[Red Envelope] Stock Addict's Notes: Invincible Quantitative Trading? A Complete Guide to Using Quantitative Methods to Navigate Hellish Market Conditions!

The Coldest Days Are Coming, A New Week Begins. Today, I won’t hold back. Let’s continue talking about trading machines, teaching everyone how to pass through this hellish market with the “correct posture”! Remember to like, follow, and give a triple support with one click—no free rides~ [Taogu Ba]

First, over the weekend, various pessimistic sentiments emerged. Some teachers shouted about quantitative strategies cutting me badly! The fall of hot money! All kinds of quant strategies are invincible! Then more opinions appeared, but in reality, the most difficult market periods each year are always met with similar words. It’s just that before and after the Spring Festival, poor market performance leads to mutual comfort, excuses to boost traffic. Those truly successful traders have long been quietly studying the “motivation” behind quant strategies, trying to develop an effective trading system based on quant methods, rather than just complaining about an unfair world. If there are flaws, why not leverage strengths and avoid weaknesses?

So today’s main post isn’t really about review points, but about how, within my system, if we keep passing through this weak market before and after the Spring Festival, how to profit when others are being harvested by quant strategies. Achieving the ultimate anti-human nature approach is the focus of our discussion!

Quant Characteristic 1: Buy on Divergence Rotation, Sell on Convergence Reversal
For example, on Tuesday, Demingli’s case clearly shows a pattern focus. Because we know the inertia of quant strategies is “assist in rising and falling,” the stock selection aesthetic is similar to many traders—always rotating in old cycles like storage, computing power, electricity, chemicals, oil and gas. From last Friday to Monday, the index sharply adjusted. During the retreat of market sentiment, which sectors defy the trend and strengthen?

“Storage chips?”
So, if we follow the quant rotation logic, on Friday and Monday, storage chips surged strongly, establishing a trend. On Tuesday, divergence appeared—should the weak sectors become the focus for quant to scoop up chips? Is there a big rotation possible the next day? Because the inertia of quant strategies is that stocks adjusted today may rotate and surge tomorrow. Stocks that surged today are immediately cashed out the next day. Therefore, on Wednesday, all stocks like Demingli, Baiwei Storage, Shannon Chip, Zhaoyi Innovation, Jiang Bolong, Langke Technology all saw big rebounds. But what about the next day?
“The quant cash-out rule is revealed!”
It’s clear that Tuesday’s divergence is the key focus for storage chips within our model. Once rotation flows back on Wednesday, it becomes the point of realization within the pattern. This is one of the secrets of arbitraging quant inertia!

On Tuesday, risking to buy during divergence with 4,000 stocks falling is a bold move, and the next day, it’s very relaxed—just 5-10cm. But if you wait until Wednesday for the rotation to happen before buying, you risk catching the top, starting with a big loss—immediately hitting the limit down. That’s the gap. According to our system’s rule of “buy on divergence, sell on recovery,” Tuesday is a clear opportunity within the pattern. Even if on Wednesday, 4,500 stocks rise, it’s the day of realization!

Quant Characteristic 2: Realization Factors Trigger Pre-Exit Points
When does quant realization happen? If you don’t understand this, believe me, during the Spring Festival market, you’ll likely be late to the limit down, or even experience multiple hits. If you want to pass through like within the system, avoiding every wave of limit downs, you need to seriously learn today’s lesson. Otherwise, quant strategies will smell the leek and immediately cut you down!

1. The hot sectors on the day are prone to trigger mass realization the next day
For example, on Monday, CPO; on Tuesday, a collective -10% drop; on Wednesday, storage chips; on Thursday, Demingli near limit down; on Thursday, computing power; on Friday, Xiechuang Data, Hongjing Technology, Dongfang Guoxin, etc., all fell around -10%. Even the stocks that surged strongly on Thursday, like Jinkai New Energy, were hammered down to close near -3%. The best response is to dare to focus on rotation during divergence on Tuesday, and to sell during the recovery on Wednesday. It’s okay to miss the move or sell early, but never lose money!

