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: 2018.1.2-2024.1.5
In the first week of the new year, the market was very weak, the Shanghai Composite Index fell for three days in four trading days, and experienced the disappointment of expectations in 2023, and now investor sentiment is very low, and the market point and valuation are also at a very low level, and the current market temperature is -0.4 °C, which is in the extremely greedy range, but from historical experience, it is 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 range: 2014.1.2-2024.1.5
Second, the style temperature
The tools of the last 10 trading days point to:
Source: Haomai Xi Club
Comments: From this week's point of view, the advantages of the large-market style are more prominent, and the large-market style operation can be biased, relative to the growth style, and the value style is still relatively dominant, but considering the rapid change in the market value style, the cautious 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, 2024.01.02—2024.01.05
Industry Commentary: Coal, utilities, and petroleum and petrochemical led the way this week. The coal sector benefited from the inflow of safe-haven funds, the increase in coking coal tariffs, and the moat effect of supply-side clearance, while the surge in public utilities and petroleum and petrochemical industries benefited from the hedging effect of funds and the replenishment effect of the upstream economic recovery.
Electronics, computers, and communications were mainly affected by the PMI falling short of expectations and the profit-taking shipments at the beginning of the year, and their performance was poor this week.
2. Industry thermometer
Source: Wind, as of 2024.01.05
Liquor: The liquor thermometer is 15.17 degrees, and the temperature drops. Due to the decline in PMI data, the liquor sector continued to fall this week due to the macro impact, and the growth space of high-end liquor is currently doubtful in the context of consumption downgrade.
Medicine: The medical thermometer was 34.33 degrees, a sharp drop from last week. This week, the U.S. bond interest rate rebounded, and the pharmaceutical sector fell due to the rising cost of funds, but there was no record low, and the traditional Chinese medicine and pharmaceutical business sectors are resilient.
New energy: The new energy thermometer was 28.73, and the temperature dropped slightly from last week. Recently, the overseas demand of the lithium battery sector has increased, and the photovoltaic sector is expected to improve slightly, but it is too early for the fundamental reversal to be premature, and this sector strategy can only focus more on rebound opportunities.
Technology: The tech thermometer is 26.57, down slightly this week. Affected by the adjustment of large funds and taking profits, the technology sector suffered a wave of take-profit selling this week, but the data shows that the storage and consumer electronics sectors still have a large demand for replenishing inventory, and the current stage can be considered that a new round of the semiconductor sector cycle is coming, and the strategy can focus on memory chips, semiconductor equipment, and auto parts related industrial chains.
Banks: The bank thermometer was 35.13, the temperature was higher than last week. Recently, the banking sector has ushered in an increase in the allocation of safe-haven funds, and profits have also stabilized.
4. Valuation of important indices
Source: wind, data as of January 5, 2024
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].
This article is the original of Haomai Xi Club, if you need to reprint, please indicate at the beginning of the article that it comes from "Haomai Xi Club". Without authorization, no media or individual shall reprint it in whole or in part, otherwise it will bear the corresponding legal responsibility.
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.
Earn while learning, just buy Xi Club, for more content, you can follow @ Good Buy Xi Club