Starting with a fully invested A-share portfolio to become a capital...

Chapter 42: Buying on the Limit, The Dragon Head Strategy (Please continue reading)
The next day, the sun shines brightly.

April 10th is a Friday, and also the last trading day of the week.

Friday is special for A-shares because it is not only the last trading day of the week, but also the settlement day for stock index futures.

On this day, funds tend to be more cautious, and prices are prone to rise and then fall.

Zhang Yang slept soundly until dawn. He washed up as usual, but to his surprise, Xu Jiafeng also climbed out of bed, rubbing his eyes, and went to the balcony.

Good morning, dormitory head.

"Good morning, is there an early class today?"

When Zhang Yang responded, he could only think of the possibility that the other party was up early.

"No." Xu Jiafeng walked into the bathroom and said while urinating, "I heard from my fitness coach that they do cardio on an empty stomach in the morning to lose fat, and I want to try it."

"Just be mindful of the intensity at the beginning, and keep it up!" Zhang Yang encouraged.

His two lifetimes of experience told him that women are indeed a potential driving force for men to become better.

Because the underlying logic of society is to strive; if you want to obtain more resources, you must first become excellent yourself.

While some young people are willing to die or even jump into a river for the sake of a girl, those who truly understand the rules of competition have already extended the time for their technicians.

"I will do what I can."

Xu Jiafeng replied.

Zhang Yang didn't say anything more. After washing up, he went to the lower bunk of his bed, put his laptop and power adapter into his laptop bag, and then headed to the cafeteria.

……

Upon arriving at the cafeteria, Zhang Yang, as usual, ordered two fried dough sticks, four steamed buns, two sticky rice chickens, and a cup of soy milk to fill his stomach before heading straight to the library.

Li Xiaochun, a junior student who works part-time at the library, greeted Zhang Yang when he appeared on time again, saying, "Senior Zhang Yang, you're here so early again."

"The early bird catches the worm."

Zhang Yang said with a smile.

Because the two were very familiar with each other, Li Xiaochun could guess what was in Zhang Yang's bag and quickly registered the valuables.

After exchanging a few more polite words, Zhang Yang arrived at the financial analysis room on the sixth floor of the library.

With the network cable connected and an hour to go before the market opened, Zhang Yang could take this opportunity to check the capital news briefing.

"Hualian Department Store has submitted a merger and acquisition application to the China Securities Regulatory Commission, intending to purchase core assets through the issuance of shares. This may lead to other listed companies following suit."

“Zhonghong Zhuoye’s backdoor listing through Keyuan Group can be marked.”

"The rise in the manufacturing PMI data in April is good for the traditional manufacturing sector, but the positive effects can easily turn into negative ones once they are realized."

Zhang Yang analyzed market news one by one and began to compile a list of sectors that might become the day's leading stocks, with banking, insurance, and finance being highlighted in particular.

Because at 10 o'clock today, the People's Bank of China will hold its first quarterly monetary policy meeting, which is directly related to the extent of monetary easing from above.

……

9 points.

A-shares have entered the call auction phase.

Orders can be placed freely between 15 and 20 minutes, and cancellations are allowed, but no transactions will be conducted.

Zhang Yang opened the China Construction Bank stock chart and saw a very strong number of buy orders above. If this level is maintained before the 20-minute mark, it may open higher again.

He then opened the Changan Automobile bidding platform to check the data changes.

Because he posted a prediction on Tieba that the funds in Changan Automobile's individual stocks had become severely differentiated, which might indicate that the market had peaked.

Now Zhang Yang wants to see if Changan Automobile can pull off its fifth consecutive limit-up move, given the positive manufacturing PMI data.

As time went on, some of the "smoke orders" were cancelled before the 20-minute mark, leaving only the real money orders.

The four major banks in the banking sector saw a continuous increase in buy orders above, and the white dots in the auction were not dense, indicating that both major funds and retail investors believe that the "First Quarter Meeting of the People's Bank of China's Monetary Policy" may bring new positive news.

The insurance and financial sectors also exhibited similar pre-market price movements. Meanwhile, the automotive sector, benefiting from the manufacturing PMI data, collectively opened higher in the pre-market auction.

The collective gap-up opening during the pre-market auction drove up stock index futures prices.

At this point on Baidu Tieba, Zhang Yang's posts began to be "whipped" (a form of online abuse).

[Little Dumb]: What's wrong with Joker? It looks like it's going to open high again today. Didn't you say that Changan Automobile had peaked?
[Wang Bujian Wang]: Luckily I didn't sell my Changan car yesterday. If I were a real expert, how could I only have tens of thousands of yuan?

