Today, the three major A-share indices ended with mixed results, with the Shanghai Composite Index marking its fifth consecutive daily gain. At the close, the Shanghai Composite Index and the Shenzhen Component Index each rose by 0.67% and 0.04%, respectively, while the ChiNext Index fell by 0.73%. Market turnover reached 2.54 trillion yuan, down 144.7 billion yuan from last Friday. Over 4,000 stocks advanced, with the median gain for individual stocks at 1.26% and the average stock price index up by 0.47%.

From the 30-minute K-line chart of the Shanghai Composite Index, the nearest resistance level above is the July 15 high of 3,981 points. The index broke through the morning's high near the close, and the MACD adhesion suggests a "stop-and-go" pattern. This indicates the Shanghai Composite Index still has upward momentum tomorrow and may test the 3,981-point level. On the daily K-line chart, since the "right foot" low on July 30, the index has risen a total of 200 points over 8 trading sessions. A rebound in mid-December last year saw the Shanghai Composite Index gain a maximum of 168 points in 10 trading sessions, followed by two days of consolidation. In summary, starting the day after tomorrow, the market may face at least one day of consolidation, but this correction within the rebound cycle should not hinder the subsequent rally. Some might argue this is a mechanical approach, but with extensive K-line analysis, similar patterns emerge, and one learns when such analysis is applicable. With practice, one can often gauge the general direction of future trends, and this "fuzzy correctness" can aid trading, especially in risk avoidance.

Over the past seven trading sessions, the Shanghai Composite Index's yellow line (representing small-cap stocks) was above the white line (representing large-cap stocks) on five days, indicating small-cap stocks outperformed mid- and large-cap stocks. In contrast, from July 20 to 22, the white line was significantly above the yellow line, reflecting major player support. Small-cap outperformance signals improving market conditions and stronger internal momentum, which is favorable for trading and increases the margin for error. Sector-wise, technology-related sectors like communication equipment, semiconductors, and components declined, while low-priced, "old-school," and defensive sectors dominated the gainers list. The author believes these three hard-tech sectors still have rebound potential. However, after substantial corrections in July, stock positions have loosened, and some tech stocks may struggle to reach new highs. Given the ongoing industrial trend, significant pullbacks in AI hardware stocks present opportunities for short-term buying, allowing high-quality stocks to lower costs through such trades. A senior strategist at Goldman Sachs recently noted that the Chinese AI sector does not have a broad-based bubble, and recent market moves have brought valuations back to healthy levels. The strategist is bullish on three sub-sectors: power supply chains, hardware infrastructure, and physical AI. Among blue-chip and white horses, the baijiu, food and beverage, and non-ferrous metals indices have recently hit new highs in this cycle, with notable gains, and the pork sector also surged today, indicating a style balance. In the absence of a strong main theme, blue-chip and white horse stocks stepping in is normal. Typically, when a previous major theme fades, it takes two to three months for a new one to emerge.

The healthcare sector surged but then pulled back today. Several healthcare and medical stocks saw their high prices end with "pair" digits, such as "AA" or patterns like "AB.AB", including Kintor Pharma-B and others. On July 1, many tech stocks showed similar "pair" patterns at their highs, and now this pattern appearing in multiple healthcare stocks raises the question of a possible sector correction. The author suggests this may be a "psychological signal" deliberately created by quantitative trading strategies. These seemingly unlucky or unusual price levels are essentially interference designed by silicon-based algorithms targeting the cognitive habits of carbon-based investors, exploiting human tendencies to overinterpret numerical patterns and trigger emotional trading. A good strategy is to shift focus away from K-line patterns and return to industrial logic, company fundamentals, and valuation rationality. A key difference is that tech stocks had seen significant gains earlier, while healthcare stocks have not appreciated as much recently. Therefore, even if market sentiment is affected, their correction should be relatively contained. Regarding other sectors, the MLCC and tungsten chains performed well. News-wise, passive component leader Yageo recently stated that MLCC demand is "indeed very strong," with more AI-related clients proactively requesting to lock in supply capacity for the next six months to years to avoid future supply risks. Zhangyuan Tungsten recently announced its long-term purchase prices for the first half of August 2026, with ammonium paratungstate prices rising compared to the second half of July. Sinolink Securities noted that tungsten prices are bottoming out and stabilizing, potentially starting a second major upward trend. The US is considering a ban on waste tungsten exports, reinforcing the logic of tungsten resource stockpiling and market share gains for domestic tungsten material manufacturers. In the MLCC sector, AI demand hoarding, combined with a bottom in traditional downstream markets, is driving price increases from overseas to domestic manufacturers. Overseas manufacturers are shifting to AI demand, spilling over general-purpose ultra-high-capacity orders, and unlike the previous cycle, this one is expected to benefit high-end products more.

Looking at post-market news: First, the South Korean presidential office announced plans to establish a new 5 trillion won fund focused on investing in promising semiconductor materials, components, and equipment. Second, JPMorgan stated that the global memory chip shortage could persist until 2028, and HBM average selling prices may see increases of over 40% next year. Third, Shanghai is promoting the expansion of computing power and foundational large models, supporting the export of model products like agents and multimodal generation. Fourth, Alibaba Cloud plans to more than double its global data center capacity. Fifth, the "Coal Industry Development 15th Five-Year Plan" was released, calling for the share of large, modern coal mines to increase to 87% by 2030.

In conclusion, the author summarizes: The market still has upward momentum tomorrow, but after a 200-point rally since July 30, following tomorrow's gain, the market may need at least one day of consolidation. The rebound is not over, so there is no need to worry about the broader market. Sectors are rotating in an upward trend, creating a dazzling array of opportunities, and buying on dips is key. Mid-term focus remains on AI applications and securities, while short-term attention should be on low-priced opportunities in AI hardware and semiconductors during significant pullbacks. Low-priced and "old-school" sectors are suitable for dip buying, not chasing rallies.