By tracking the performance of some indicators and indices, Haomai Thermometer aims to determine the current market position as much as possible, grasp the rhythm of market style switching, and capture opportunities in industry layout, so as to help investors make good investments. We also keep track of the valuations of some of the indices that investors are looking at.
Updated: Every Saturday at 10:00
First, the market temperature
Source: wind, Haomai Xi Society. Time period: 2018.1.2-2023.12.22
Investor sentiment continues to suffer from the continued decline, with various market indicators at historically low levels, and the Haomai thermometer has dropped below 0°C several times this week, reaching 0.52°C today, which is in the extremely greedy range. As we have said repeatedly, very low market temperatures rarely occur, and when they do, the market provides a rare time to buy. From the perspective of long-term investment, the current position can be greedy, and of course, the total position should be controlled to prevent more extreme situations in the market.
Tips：
✏️ How to prepare and use the market thermometer:
(1) Using index valuation, stock and bond spreads, the proportion of financing purchases, the deviation of the moving average, and other indicators that can reflect the market temperature, observe the level or absolute value of these indicators in history, and assign corresponding weights to them, and calculate the temperature value by weighting.
(2) The initial theoretical range of the market temperature value is 0°C-100°C, and when more bottom indicators are confirmed to the bottom, the lower temperature limit is adjusted to -10°C, that is, when the market is below zero, it is a better investment time.
(3) When the temperature value is at [-10 °C, 10 °C], the market is in the bottom range, should be more greedy, dare to lay out equity assets at a low level; when the temperature value is at [10 °C, 30 °C], the market position is still low, you can still be appropriately greedy; when the temperature value is at [30 °C, 70 °C], the market is neutral, you can see more and move less; when the temperature value is at [70 °C, 90 °C], the market position is higher, you should consider gradually reducing the position of equity assets in batches according to your own risk appetite. Increase the proportion of bond assets: When the temperature value is at [90°C, 100°C] and the market reaches a relative peak, we should be extremely afraid and consider significantly reducing our equity positions, or switching the style of the holding funds, so as to avoid the risk of large drawdowns and large fluctuations that will occur in the future.
(4) Through backtesting historical data, the Haomai thermometer can better reflect the temperature of the stock market. Note that the Haomai thermometer only reminds of the larger bottoms and tops, and does not judge the rise and fall of a short period.
Source: wind, Haomai Xi Society. Time period: 2014.1.2-2023.12.22
Second, the style temperature
The tools of the last 10 trading days point to:
Source: Haomai Xi Club
Comments: Value style and small-cap stocks are still relatively dominant this week, but the relative advantages have weakened, especially in terms of large and small caps, which are gradually biased towards neutral. In terms of operation, it can be considered to bias towards small caps and value. However, considering the rapid change of style, the cautious can still maintain a neutral operation and respond to the market in a balanced way.
Tips：
How to compile and use the Haomai style tool:
1. Tracking benchmark:
Large-cap and small-cap styles: CSI 100 Index and CSI 1000 Index
Growth Value Style: CSI 300 Growth Index and CSI 300 Value Index
2. Through trend following, calculate the dynamic income performance of two opposing styles and find a strong style. Depending on how strong it is, the tool will point to the corresponding position. If the performance of two opposing styles is relatively close, the tool points to "neutral".
3. When the tool points to "neutral", there is no obvious difference between the two opposing styles, at this time it is recommended to keep the original position unchanged and wait for the tool to send a new direction.
When the tool points to "bias", it indicates that there are some obvious differences in the performance of the two opposing styles, and a certain tilt can be considered.
When the tool points to two levels, it indicates that there is a very clear gap between the performance of the two opposing styles, and a more tendentious layout can be chosen.
4. The sensitivity of the style tool is relatively high, and it can capture the style change with low lag. However, it is important to realize that behind this high sensitivity is the high frequency of style rotation.
Third, the industry temperature
1. Top 3 weekly gainers and losers
Data source: Ifind, 2023.12.18--2023.12.22
Industry Comments: Coal, power equipment, and household appliances led the way this week. Coal benefited from the inflow of safe-haven funds, rising first this week, while power equipment and household appliances rebounded this week due to excessive declines in the early stage, ranking second and third in the rebound;
The media and computer sectors fell sharply on Friday due to the norms of the gaming industry, while social services were dragged down by sluggish consumption and the tourism sector.
2. Industry thermometer
Source: Wind, as of 2023.12.22
Liquor: The liquor thermometer is 14.22 degrees, and the temperature drops slightly. The price index of liquor rose slightly in early December, which has a hedging effect on the deterioration of liquor fundamentals, so if the liquor in this position hits a new low, there will be funds to undertake, and the bottom space is limited.
Medicine: The medical thermometer is 35.61 degrees, and the temperature is slightly lower. This week, the pharmaceutical sector did not follow the market to hit a new low this year, and the news of innovative drugs accelerating their overseas expansion continued, it can be considered that the current pharmaceutical sector is close to an inflection point, and strategically we can further focus on tracking innovative drugs, CXO, and traditional Chinese medicine sectors.
New energy: The new energy thermometer was 26.41, and the temperature was slightly lower than last week. Recently, new energy vehicles and photovoltaics have begun to stabilize and rebound, and funds have begun to replenish.
Technology: The tech thermometer is down sharply this week at 20.09. This week, the news of memory chip price increase and production expansion continues, and the news comes out of the industrial chain, Apple's MR headset is expected to be officially launched in February next year, and at this stage, it can be considered that a new round of the semiconductor sector cycle is coming, and strategically we can focus on memory chips, semiconductor equipment, and auto parts related industrial chains.
Banks: The bank thermometer is 18.04, and the temperature is significantly lower than last week. Banks have seen a major positive this week - the deposit rate has fallen, which is conducive to banks to raise interest rate spreads and stabilize profits.
4. Valuation of important indices
Data source: wind, data as of 2023.12.22
Tips：
1. The column of PE/PB valuation quantile in the past 5 years: green light, valuation percentile <20%, representing undervaluation, yellow light, valuation percentile 20%~80%, representing medium valuation, red light, valuation percentile >80%, representing overvaluation (if the index is less than 5 years, according to the data statistics since the base day, that is, the three indexes of wind, light and storage, science and technology 50, science and technology leaders, 5G communication and Hang Seng technology index).
2. PE indicators are only applicable to industries with good liquidity and stable profits, such as securities, aviation, energy and other cyclical industries should look at PB. In addition, some industries with unstable earnings, or industries or broad-based indices with stable earnings in the short term, can also use PB to assist valuation. If you don't know how to judge, you can check the Haomai Index Valuation Tool [Index Valuation Inquiry Path Haomai Research Xi - Investment Tool - Index Valuation].
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Disclaimer: The content of this article is based on public information research and does not constitute investment advice. Investors should make prudent decisions and bear risks independently.
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