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

Chapter 69 Medical Sector Takes Off
[Sina Finance Reminder]: ICBC's total revenue for the first quarter of 2009 was 726 billion yuan, and its net profit was 352.89 billion yuan, a year-on-year increase of 6.03%. Can the banking sector reverse its downward trend?
When the Industrial and Commercial Bank of China (ICBC) released its first-quarter report, all financial media workers immediately began summarizing and forwarding it.

The core reason for the continuous decline in the A-share market is the pullback in the banking sector. Even though the securities sector was slightly up yesterday, it couldn't withstand the sell-off in bank stocks.

Furthermore, the four major banks have been releasing their first-quarter financial reports in the past few days, with the 29th being a particularly important day as Huaguo Bank and Huaxin Securities release their first-quarter reports, naturally creating a demand for safe-haven assets.

During the period of the first quarter, semi-annual, third quarter, and annual reports each year, market funds tend to adopt a cautious attitude.

Those who frequently trade A-shares know that if you don't try to avoid earnings reporting months, you are very likely to suffer from stock price corrections caused by financial fraud, underperformance, or serious losses.

At this point, some people might ask, "Why can't we just bet on the listed company's good performance?"

Those who have this idea are basically retail investors who are new to the market.

Any seasoned stock market investor knows that the essence of stocks is speculation on future expectations.

A sudden surge in a stock's performance never happens without a reason; it will always leave clues.

Take Changan Automobile, for example. On the policy front, there are car purchase subsidies; on the news front, there is capacity expansion; and on the data front, there are monthly car sales and manufacturing PMI data. All these signs indicate that its semi-annual report is very likely to show explosive growth in performance.

Given this expectation, Changan Automobile's value naturally increased.

However, if its semi-annual report shows that its performance has not seen explosive growth, but only turned a profit, this does not meet market expectations, and the premium of advance speculation will be squeezed out.

The saying "good news turns into bad news, and bad news turns into good news" describes the realization of expectations in stock speculation.

……

4 month 29 number.

Wednesday.

During the morning pre-market auction, market participants remained cautious. Apart from medical sector concepts such as shikimic acid, innovative drugs, and traditional Chinese medicine, other sectors continued to be sluggish.

Just last night, the World Health Organization issued a special warning to be vigilant about the global spread of H1N1 influenza, which has led to increased market interest in the medical and pharmaceutical sectors.

Why are market funds favoring this sector?

Four words: future performance.

Given the global spread of H1N1 influenza in the United States and Mexico, the production and sales of corresponding drugs, vaccines, and diagnostic test strips will increase, which is a clue in the revenue of related companies in their half-year reports.

Stock trading is about investing in future performance, so it's reasonable for market funds to favor the medical and pharmaceutical sector at this time.

Since he had agreed with Liao Guopei that the release of the "Announcement on Abnormal Stock Price Fluctuations" by Rhine Biologics would be the signal for a price surge, Zhang Yang was in no hurry and focused on trading bank stocks.

It is worth mentioning that, according to the regulations of the Shanghai Stock Exchange and the Shenzhen Stock Exchange, if the cumulative deviation of the daily closing price of a main board stock reaches 20% within three consecutive trading days, and that of an ST stock reaches 12%, the listed company is required to issue an announcement explaining the stock price fluctuation.

However, 20% and 12% are considered minor fluctuations, and listed companies usually don't take them seriously. They typically use template statements to deal with them, such as "the current operation is normal, and there are no undisclosed material matters" to gloss over the situation.

Only when there are four instances of abnormal fluctuations in the same direction within 10 consecutive trading days, or when the cumulative deviation of the price change in 10 days exceeds 100%, or when the cumulative deviation of the price increase in 30 days exceeds 200%, can it be considered a serious abnormal fluctuation, requiring a detailed "Announcement on Abnormal Price Fluctuations." This is the opportunity that Zhang Yang and Liao Guopei have been waiting for to intervene.

If the price fluctuation deviation exceeds 100% in 10 days, and there are 7 consecutive limit-up days, the deviation would be 94.87%. This means that after 8 consecutive limit-up days, Rhine Biologics will have to disclose detailed information about its shikimic acid business to the market, including its performance and orders.

The first "Announcement of Abnormal Stock Price Fluctuations" is often seen by veteran investors and speculative funds as a signal of a short-term leading stock's rise. However, as the stock approaches its eighth consecutive limit-up day, veteran investors and speculative funds will gradually liquidate their positions and exit the market, because very few stocks can withstand the penalty of eight consecutive limit-up days.

After all, many speculative stocks lack performance support, and once a detailed explanation is given, it's like tearing down the windowpane.

……

Upon seeing the banking sector decline again, Zhang Yang did not rush to take action, but instead focused on changes in trading volume.

In less than ten minutes, the Shanghai Composite Index saw a trading volume of 129 billion yuan, with most of these funds concentrated in the healthcare sector.

Ultimately, however, when fresh capital enters the market, market funds will become more active.

10 o'clock.

The securities sector is showing unusual activity.

Hongyuan Securities (now delisted) rebounded strongly from -2.37%, turning positive in less than ten minutes.

Not only Hongyuan Securities, but also other securities stocks such as Huaxin Securities, Haitong Securities, and Southwest Securities saw a surge in trading volume and price increases.

It seems that the rise of the healthcare sector has spurred the securities sector to follow suit.

Anyone who has traded in the securities sector knows that this is a "follower".

It's virtually impossible for it to become the main theme, but if a new main theme emerges in the market and activates short-term market sentiment, it will also rise as trading volume increases.

The logic behind the rise in the securities sector is that as long as market funds are active, securities companies can collect a large amount of transaction fees, and stock prices will naturally rise accordingly.

At this moment, many investors on various stock forums were agitated when they saw the securities sector collectively surge in trading volume.

[Xiao Chuan Chuan]: Bull market leader makes unusual moves, holy crap, am I going to get shaken out? I just sold this morning!

[Tiga Needs Light]: The situation has changed, the situation has changed, Niu Hui, return quickly!

[Big Leek]: Who the hell said it would go back to 1800 points? The main funds are frantically buying up shares. It might even go back to 6000 points!
[Call me Mr. Dai]: I'm going all in on the flu drug sector ETF with 200 million! Come on, the surge I've been waiting for!
As investors regained confidence, major funds saw a net inflow of 94 billion yuan, while northbound funds saw an inflow of 47 billion yuan, leading to a surge in trading volume for both the Shanghai Composite Index and the Shenzhen Component Index.

Zhang Yang watched as the banking sector surged, his mind racing.

"The MACD indicator for the banking sector has not improved significantly, the DIFF line has limited upward movement, the trading volume is insufficient, and the 5-day moving average is still being suppressed by the 10-day and 20-day moving averages."

"There are no new favorable policies. The rise in the securities sector is due to the speculation in the medical sector. The collective rise is driven by the securities sector. However, Huaxin Securities will release its first quarter report tonight, which will inevitably cause some safe-haven funds to leave the market this afternoon. If the trading volume cannot be sustained, it may just be a rebound in the middle of a downtrend."

Taking advantage of a rebound to trade intraday is a great opportunity to increase profits and reduce costs.

Zhang Yang's leveraged account had 20 yuan invested in China Construction Bank and another 20 yuan in Jianfeng Group. Even if he only used 20 yuan for day trading, a 1% return would be 2000 yuan.

After careful consideration, he dialed Zhong Qifeng's number and quickly said, "Manager Zhong, reduce your holdings in China Construction Bank by half, and then send me the chart of your account's profits."

"I'll handle it for you right away, Mr. Zhang."

(End of this chapter)