February completes a perfect consolidation, with March expected to see index fluctuations and an accelerated upward trend!

Victory in February has ended, and March is just a crazy honeymoon period. I held a 50% position for a while in February, and starting today, my position is up to 70%! [Taoguba]

Leading the way, spring market, accelerated rally—any bear scare tactics can’t compare to the power of the bulls. Everyone around us is bullish!

In December, when the index was at 3815 points, I said it would rise for a month, and ultimately, we saw 17 consecutive positive days. Opportunities are always prepared for those willing to seize them.

The A-share market in February showed steady index growth, prominent structural opportunities, and sustained active trading volume. The Shanghai Composite index had three consecutive positive months, consolidating at high levels after a volatile upward trend. Daily trading volume exceeded one trillion yuan for many days, with multiple breakthroughs of 2 trillion yuan in late February. Risk appetite among funds significantly increased. The market was driven mainly by policy preheating, industry catalysis, and price increase logic. Sector rotation accelerated, with both technology growth and cyclical resources running in parallel, laying a solid foundation for a “shock and accelerate upward” trend in March!

1. February Summary:

1. Volatile rise, healthy volume and price, structural differentiation

In February, the A-share market moved within a volatile upward channel, consolidating at high levels. The Shanghai Composite index stabilized above 4100 points, with strong support at 4130 points. By month-end, it closed near 4162 points. Trading volume was robust, with daily transactions exceeding one trillion yuan regularly, and incremental funds kept flowing in. Northbound funds and industry capital were active in both directions. The index showed strong support during pullbacks, with no systemic risks.

Personally, I believe the market’s rhythm was influenced by the Spring Festival holiday and external strength at the start of the month, leading to a high open. In mid-month, there was a slight pullback and consolidation. In the second half, expectations for the Two Sessions and industry catalysis drove renewed strength, with high-level consolidation at month-end to digest profits. Style-wise, growth outperformed value, sector themes outpaced broad market gains, and profit opportunities were concentrated in main sectors, while non-mainstream sectors performed flat.

2. Core themes: dual main lines leading the rally, with rotation accelerating (price increase cycle + AI technology dual drivers)

1. Cyclical resources (price increase main line): the strongest theme this month, with sectors like non-ferrous metals, rare earths and permanent magnets, minor metals, phosphate chemicals, and oil & gas exploding. Prices of tungsten, rare earths, indium, and others continued to rise. Leading companies like Zhaoyuan Tungsten and Northern Rare Earth surged significantly. The logic was global supply contraction and domestic environmental restrictions, with price hikes directly boosting earnings expectations. Capital clustering effects were evident, making price increases and cyclical sectors a new main line.

2. Technology growth (computing power and domestic substitution): AI computing power, semiconductor equipment, leasing of computing resources, PCB sectors led gains. Benefiting from policies like “AI + advanced manufacturing,” accelerated domestic substitution, and increased overseas demand for computing power, high-end optical modules, CPO, semiconductors, and domestic computing hardware showed relative resilience, becoming core supports for tech sectors. Additionally, new expectations emerged for substitutes like Yizhong Tian (Yizhong Tian Fiber), Hengtong Optoelectronics, and Honghe Technology, with institutional rebalancing and stock rotation progressing well.

3. Power, energy, and infrastructure: grid upgrades, energy storage, and power operation performed steadily, driven by increased energy infrastructure investment, rising electricity demand, and the continued implementation of dual-carbon policies. The sectors exhibited low volatility and high certainty, suitable for conservative capital allocation. Especially with AI computing power, AI-enabled smart grids performed well at month-end, with “Yuan Energy Holdings” hitting seven consecutive limit-ups, turning market attention here.

4. Adjustment directions: high-level AI applications, film and media sectors experienced pullbacks due to excessive gains and earnings verification issues. Funds shifted from pure themes to hard assets with earnings, catalysis, and barriers. After underperforming during the Spring Festival period, stocks like Bona and Hengdian faced negative feedback. Retail investors’ high expectations for Spring Festival robots were cashed out post-holiday. AI applications and robots, being retail favorites, are expected to see retail exit in March, with funds shifting back into other sectors.

