Cooling down has arrived, but this is not a signal of a bear market. Understanding market cooling as an adjustment rather than a collapse is key—just like a fever needs to break to recover health, an overheated market also requires this cooling period to emerge into a more sustained slow bull market, rather than being frozen.

Recently, there are some new trends in sector rotation worth paying attention to. Besides communications and some traditional sectors, other industries are performing well. Here, I especially want to discuss those niche areas that are overlooked by the market but are undergoing fundamental changes.

**The innovation and technology chips sector is interesting.** The AI industry chain, from data elements to industrial applications, has very clear capital flow: data → industrial AI → domestic computing power (innovation chips) → overseas optical modules. Why am I particularly optimistic about innovation chips rather than traditional chips? The key is that many old listed companies are still making analog chips and RF chips with 42nm mature processes, while the innovation chip sector consists of companies that have gone public in recent years, with significantly faster technological iteration. Many people haven't noticed this detail.

**Non-ferrous metals and gold stocks have been very impressive recently.** Geopolitical factors combined with fundamentals have caused non-ferrous metals to rise counter to the large decline. Elon Musk's statement became popular—copper is the infrastructure of the future computing era, with endless demand. This directly makes the outlook for the next few years "unfalsifiable." However, note that valuations for non-ferrous metals are not cheap in themselves. The interesting part of gold stock ETFs is that they are actually double exposure to gold processing and non-ferrous metals, similar to petrochemical ETFs, offering a more attractive combined effect than single assets.

**Hong Kong stocks have two areas to be cautious about.** The internet sector faces a new round of regulatory expectations, with anti-monopoly events signaling the market. Innovation pharmaceuticals are even more complicated—companies generally spend money inefficiently, and behind a successful one are dozens of failed projects. There are many cases where good performance leads to a sharp drop in stock price. Plus, policy disturbances may still occur, so short-term avoidance is advisable.

**US stocks in the healthcare sector can consider partial profit-taking.** The S&P biotech sector initially benefited from rate cuts and recession expectations, but now with the Fed's rate cut expectations falling short and economic data exceeding expectations, this puts pressure on small-cap stocks and biotech. The Nasdaq is relatively stronger. However, once the quota for selling QDII is used up, it’s gone, so think this through carefully.

**The chemical sector is doing well across the board.** Valuations are not high, and gains are moderate, almost becoming a safe-haven tool. This has been discussed extensively.

The last sentence is very important: don’t think this cooling wave means the bull is gone, nor think you can keep speculating on concepts. A 50% rise in two weeks cannot withstand such fundamental turbulence. After the market cools and adjusts, it will go further. If you lack the courage, consider some fixed income to participate; confidence is there, but don’t be blindly optimistic.