Of course, if you think that the four consecutive days of ice on Wednesday show a bottom feature because it’s a volume-reduced halt, and the next day might continue to recover with increased volume, then the core “risk control of pullback” is actually “position control.”
Because until the index truly hits a bottom, with the “index bottoming + Iran-U.S. situation clarifying,” it’s hard to confirm a medium-term bottom. It might rise 1-2 days then quickly break down again. So even if we see signs of stabilization on Wednesday, if the Iran-U.S. situation remains unclear and might influence the decline, then we must implement “position control.” For example, within the system, what would we do?
On Tuesday, trigger the system’s ice point pre-focus, then fully deploy in storage core stocks like Demingli, Baiwei Storage, etc. When Wednesday’s recovery occurs as expected, but the quant rule remains unchanged, and the Iran-U.S. situation is still unclear, just observe the index’s downward trend as shown below. Take profits on storage stocks at high levels, then use light positions to test your favored tech or aerospace sectors. If the next day, the index doesn’t meet expectations and doesn’t bottom out, then exit without hesitation.

This way, with a large position, you can gain nearly a limit-up move, and you won’t miss the potential bottom. Even if the next day you lose 3cm, you’ve already controlled a quarter or fifth of your light position in advance. In such harsh markets, even if you’re wrong, the retracement is only 0.6-0.75%. If it triggers a breakout, you can continue increasing your position. Compared to earlier profits, isn’t this a more relaxed and skillful way to operate?! This is the core of “risk control and drawdown management”—actually “position control”! Have you learned it in front of the screen?

2. Sector performance below expectations + strength or weakness easily triggers quant踩踏 (踩踏 = stampede or liquidation)
Looking back at this week, most sectors started poorly at the opening, causing stampedes. For example, on Thursday, the index plunged to the limit in seconds, with Meiliyun’s computing stocks, but on Friday, the core sectors had almost no premium and underperformed. During the session, stocks like Cunchuang, Hongjing, triggered quant realization and stampede.

Similarly, on Wednesday, the peak of storage chips, and on Thursday, the opening was all below expectations, triggering quant realization and stampede. As a result, Demingli’s nearly 800 billion market cap approached limit down. Also, on Thursday, commercial aerospace seemed weak but was actually strong—everyone’s focus on aerospace development was justified. The entire day, it adjusted downward, approaching new lows at close. On Friday, it was near a limit down again! Now, do you understand the value of buying on divergence and rotating, and selling on recovery? This market is profitable if you know how. When it’s time to sell, don’t listen to other teachers’ nonsense. In the end, before the Spring Festival, accounts still lost money.

3. Technical bottom + consecutive bottom triggers quant re-entry
We’ve discussed this many times. Previously, we shared that when the technical bottom appears within the system, daring to buy when 4,000 stocks fall on the same day, then the next day, there’s a high probability of a rebound—sometimes even 5,100 stocks rising during the opening. This rhythm was very comfortable before last week, helping us precisely navigate the market against the trend before the Spring Festival. But last week, we discussed that the technical bottom no longer applies because the trend is accelerating to a top, and the market might turn downward. Looking back, most of the time from last week to now, the index has been in a downward wave + 4,000 stocks falling.

But is there no way out? No, since the market is extreme, we must be more extreme! If the technical bottom can’t hold, then can the first extreme dip below the bottom trigger a quant signal?

So, on Tuesday, if the technical bottom is broken downward + market’s third consecutive ice, it’s a good time to attempt to take the core trend early, as the next rotation is highly probable! When Wednesday’s recovery occurs, it triggers the system’s climax exit signal!

Moreover, the best results often come from the “first” occurrence. The first time the technical bottom or its breach within the system works very well. But as it repeats more times, capital’s aesthetic fatigue sets in, and marginal benefits decline.

For example, before the Spring Festival, the first technical bottom resonated with the system in Wangsu Technology, and right after the holiday, the first day of international composite materials, the 3.4 ice point of Yunnan Energy Holdings, Huagong Technology, all showed no problem with sustained growth. But after two weeks, the focus on aerospace development, Demingli, and others, once they recover, you should consider taking profits quickly—only holding for 1-2 days for quick in-and-out.

4. Index structure’s technical top and bottom easily trigger quant “clues”
This is a signal we’ve always shared. Looking back, it seems I’ve shared every core point publicly before? But whether you listen or act, it’s the key to differentiating during this weak market. For example, the recent obvious “box structure”: top at 4150, bottom at 4100. When the index approaches the top, around 4150, it’s prone to quant realization; at the bottom, around 4100, it’s prone to quant activity. During this cycle, daring to buy at the 4100 technical bottom during the decline, and taking profits at the peak near 4150, can lead to big gains. Because the big structure determines the small opportunities and risks! So, when the 3.4 technical bottom + box bottom at 4100 occurs, it’s easy to trigger quant re-entry. If the index drops to 4100, dare to attack; if it approaches 4150, dare to realize profits.