[ErMaoShangShangShang]: A 62.74% return is indeed impressive, but the amount of capital is only 20,000 to 30,000. A true master would never have such a small return. I feel that Joker is just lucky.

The questions and responses came one after another, but Zhang Yang didn't have time to check them; instead, he kept a close eye on the market.

The 14 yuan one-day reverse repurchase agreement of treasury bonds that he bought yesterday has returned the funds and three days' interest to his securities account, allowing him to trade stocks, but he cannot withdraw the money to his bank card.

If you need to withdraw funds to your bank card, you must suspend the purchase of reverse repurchase agreements for treasury bonds until Monday, the next trading day.

Time passed again, and at 9:25, the opening auction ended.

As Zhang Yang predicted, the manufacturing PMI data rebounded for the fourth consecutive month, which indeed led to a higher opening for the market index.

With the market officially opening at 9:30 a.m., sectors such as banking, infrastructure, insurance, construction machinery, finance, and automobiles all rose.

This kind of vibrant and diverse upward trend can only be seen in a recovery-type bull market.

Zhang Yang opened the stock exchange's daily trading data and noticed a ST stock, ST Zhongfangji (now Zhongyida), which had hit its daily limit up and was showing unusual activity.

He quickly opened the research reports on ST stocks that he had compiled some time ago to check the company's fundamentals.

ST Zhongfangji, originally named Huaguo Textile Machinery Co., Ltd. when it was listed in 1992, was transformed from Huaguo Textile Machinery Factory and is a leading enterprise in the domestic textile machinery industry.

In 1998, due to asset restructuring and integration of assets such as Shanghai No. 2 Textile Machinery Factory, it was renamed Shanghai No. 2 Textile Machinery Co., Ltd.

In 1999, the company was designated as a "Special Treatment" (ST) stock due to the cyclical downturn in the textile machinery industry, coupled with internal management problems, which resulted in a continuous negative net profit.

Although it successfully removed the "special treatment" designation in 2003, the company's net profit was negative for three consecutive years from 2006 to 2008. In 2008, after deducting non-recurring gains and losses, the loss reached 5324.9 million yuan, and it was once again designated as a "special treatment" company.

In the first quarter of 2009, its net profit attributable to the parent company was only 146 million yuan, a year-on-year decrease of 91.57%, which was a clear sign of a financial crisis.

"The company's fundamentals have not improved, and there is also internal strife among shareholders. However, loom production belongs to traditional manufacturing, and it was boosted by last night's positive PMI data..."

Zhang Yang then opened the loom sector and found that other loom concept stocks were also rising collectively, with ST Zhongfangji being the fastest to hit the daily limit.

In other words, it is now a leading stock in the loom concept sector recognized by market funds.

According to the "Signature Trading Strategy - Leading Stock Strategy", leading concept stocks will take the lead in starting and rising, and drive the sentiment of the sector. ST Zhongfangji obviously has all the conditions.

Without hesitation, Zhang Yang bought 20,000 yuan worth of shares at 11.28 yuan, the price that hit the daily limit.

Why did he target ST Zhongfangji?
Very simple.

The market is flush with funds!
Within just 5 minutes of the market opening, a massive volume of 400 million shares was released, reaching one-tenth of the previous trading day's volume. This indicates that the stock's funds are extremely active, and the fundamentals of this stock are really terrible. Despite its small market capitalization, it has attracted market attention, suggesting that someone is manipulating the market to drive up the price.

The most crucial factor in determining whether a stock is worth chasing at a high price is whether it has future prospects and whether it is favored by market funds.

ST Zhongfangji, as the leading stock in China's textile machinery industry, has seen its market value decline for three consecutive years. However, if the economy recovers smoothly and manufacturing demand increases, it may not be impossible for it to be removed from the delisting list.

1. There are future expectations.

2. There is financial interest.

In the cutthroat stock market, no one can guarantee a 100% profit.

When trading high-risk ST stocks, Zhang Yang also sets a stop-loss line, which is three consecutive limit-down days. If the judgment is wrong, he will stop the loss in time. If the judgment is right, he will make a decision based on technical indicators such as capital volume, turnover rate and K-line trend.

Many people who try to time the market or get trapped at the top of a stock's price movement do so because they don't know how to set stop-loss orders and stubbornly hold on to their positions, which often leads to being deeply trapped.

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(End of this chapter)