Chip Cycle: When Will New Energy Break the Circle?

On the evening of September 26, I would like to discuss today’s market and the opportunities and risks for tomorrow.

The impact of the Moore report incident has led to a weak technology sector, with declines in consumer electronics and lithography machines, while new energy has started to surge, resulting in a resource explosion. The market trend has been quite artistic, with the recent mysterious funding pressure causing a drop in Ducong i. Such sudden drops are common in a bull market, where excessive declines often occur without clear reasons, posing a significant deterrent to retail investors. Similar unexpected drops can present excellent short-term opportunities.

Regarding the impact of the Moore incident on technology stocks, I believe it is not significant. It serves as a tool for washing out technology stocks, and there is no risk of a collapse in the tech sector below 4000 points; it is merely a regular differentiation and rotation. Currently, the market style has entered a high-cutting phase, where high-positioned funds are willing to exit, preparing momentum for future trends.

When discussing chips, we must mention the chip cycle. Chips are a small cycle direction, having started less than two months ago at the end of July, while the general cycle for sector speculation typically lasts over six months. The recent hot sectors like lithography machines, consumer electronics, and computing power are merely subdivisions of the chip cycle, which is still ongoing, with expectations for rotation and explosion in these directions.

Currently, is there a main direction that can break the chip cycle? New energy (batteries – upstream) fits this description, as it resonates with the overall rhythm of the technology market in reverse, being a non-tech stock with an industrial reversal logic that has been recognized by large funds, thus possessing the potential to break the circle. Breaking the circle means that the explosive main line has the energy to overturn the old cycle; the rise of tech stocks cannot overturn the tech cycle (robots, chips, cloud computing, etc.).

1. The inflection point of the new energy industry will be established in the third quarter. Very few understand the reversal; the initial phase of the market will not be too fast or strong, but it will eventually arrive.

2. In the past two weeks, regardless of sector gains or losses, institutions have been primarily buying leading new energy stocks, with buying intensity surpassing that of chips, robots, and consumer electronics.

Thus, the insights shared here are original and practical, directly addressing abstract concepts to facilitate understanding. A brief overview of sector levels:

There are very few directions and individual stocks that can form cyclical market trends, such as new energy, robots, chips, and cloud computing in 2020.

On the thematic side, there are true dragon cycles: during the initial emotional gathering of bear and bull markets, core stocks like Shenglong, Jierong, and others were created, all of which were true dragon stocks of that cycle. As long as the true dragons do not fall, the themes will not cease!

Thematic direction levels, sorted from large to small:

Cycle (6 months – 3 years) – Track (1-6 months) – Main line (1 month) – Hotspot (less than one month) – Others

Regarding future expectations for the market, my view remains unchanged; I still expect a peak oscillation around 4150 (this year), with a style switch at 3980 points. The tech gathering may initially collapse, and at that time, it is necessary to pay attention, as funds will likely shift to relatively undervalued hard directions like new energy, consumer electronics, and securities.

Opportunities

Consumer Electronics

The best explosion is expected in October, with September being a trial rise. Today’s decline reflects core opportunities, shared internally.

Securities

Track defense; finance has track attributes, and the supplementary rise should not be absent. The sector has not taken off mainly because retail investors are clustered together, and the market’s calls for certain opportunities are too high. It can explode, but the timing may be later than expected, and the initiation will be too sudden. Pay more attention to small indices and small countries, and exercise a bit more patience.

Batteries

Large-capacity varieties have a slightly longer initiation process, but the pattern is opening up. Maintain a steady mindset and pursue the core. Pay attention to small Yang and small Tian.

Semiconductors

Leading the style switch in main line directions, the market trend is hard to declare over, but the sentiment is consistent. The themes need to be pressed down, and the high positions need to squeeze out some excess. Focus on mid-level core opportunities. Allwinner’s “filling the pit” confirmation is awaited for a breakthrough.

Lithography Machines

Lithography machines represent the technological ceiling of China, with a long breakthrough time and long-term expectations. The previously recommended “three swordsmen” are all set to explode.

Teacher Luo:

First, the big finance sector is currently in a (relatively) high position with high divergence. I still have a relatively optimistic view on the elasticity of the financial direction and continue to expect this direction.

Second, the “China concept stocks” are a direction I personally care about. Recently, the market gives me the feeling of “value return”; as the backbone of the value line, there is a possibility of being excavated by funds. From another perspective, if there are no China concept stocks in a bull market, what kind of bull market is it?

Third, small metals (rare earths). I have always been optimistic about the small metal direction, which has recently performed somewhat at the bottom. As a cyclical direction, the price increase expectation is not so easy to end, and after excessive declines, there should be a good rebound.

Fourth, large consumption; essential consumption is still slightly weak, while optional consumption has some elasticity. As we approach the fourth quarter, the expectation of consumption rebound will increase over time. Fifth, gas and tourism; the sector capacity is limited, but as a transitional direction for market oscillation, it should perform well.

Risks:

Arise from fear of a bull market, concerns about sharp declines, or excessive optimism at high positions.

When the market is in a “slow bull” trend, it is not about “who reacts faster,” but rather “who sees further and can endure.” Currently, the volume is shrinking, but hotspots are quietly brewing. Only by “opening up the pattern and seeing the logic clearly” can one avoid losing direction in oscillations and seize opportunities when they arise!

Disclaimer:

The brokerage research reports and investment advice provided by investment advisors are based on the principles of specificity and effectiveness, and their investment advice cannot be valid in any market environment for a long time. Investors must make their own investment decisions and independently bear investment risks. Investment carries risks; proceed with caution.

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