Since the major structure is the core of opportunities and risks, these two levels—4100 and 4150—are critical. Approaching them, beware of short-term reversal risks. Don’t get caught at the top. Also, during the index’s ice point, the March-end effect is at play. We know the main funds driving this market are “quant + institutions,” and institutions prefer to buy at the bottom and sell at the top at month-end. For nearly every adjustment since April 2025, the index has moved in the last few days of the month. So, the recent trend has enough profit-taking, and the upcoming month-end realization effect will hinder the index’s recovery! It’s not hard to see that next week will still be very divergent. Don’t be overly optimistic!

It’s likely that on Friday, the index will precisely fill the 3983 gap, then recover slightly, making many believe the bottom support is confirmed, pushing the index to 4500 for a false breakout, only to be quickly realized by quant and institutional profit-taking, dropping near 4800 at close. This pattern may repeat often: even if the bottom stabilizes, such situations will frequently occur. Because when the index hits the bottom, most traders think the risk is over, and then they chase the rebound at open, only to realize losses during the day.

So, this Friday’s gap fill + index ice point, if on Monday the opening continues to recover above 3000 stocks, it’s a front-runner’s feast; for the latecomers, it’s risky. Watch for lagging points—if this pattern continues daily, every evening could be a buy point, and every open a sell point—repeated arbitrage!

Finally, how to tell if it’s really the bottom? Is the market temporarily returning to normal or just a trap? Today, the soil pile method teaches you a practical trick!
Notice? Looking back at last Friday’s decline, despite countless heavyweights like banks, insurance, oil & gas, tech, energy storage stepping in to support, the index still kept falling after each false rally. The market’s real support isn’t from weights, but from spontaneous sentiment! When support shifts from weights to sentiment, that’s when the market temporarily recovers!

So, even if the gap at 3983 is filled on Friday, is there resonance? Have you seen a big decline that can resonate? Probably not. So, if the recovery on Monday needs to be the first sustained strong move with resonance, only sectors with continuous strength can do it. The core sentiment anchor is whether Huadian system can break through high + the afternoon ice point, and whether Gaxin Energy can continue to lead the rebound. If the sector rotation continues and sentiment lacks spontaneous support, and the Iran-U.S. war outlook remains unclear, then all talk is just to deceive P!

Data summary:

Number of stocks up/down: 662/4786
Number of limit-ups: Thursday 28 / Friday 28
Limit-up rate: Thursday 72% / Friday 53%
Number of limit-downs: Thursday 5 / Friday 13
Total market turnover: 2,303.1 billion, up 175.62 billion from previous trading day

This kind of detailed analysis, review, and intraday sharing is unique—nowhere else can you see such dedication. If you feel the effort I put in, please give a like, follow, and support with one click—no free rides!

If you think the pattern before and after the Spring Festival is “slow but steady,” my evaluation is: “Though slow, it’s stable”—early recognition of the ice point, safe and steady before the storm.

Low-frequency entries 1-2 times a week to ensure high win rate. Even if before the festival, you apply false signals or the Bainan Yingye dip, you won’t get caught in traps. You can safely pass through extreme market conditions with stocks like Wangsu Technology, Saiwei Electronics, and others. After the festival, the first day’s international composite materials, multiple aerospace bottoms, the 3.4 ice point of Huagong Technology, Yunnan Energy Holdings, and last Thursday’s early rest to avoid the retreat + main decline wave, and this week’s Demingli—these are all opportunities to avoid risks and catch bottoms. The hard part is learning to wait, because waiting is harder than trading. Controlling drawdowns is more important than chasing profits. Staying alive is the key to compound growth. All your anxiety, confusion, and helplessness come from not being in cash during the retreat.

Flow doesn’t compete to be first; it competes to be continuous. The overall pattern before and after the festival feels good—perhaps the wisdom is not as good as the ability to follow. Helping every serious learner avoid risks and catch bottoms—that’s the true meaning of sharing the core method. Let everyone know how to better respond at different market stages. Most pitfalls and false signals won’t trap you; instead, stable opportunities are in your hands, with smooth rotation at high levels, entering and exiting calmly.

Next week’s end-of-month market will continue low-frequency to ensure win rate. Patience in the short term for long-term calm; a solid system to counter luck’s fragility. If you agree with this philosophy and want to systematically improve cognition and build a sustainable trading system, this journey is one of selection and resonance. Those with fate will find the way; those with purpose will act. If interested, pay attention to the timing~**

Wishing everyone a steadier, farther journey on the path of long-term trading.

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