5. This month marks the second half of the spring turbulence and the first half of the Two Sessions preheating. The driving force shifted from liquidity expectations to industry prosperity and earnings forecasts. The market completed a high-low switch, with dual main lines of cyclical and tech sectors established. Trading volume and sentiment supported continued rally, providing a solid foundation for accelerated upward movement in March.

6. March A-share Market Expectations: Accelerated Volatility with Performance and Policy Resonance

1. Accelerated volatility and upward trend: the Shanghai Composite index is expected to rise to 4200-4300 points! There may also be more than seven consecutive positive days.

In March, the market will continue its pattern of accelerated upward movement with increased volatility but an overall upward trend. The core drivers are threefold: first, policy implementation from the Two Sessions—new productivity, AI+, high-end manufacturing, and steady growth; second, intensive disclosures of annual and first-quarter earnings forecasts, shifting focus from themes to actual performance; third, liquidity remains reasonably ample, with continuous inflow of incremental funds supporting the index breakout.

My personal view is that in early March, policy preheating and fund inflows will push the index higher; mid-month, during the Two Sessions, sector rotation will accelerate, and volatility will increase; late March, earnings verification will favor strong stocks and clear out weak ones, with main sectors accelerating upward.

2. Core themes for March:

• Cyclical performance-driven sectors: price-increasing resources (rare earths, minor metals, chemicals), computing hardware (semiconductor equipment, PCB, liquid cooling), power and grid sectors—those with earnings growth expectations will enjoy valuation premiums.

• Policy-driven themes: new productivity, humanoid robots, low-altitude economy, commercial aerospace, brain-computer interfaces—expect policy surprises during the Two Sessions to create pulse opportunities.

• Potential recovery at low levels: high-dividend state-owned enterprises, large financials, and consumer segment leaders—defensive attributes and rebound needs resonate. Special note on Baishui: it is expected to have a significant upward wave by 2026, depending on policy efforts to reduce internal competition and stimulate domestic demand.

3. Personal Trading Strategy for March:

1. Maintain core positions at 70-80%, with rolling adjustments!

• Base holdings (30%): allocate to main sector leaders (price-increasing chemicals, computing hardware, non-ferrous metals, AI power) based on individual stock-picking ability, 3-5 stocks.

• Flexible holdings (20-30%): engage in low-buy, high-sell trading within main sectors to seize rotation opportunities.

• Reserve (10-20%): prepare for dips, maintain liquidity, avoid full or heavy concentration in a single sector.

For sectors and core stocks with sustained momentum, the approach remains to buy on dips.

2. Specific operation methods:

First, prioritize sector-leading stocks for relay trading. For skilled stock pickers, achieving 2-3 stocks with over 5 limit-ups in a month is a good target.

Second, use break and rebound strategies, along with large-volume declines and surges, to low-buy core stocks. For most non-leader relay players, base on logic of low-buy after breakouts, avoid chasing highs, keep single-sector positions below 30%, and diversify stocks. If a sector shows strong persistence, consider allocating a core position there.

Currently, the market has completed consolidation, established main themes, and accumulated volume. Cyclical and tech sectors are leading the rally, laying a solid foundation for March. The market is entering a window of policy and earnings resonance, with a main tone of accelerated upward movement. Opportunities are concentrated in main sectors with confirmed earnings and policy benefits.

In trading, adhere to main themes, rotate actively, strictly control positions, and follow discipline. Seize the opportunities of the second half of the spring market to achieve steady gains. I also hope everyone masters the core relationships between volume and price, as well as operational strategies. In February, many friends achieved excellent results, with profits over 20%, and no significant losses. Your efforts and learning will help you achieve satisfying results in March!

This is our February summary. Let’s keep up the good work in March and see our accounts stay in the green!