Market Overview - On the first trading day after the holiday, major A-share indices continued to rise, with varying degrees of increase. The market showed a clear divergence, with 99 stocks hitting the daily limit up and 24 stocks limit down. Strong sectors included non-ferrous metals, nuclear fusion, and superconductors, while accommodation and catering, as well as film and animation sectors, lagged behind [1]. Index Analysis Shanghai Composite Index - The Shanghai Composite Index rose by over 1%, forming a bullish candlestick pattern with increased trading volume, indicating a healthy volume-price relationship. Recent fluctuations have created a medium-sized central structure on the daily chart, corresponding to a monthly pullback. The current bullish candlestick signifies an effective structural breakout, suggesting the end of a medium-term adjustment and the beginning of a new upward wave. However, typically after a structural breakout, a pullback is expected. The recent upward trend has completed three effective cycles, with the fourth cycle being a potential turning point, indicating a high probability of adjustment in the short term [4]. Sci-Tech Innovation 50 Index - The Sci-Tech Innovation 50 Index has also experienced five effective upward cycles, reaching a turning point. The day's candlestick showed a significant gap up but closed with a long upper shadow, signaling a clear adjustment signal. Therefore, it is likely that the index will undergo a correction on Friday. The index is near historical highs, facing substantial resistance. On the hourly chart, the recent trend has completed nine effective adjustment cycles, with the first hour of trading on the following day being a potential turning point, suggesting a likely pullback followed by stabilization [5]. Summary - The current A-share market is characterized by structural trends in individual stocks as long as the overall market does not experience a significant decline. Successful trend trading is essential for achieving stable wave profits. By analyzing candlesticks, patterns, and central structures, it is possible to accurately grasp price fluctuations. Pullbacks following structural breakouts serve as entry points for gradual investments. The A-share market is challenging, and caution is advised [7].

Report Industry Investment Rating No information provided in the content. Core View of the Report The report is the first in a series of special reports on the SMC system, introducing the basic theory of single - cycle market structure. SMC is a new technical analysis and trading methodology. The core of the SMC system is market structure, which determines the price trend direction. The core logic of the SMC strategy is to enter the market relying on strong points and aim at weak points as targets. Four key conclusions are derived from relevant concepts, which are the important cornerstones for the subsequent development of the theory [2][3][10]. Summary According to the Directory 1. Introduction: SMC System Introduction - SMC (Smart Money Concepts) is a new, complete, and systematic technical analysis and trading methodology, originating from ICT. It became popular after 2020, especially in the foreign exchange and cryptocurrency trading communities [2][6]. - The basic idea of SMC is to follow the trading behavior of "smart money" to achieve high - probability or high - profit - loss ratio trading. However, the so - called "smart money" may not exist in reality, and its effectiveness is explained by the more fundamental ICT theory [2][6]. - The advantages of the SMC system include a complete theoretical system, "naked K analysis" without relying on technical indicators, relatively less subjective components and high degree of regularization, and a complete trading system with clear entry, exit, and target frameworks [2][7]. - The SMC system consists of five modules: market structure, institutional supply and demand, order flow, liquidity, and trading strategies. Market structure is the core, used to determine the price trend direction, and other parts revolve around it [8]. 2. Basic Concepts and Expectations of Market Structure - Market structure refers to a series of high and low points and the bands formed between them, which can be divided into upward and downward structures according to the arrangement of high and low points [11]. - Structure break (BOS) means any of the HH, HL, LH, LL in the market structure is broken. If the HL in an upward structure or the LH in a downward structure is broken, a trend reversal is expected, but this is only a probability - based expectation [14][17]. - The generation of high and low points: In an upward structure, HH is confirmed after a certain - amplitude callback, while HL is objectively determined after the HH is broken. The situation in a downward structure is similar [18][21]. - After a structure break, a callback at the same level as the structure is expected, which helps answer questions about chasing high after a new high is broken [21][22]. - Swing high, swing low, and swing range: Swing high and low are the latest high and low points at a certain moment, and the swing range is the area between them. They are mainly used to assist in judging structure breaks and introducing the concepts of strong and weak points [25]. - Strong points and weak points: When a structure break occurs, the unbroken swing point is the strong point, and the broken one is the weak point. Strong points are expected not to be broken, and weak points are expected to be broken. The core logic of the SMC strategy is to enter the market relying on strong points and aim at weak points [27][31]. 3. Premium and Discount - For the callback band after a structure break, the mid - point of the previous band price range is the fair value, the area above 50% is the premium area, and the area below 50% is the discount area. They are used to assist in judging the general areas for long and short positions and when the callback band ends [32]. 4. Summary - The report mainly introduces the basic theory of single - cycle market structure, with the core logic of the SMC strategy being to enter the market relying on strong points and aim at weak points. Four key conclusions are derived: trend reversal is expected when a turning point is broken; a callback at the same level as the structure is expected after a structure break; strong points are expected not to be broken, and weak points are expected to be broken; the probability of the end of the callback band increases as it approaches the strong point, especially when the callback amplitude reaches more than 50% [35][36][39].