Weekly Review and Dry Goods Sharing: Complete Trading Breakdown of Account Continuing to Hit New Highs During Index Freezing Point.

The full review consists of three parts: the first part is logic, the second part is quantification, and the third part is sentiment. [Taogu Ba]
The war here has driven up oil prices. Besides the inflation increase and the reduction of rate cut expectations caused by high oil prices, there is also a push related to power generation costs that has triggered a global demand surge for domestic photovoltaic and energy storage. For every $10 increase per barrel in crude oil, the electricity generation cost in Europe for gas-fired plants rises by 0.08-0.12 euros per kWh, and in North America, it increases by $0.05-0.07 per kWh. Rising crude oil prices push electricity prices higher. Europe heavily relies on oil and gas exports, and when Russia considers cutting natural gas supplies to Europe, Russia and the East rely on oil self-sufficiency, with the East leading in renewable energy, so energy shortages and issues are unlikely. At worst, they just won’t use oil-powered vehicles.

Europe’s high dependence on imports means rising oil and gas prices increase residents’ electricity costs. The long-term stability advantage of electricity prices is forcing a surge in demand for photovoltaic and energy storage installations. Europe lacks large-scale local capacity, and energy demand is most urgent there, especially in smaller countries. A problem here is inverter labeling—220V 60Hz standards differ from 110V standards. Rising oil prices will push Europe to accept our standards. Once they do, smaller countries will find it hard to change standards quickly. We can gain global pricing power, and during the industry’s capacity reduction, this will accelerate inventory clearance and concentration.

High oil prices essentially break the traditional energy and green power cost balance, making photovoltaic and energy storage a global necessity. As a core component of PV and energy storage, inverters’ demand will explode. Globally, only China has the large-scale, low-cost, fast-delivery, highly adaptable inverter capacity, making Chinese inverters the only optimal choice under cost, capacity, and efficiency constraints. Here, Ning Wang’s entire strength surge is because energy storage batteries have surpassed power batteries.
Super strong structure.

This is the core reason for Europe’s photovoltaic and energy storage strength. Australia’s energy isn’t exactly scarce either. Returning to the market, I discussed on Thursday night that if a recovery occurs, from an oversold perspective, hardware resistance is minimal. After a batch of high openings, although the market strengthened throughout the day and hit new highs, if the volume was too large, similar levels of volume appeared at previous new highs. The market environment and conditions now are completely different—back then, the market was close to 30 trillion yuan, with different index states and liquidity.

I want to emphasize two points about the market: first, during past one-sided declines, there was significant liquidity risk. Daily market bidding often exceeded expectations, but so far, no major liquidity risk has emerged. Many stocks with declines over 8% are rare, and much of the liquidity injection comes from quant funds and institutional groups. Currently, quant funds, institutions, insurance funds, foreign capital, and enterprise annuities are not heavily reducing positions. I maintain my previous view: any downward movement or acceleration in the index is a confirmed left-side buying opportunity.

The key question is whether the index can still hold this range. If it can, there’s little room to fall further. If it’s going to accelerate downward, wait for the acceleration to choose a new direction. Essentially, it’s a game between two options: those who choose the first may face rapid declines, while those who choose the second might be overly bearish, leading to a dull sense of continued hesitation in chasing rallies. The outcome is obvious.

Over the weekend, there was a lot of criticism of quant funds, with many claiming they are the main cause of market issues. Without quant funds, the current liquidity wouldn’t even be sustainable. Discussions over the weekend pointed out various problems with quant strategies, like the 2016-2018 new high transfer groups, the frenzy in new energy from 2021 to 2023, and today’s quant environment—these are just style rotations. To grow in the market rather than just make small profits, the core is still timing, geography, and harmony. When the market has incremental opportunities, the current mode fits the environment. I focus on my trading style. The incremental market from 2019 to 2021 allowed speculators in the 2016-2018 high transfer period to grow quickly. From 2024 onward, the incremental market favors those committed to capacity trends, allowing rapid growth. Since quant strategies can’t change, the current period is about adaptation. The sooner you adapt, the more likely you’ll see growth in the next few years. Essentially, the market needs a scapegoat during tough times to vent emotions. Why doesn’t anyone criticize quant funds during the rise of commercial aerospace? Without quant funds, could the aerospace sector reach this stage? Recognition determines wealth—this is an eternal truth. Blaming others is useless. BlueFocus, Huasheng Tiancheng, Wangsu Technology, and Runze are all liquidity injected by quant funds.

Returning to Friday’s market, I repeatedly reviewed my past two weeks’ comments, emphasizing that the main theme is China’s future energy beyond oil. Besides wind, solar, storage, and lithium batteries, the market has also moved into coal chemical industries. East China relies on about 90% self-sufficiency in coal, and coal chemical industries produce plastics—another part of future energy. Quant strategies have been increasingly consistent, with high expectations management. When expectations fall short, the market quickly moves downward, as seen with companies like Jufei Optoelectronics and China Oil Capital.

Quant strategies follow popularity and liquidity, moving to areas with high liquidity to profit from price differences. They choose relative capacity for liquidity. If the market believes wind, solar, and storage are the main themes—especially offshore wind and solar in Europe—then the market has already priced in some panic and large declines, and future consolidation is possible. Sentiment remains relatively strong, with companies like Hang Electric and Yunnan Energy Holding showing potential for a second wave of groupings.

Sentiment exists prior to index recovery, and the overall sentiment remains positive. I believe the opportunities outweigh the risks moving forward. No systemic risks are apparent. I am bullish. Structurally, Ning Wang and Sunshine Power are driving the strength of the ChiNext, with new highs in ChiNext diverging from the Shanghai Composite’s lows. After the strength separation, will ChiNext’s strength continue? Tomorrow’s movement of Yizhongtian will directly impact ChiNext’s strength and may influence quant factor sentiment. I tend to favor areas with high quant crowding and high popularity for safety. Besides GCL-Poly, Huadian, and others, these are typical examples.

The broader trend accounts are also facing drawdowns.