Hexun Investment Advisor Zhang Tingyu: What Directions Should We Focus on Next?

This market is more optimistic about oversold conditions, especially in the commercial aerospace sector within the oversold category.

Why focus on oversold stocks? Because stocks that are heavily oversold tend to rebound with the least resistance. Market funds always flow toward directions with less resistance. Currently, the market’s problem is that the buying momentum isn’t very strong—there’s been some decline, but no significant profit-taking, and not enough funds are going long. Therefore, funds are seeking directions with less resistance, and oversold stocks are one of those.

Recently, there have been some movements in oversold sectors, such as robotics a few days ago, which had been heavily declined and then experienced a collective rebound; securities also saw similar declines. Commercial aerospace has also fallen significantly but hasn’t yet rebounded.

Why emphasize commercial aerospace? Because this sector has two key points. First, it has high popularity. Once it rebounds, the whole market will pay attention, and its influence is strong; it can resonate with the index to trigger a rebound. Second, the medium-term logic for commercial aerospace remains unchanged—there are no issues, and industry fundamentals continue to drive growth. There are many launch plans this year, and the reusability of rockets will ultimately succeed.

The medium-term logic is solid, and currently, the sector is continuously oversold at very low levels. Why not try boldly? Choosing other sectors might involve greater resistance.

When selecting commercial aerospace stocks, keep in mind a small tip: try to pick stocks whose prices are below the 5-day moving average, and the farther below, the better. The farther away, the more severe the oversold condition, and the stronger the rebound momentum. Focus more on stocks with good past performance, high popularity, but recent sharp declines.

(Edited by: Zhang Yan)

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