Has the second wave of technology stocks arrived?

Today, the market was once again lifted by technology stocks. Earlier, I explained to everyone that during bull markets, technology stocks—acting as the main theme—typically experience two distinct upward waves. Previously, this analysis was purely technical; today, I’ll explain it from a fundamental perspective. During the last bull market (2019–2021), the performance of technology stocks followed the black line shown in the chart below (using semiconductor stock prices as a proxy). You’ll notice there were clearly two major rallies: the first peak occurred in July 2020, and the second in August 2021—with the latter reaching a higher level than the former. So the question arises: Is there any fundamental pattern behind this? Yes, there is. We can overlay two fundamental indicators onto this price chart: valuation (yellow line) and ROE (Return on Equity—the black line, representing profitability). You’ll see that both peaks in technology stocks coincided precisely with peaks in both valuation and profitability. Specifically, the first rally was driven primarily by valuation expansion. From January 2019 to July 2020, tech valuations surged from 40x to 140x—a more than threefold increase. Simultaneously, stock prices rose from 2,200 points to 8,000 points—also a more than threefold gain. During this period, while profitability did improve modestly, it was not the primary driver of the price surge. From July 2020 to August 2021, however, tech stocks corrected—from 8,000 down to 5,500 points—before launching an even stronger rally, surging from 5,500 to 9,600 points and setting a new high. In this second phase, valuation actually declined—from 140x to 120x—as valuations were digested. The real change came in ROE: tech companies’ annualized ROE jumped from 11% to 18.4%, a substantial improvement. In short, technology stocks tend to form two peaks: — The first peak occurs at a valuation high; — The second peak occurs at a profitability (ROE) high. That said, nothing in the stock market is absolute. Don’t assume this dual-peak pattern guarantees safety. For example, the 2015 bull market diverged from this pattern. As shown in the chart below (black line = tech performance; yellow = valuation; purple = ROE), the 2015 peak did coincide with the highest valuation—but when ROE improved in 2016 and earnings materialized, no second rally followed. So does this invalidate the earlier dual-peak conclusion? Hold on—we need a broader perspective. Let’s examine the past 15 years. The chart below shows tech performance since 2013 (black line), alongside valuation (yellow) and ROE (purple). You’ll see that the 2015 bull market was driven almost entirely by extreme valuation expansion—far exceeding both the 2019–2021 bull market and the current one. By contrast, the 2019–2021 bull market featured only moderate valuation expansion—but achieved record-high ROE over the past decade, significantly surpassing even the 2015 cycle.

Has the market bottomed out and rebounded—is this institutional position-shaking or a bear trap? How should we interpret the continued decline in trading volume? Has technology made a comeback—and will this rally be sustainable? What lies ahead for next week’s market? Among technology, metals, and innovative pharmaceuticals, which sector holds the strongest potential to become the dominant theme?

So how should you buy innovative pharmaceuticals? Buy institutional-held stocks—not speculative, momentum-driven ones. For retail investors, the optimal entry point isn’t chasing gains, but rather stepping in precisely when speculators dump shares and retail panic triggers mass selling—while institutions quietly absorb the supply. (III) Metals: The Simplest Theme Let’s now discuss metals. First, observe how precious metals performed today: they also staged a bottom-rebound. After yesterday’s sharp drop, many retail investors concluded metals had lost momentum. So today’s opening—deliberately low—was designed to flush out weak hands. With gold spot prices falling in the morning, the main force leveraged this to conduct a shakeout. Many ask: “You said the main upward wave would begin in July—but it’s already August, and no such move has materialized. Can we still trust metals? Does holding through mean doing nothing?” First, yes—I did say July would mark the start of the main upward wave. But remember: the main force is like a cat—and a cat’s movements depend entirely on how the mouse behaves. Recall what happened in July: the probability of a rate hike surged dramatically—making a hike highly likely. So if you’re the main force, would you ignore such a powerful negative catalyst? It’s the perfect tool to shake out weak holders. You’re ready to rally—but just then, a major headwind emerges. Why not extend the shakeout by another month? Absolutely. And with another rate decision pending in September, will that news also be used to shake out positions? Of course. Many feel metals are promising—but frustratingly slow. Yet consider this: when technology stocks shake out weak hands, don’t they sometimes plunge 70%? How far the main force is willing to push a core theme depends entirely on its strategic priorities—think about that yourself. Why has the external market sold off so sharply this round? On the surface, it’s due to concerns about technology—specifically, uncertainty over whether fundamentals have peaked. But at the height of the tech selloff, I told you clearly: “Technology fundamentals won’t end here.” Earlier, I explained why I avoided tech initially: the challenge was pinpointing the turning point. Once that inflection appeared, a 70% collapse could follow. Now that the sell-off has occurred, the new challenge emerges: distinguishing which tech stocks can make new highs—and which have hit all-time peaks. So while we remain bullish on tech overall, picking the wrong sub-sector still leads to losses. Metals, by contrast, are easier to navigate—their upside isn’t overly stretched. Let me add one more psychological insight: haven’t you noticed something? Among the three themes currently favored by institutions—technology, metals, and innovative pharma—which is truly the most transparent, clearest, and most straightforward? It’s metals. Technology can no longer deliver broad-based gains like it did months ago. Many tech stocks simply won’t recover from this downturn. Internal consolidation is underway—only select segments will be actively traded. Today’s tech rallies increasingly rely on U.S. market spillover effects: whichever U.S. tech names rise, their Chinese counterparts get lifted by association; sectors without such linkage underperform. Right now, there’s no universal tech rally. Innovative pharma lacks clear catalysts—and doesn’t mirror U.S. peers. Most activity here is driven by speculators pursuing consecutive涨停 (limit-up) trades. Even institutional participation centers around Wuxi AppTec—the sector leader—whose solid earnings provide a floor. But most other innovative pharma stocks lack comparable earnings support, leaving them without a durable catalyst for sustained gains. What about metals?

Core Molding Technologies (CMT) Surges 7.4%: Is This an Indication of Further Gains?

Apr 14, 2026

Core Molding Technologies shares surged 7.4% driven by strength in its sheet molding compound business, with expected quarterly earnings rising 8% year-over-year. Analysts suggest monitoring the stock despite unchanged consensus EPS estimates.