key: RMB appreciation expectations, import price cuts, and tariff cuts are solid tailwinds. It’s not rising now only because hot money chases high-beta plays—once sentiment shifts, duty-free could surge.

Also, is it time to position for the rural policy document? Recent rural work conferences were held mid-to-late December (2024: Dec 17–18; 2023: Dec 19–20; 2022: Dec 23–24; 2021: Dec 25–26)—worth watching early.