Two-Pronged Defense: Practical Strategies for Gold, Oil, and A-Shares

Short-Term Trading Strategies for A-Shares

In our previous video, we primarily discussed the long-term investment logic for A-shares; in this episode, we will focus on short-term trading strategies. The core strategy for the Shanghai Composite Index at present is to maintain a watch-and-wait position, waiting for clear market signals before seeking appropriate opportunities to add to positions. The goal is to control the average cost of holdings and avoid blindly increasing positions.

Personally, I positioned myself in A-shares when the Fed first cut interest rates, so my average cost basis is significantly lower than current levels. I added substantial positions at 3,100, 3,000, and 3,400 points, with the bulk of my holdings established below 3,400 points. Consequently, I can trade with greater composure—there’s no need to rush into buying or selling; I simply need to wait patiently for the optimal entry points to emerge.

Two Possible Forecasts for the Shanghai Composite Index

In the future, the Shanghai Composite Index is likely to follow one of two paths:

  1. Range-bound Consolidation: A short-term pullback to the lower boundary of the trading range (the 3,925–3,900 point range) followed by a rebound. The index will then consolidate at higher levels, awaiting positive news from U.S.-China negotiations before breaking out upward. The target is around 4,500 points, after which it will enter a sideways consolidation phase.
  2. Direct Uptrend: Without a deep pullback, the market will rise directly and consolidate at higher levels, awaiting a stabilization of the situation and clear signals from the US-China meeting before breaking out further to the upside.

Currently, the probability of a pullback to 3,800 points is very low, so the opportunity to add positions at 3,800 points that we previously planned may not materialize. My trading plan is as follows:

  • If the market pulls back to the 3,925–3,900 point range, make a small position increase.
  • If it continues to fall to around 3,800 points, make a significant position increase.
  • If it breaks out directly to the upside, wait until it retests the upper boundary of the trading range to make another position increase; proceed with subsequent actions only after confirming the trend has formed.

Response Strategies for Different Position Costs

Investors can choose the appropriate trading strategy based on their position costs:

  1. Average cost below 3,800 points: No need for concern; simply hold your positions and avoid frequent trading
  2. Average cost above 3,800 points:
    • If you have sufficient cash reserves (e.g., only 200,000 of a 1 million investment has been deployed), there is no need to reduce your position; patiently wait for a pullback to add to your position
    • If you are already heavily positioned and have insufficient cash reserves, you may take partial profits and reduce your position after the market opens on Monday. Wait for a pullback to your target level before adding back to your position, but under no circumstances should you liquidate your entire position; retain a core position to avoid missing out on the rally.

The core principle is not to exit the market entirely due to short-term volatility. The long-term upward trend of the A-share market remains unchanged, and position management is more important than frequent trading.

Oil Trading Plan

We began positioning in WTI crude oil on January 30, taking profits around $110. We subsequently added to our position once around $85. We currently plan to complete the remaining two additions below $80 to further lower our average cost.

Even if the conflict eases more than expected and oil prices fall below $70, there is no need to panic. Our long-term bullish outlook on oil remains unchanged; short-term volatility merely provides us with an opportunity to add positions at lower costs. For highly cyclical assets like oil, a sufficiently low average cost basis is a core prerequisite for long-term holding. Our goal is to bring our average cost down to a sufficiently low level to weather cyclical fluctuations.

Gold Asset Allocation Recommendations

Gold is the core hedging asset in the current geopolitical environment. We have already made three additional purchases at the bottom, and our current holding cost is highly advantageous. If geopolitical tensions continue to ease, our gold position will remain very secure, allowing us to benefit from valuation recovery once risk-averse sentiment subsides; if tensions escalate again, gold will serve as the best risk-hedging tool.

At this stage, there is no need to significantly increase or reduce gold positions; maintaining the current allocation is sufficient. Gold’s hedging value within the portfolio will persist for a long time to come.

Overall, the core strategy at this stage remains a two-way defensive approach: neither blindly optimistic full-position buying on the rally nor overly pessimistic liquidation. Manage position structure effectively and patiently await clarity on the situation before making further decisions.