To The Moon

For stock trading insights, investors turn to authoritative, professional, timely, and comprehensive analyst research to uncover potential thematic opportunities.

There is little fear of a pre-holiday decline, but a post-holiday drop is another matter. There is little fear of an index falling, but repeated breakdowns by leading sentiment stocks are far more concerning. After what many see as the "final drop," why do new lows keep appearing? Many things in the market cannot be clearly explained. The rhythm of A-shares continues to throw up new variables amid rapid shifts.

On October 8, the first trading day after the holiday, optical communication leaders represented by Yuanjie Technology broke down one after another, dragging the index to new lows. On the other side, high-flying bank stocks hit fresh highs in batches, while low-level solid-state battery names surged in clusters. Some cannot help but ask: is the July scenario about to repeat itself? Where will the market go next? Will there be new lows? Will an oversold rebound materialize?

Why Did A-Shares Fall Again, and Where Are They Headed?

A few days ago, while still on the road during the holiday, seeing news that the Hang Seng Index hit a new low (down 2.60% on October 2) prompted considerable reflection. On the first trading day after the holiday, A-shares played out the familiar script of "markets rally as soon as we close, and fall as soon as we reopen," delivering "ten minutes of joy, then silence." Overall, however, overseas indices were relatively stable during the holiday, with structural improvement alongside divergence. The Nasdaq rose 2.75% cumulatively from October 1 to October 6, hitting a record high during that period, before slipping 0.22% on October 7. South Korea's KOSPI rose for two consecutive days on October 1 and October 2, gaining 2.42% cumulatively, then fell for two straight days from October 6 to October 7, losing 2.85%.

On October 8, A-share indices were pulled up multiple times during the session. The ChiNext Index, for instance, fell more than 3% that day but rebounded around 10:52 a.m. and 11:11 a.m. before ultimately declining even more deeply afterward. This closely resembles the intraday declines on September 24 and September 28, when the ChiNext Index dropped 2.68% and 4.53%, respectively. Behind the consecutive index declines, the stocks leading the selloff have clearly changed. The following data set offers further evidence: on September 24, September 28, and October 8, the number of stocks falling more than 5% was 258, 859, and 453, respectively. But on October 8, the list of stocks down more than 5% began to densely feature former sentiment leaders in optical communications such as Yuanjie Technology, Changxin Bochuang, and Shijia Photons. New market phenomena are emerging: internal divergence within tech stocks is intensifying, and some leaders that previously "held up reasonably well" are now falling in rotation, even accelerating their declines. Moreover, the rotation between tech and non-tech sectors is also intensifying. Some compare this round of adjustment to July, noting that after July's sustained sharp declines, technical recoveries often followed.

This leads to the focal questions on many investors' minds: is the July scenario about to repeat itself? Where will the market go next? Will there be new lows? Will an oversold rebound appear?

Opportunities Remain

As for why the market is adjusting, some attribute the triggers partly to Federal Reserve rate adjustments and expectations of further rate hikes ahead. On this point, some investors argue that despite similar rate hikes, U.S. stocks can still hit new highs, which comes down more to differences in listed company composition and valuations. Additionally, the further adjustment of market indices on October 8 was related to structural divergence caused by pressure on optical communication leaders, while the overall fundamentals of A-shares remain solid. The pullback in optical communication leaders is tied to market news such as "pressure on optical chip prices."

Behind A-share divergence, opportunities are rotating, accelerating from the previously high-flying tech mainline toward non-tech mainlines. Sodium batteries and solid-state batteries are typical examples, with many stocks launching from low levels. On October 8, names such as Lingpai Technology, Zhengqiang Co., Liqi Intelligent, Xiongtao Co., and Jiangsu Transimage Technology Co.,Ltd. (ASX: 002866) moved higher. Among them, Jiangsu Transimage Technology Co.,Ltd. (ASX: 002866) has posted three consecutive "10cm" limit-up days since September 29 (see Figure 1), a typical example of a stock surging against the broader market trend. Shanghai Zizhu High-Tech Science And Technology Co.,Ltd. (ASX: 002058) likewise captured three "10cm" limit-up days (see Figure 2), with the company continuing to cooperate with major battery manufacturers on solid-state battery research and development.

In the October 7 content, the solid-state battery industry chain was already mentioned. In the latest developments, capital continues to speculate around new energy, solid-state batteries, and even sodium batteries, with related opportunities spreading. The heating up of the new energy battery theme is directly linked to the policy tailwinds from the "15th Five-Year Plan for the Development of New Battery Industry," which proposes that by 2030, China will achieve major progress in new-system battery research and development, with all-solid-state batteries initially achieving large-scale application. Solid-state batteries have already formed a complete industry chain: "upstream key materials and specialized equipment to midstream cell manufacturing and system integration to downstream multi-scenario applications." Among the stocks that surged on October 8, many are typical companies along this chain. For example, Jinyinhai, which jumped more than 17% from a low level (see Figure 3), has new energy battery intelligent equipment applicable to dry-process electrodes, solid-state batteries, lithium (sodium) batteries, power batteries, energy storage batteries, and digital batteries, among others.

In closing, there is no absolute safe haven in the market. The wisdom for dealing with risk in investing may not lie in fighting it, but in making risk invisible through position allocation and rhythm adjustment. True risk avoidance is not about dodging every decline, but about ensuring that when the worst possible outcomes materialize, they fall within the boundaries of what you can foresee and endure.