Weekend Reflection: Why Did Gravity Media Explode?

I’ve been thinking about a question today: why did Gravity Media break the limit on Friday? From multiple angles—market sentiment, sector strength, opening auction volume, and the market’s main theme—Gravity shouldn’t have broken the limit.

From the perspective of market sentiment, it wasn’t high on the highs; funds generally bought at low levels, and there were dozens of first-board and second-board stocks. From the perspective of sector strength, computing power had two one-word limit-up boards. From the perspective of opening auction volume, the auction volume was about 10% of the previous day’s volume, which is very healthy. From the perspective of the market’s main theme, the popularity of computing power has been sustained during this period.

Gravity Media opened two ticks below limit-up, then after topping the limit-up with more than 200 million yuan, it quickly had its limit-up shares cashed out through a series of large sell orders. Although there were funds that tried to re-seal the board afterward, the buying strength was clearly insufficient, the sell/remaining order quantity wasn’t enough, and ultimately in the afternoon market confidence wavered and it completely broke the limit.

Where was the problem? It was in that two-tick-below limit-up opening. I overlooked its first-board pattern: the first-board move didn’t start accumulating momentum until 1:30 pm, so the first-board was weak. The next day it opened directly with a two-tick-below limit-up gap-up, which is an extreme weak-to-strong transition. An extreme weak-to-strong transition means it exceeded expectations; there’s a high probability it will be fulfilled—either it opens and then turns into an intraday “A” (sell-off / exit) move, or it hits the limit and then breaks the board and exits with an “A” move. After Gravity broke the limit, it struggled for a moment, but in the end it still went to an “A” move.

So the issue is clear now. In Friday’s first-to-second board play, the fastest to hit the limit—Gravity Media and Zhongsheng Pharmaceutical—couldn’t be traded. The best option should have been Beitou Technology. The essence of the first-to-second board move is capital-driven arbitrage, and the funds’ attitude during the first-board period is crucial.

Of course, there are also stocks that make an extreme weak-to-strong run and then go on to the third and fourth boards, and there are also stocks with a pretty-looking first board that break on the second board. Nothing is absolute—we’re just dealing with high-probability scenarios.