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 range: 2018.1.2-2023.12.29
This week, the market temperature has rebounded significantly, from below 0°C to 7.37°C. Mainly due to the continuous sharp rise in the second half of this week, the market confidence, reflecting the risk appetite and expectations of traders on the floor - the proportion of financing purchases rose sharply on Thursday, indicating that risk funds are more willing to buy the bottom. Although the market temperature has warmed up as the market has rebounded, it is still in the extremely greedy range and is still 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: 2014.1.2-2023.12.29
Second, the style temperature
The tools of the last 10 trading days point to:
Source: Haomai Xi Club
Comments: This week, the advantage of the small-cap style has been further weakened, and even some have turned in the direction of the large-cap market, and the operation can be neutral to deal with the competition between large and small markets. Compared with the growth style, the value style is still relatively dominant, but considering the rapid change of style, the cautious one can still maintain a neutral operation.
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, 2023.12.22--2023.12.29
Industry comments: power equipment, non-ferrous metals, and food and beverages led the way this week. The main rebound logic of these three sectors is the over-falling rebound pulled by the broader market, and all of them have benefited from the impact of foreign capital inflows.
Coal and transportation were affected by the slight loosening of safe-haven funds, and fell this week, while the media rebounded poorly because of the impact of funds taking profits and giving priority to the inflow of over-falling sectors.
2. Industry thermometer
Source: Wind, as of 2023.12.29
Liquor: The liquor thermometer is 17.74 degrees, and the temperature rises slightly. Approaching New Year's Day, the liquor industry is still in a fundamental trough period, and this week's rebound in the market has led to a rebound in the liquor sector, but the upside is limited.
Medicine: The medical thermometer is 45.33 degrees, and the temperature has risen sharply from last week. The bottom range of the pharmaceutical sector is relatively clear, and the results of centralized procurement in 2023 show that about 70% of drugs have not been reduced in price, and it can be considered that the negative of centralized procurement is close to disappearing. In addition, another innovative drug company has recently been acquired by foreign-funded institutions, and innovative drugs have frequently gone overseas, which can be considered that the current pharmaceutical sector is approaching 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 31.73, and the temperature increased sharply from last week. Recently, new energy vehicles and photovoltaics have rebounded sharply, and photovoltaic export expectations have improved, but it is too early for the fundamentals to reverse.
Technology: The tech thermometer was 28.93, up slightly for the week. MR optical electronics continued to rise this week, consumer electronics began to stabilize and rebound, domestic smartphone sales in November increased by 34% year-on-year, the current stage can be considered that a new round of semiconductor sector cycle is coming, strategically can focus on memory chips, semiconductor equipment, auto parts related industrial chain.
Banks: The bank thermometer was 24.63, a sharp increase from last week. Recently, the real estate sector has stabilized, but the data needs to be confirmed, the interest rate spread of the banking sector is stable, and the profit has stabilized.
4. Valuation of important indices
Source: wind, data as of 2023.12.29
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 can't judge, you can check the index valuation tool, [Index valuation query path: Good Buy 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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