He Xun Investment Advisor Yang Lihua: Accelerated Pullback in the Afternoon, How to View the Subsequent Market Trend?

Hello everyone, friends. The market closed without the expected sharp rebound; instead, it showed a decline today. This indicates that the overall market is no longer in an upward attack phase. Old Yang believes the market will continue to fluctuate, entering a period where trading becomes somewhat more difficult because none of the major indices have broken through upward. For example, today we saw the ChiNext and Shenzhen Composite indices rise briefly, but with upper shadows and no significant volume, indicating the upward moves didn’t hold.

At the same time, the Shanghai Composite Index also declined today, signaling the beginning of a predominantly weak and volatile market pattern. We see about 1,500 stocks rising and over 3,800 falling, showing a narrowing of the overall probability distribution. Currently, there’s no sign of extreme panic or sharp declines. Old Yang thinks the market has entered a transition phase between the first and second stages of fluctuation. During this time, friends should remain patient, cautious, and restrained. This fluctuation will take some time, and only after that will the real market trend emerge. Overall, the chance of a major correction is low because the entire market has not experienced significant declines under external shocks. This suggests the market will follow its own rhythm. From recent market movements, Old Yang still emphasizes a few sectors: chemicals, electricity, and some new energy directions.

Additionally, some state-owned enterprises are relatively resilient and have started to show activity. Over the past two days, wind power and nuclear energy stocks have performed well. Going forward, watch for noticeable movements in agriculture and financial stocks during trading sessions. Opportunities are becoming more dispersed, so pay attention to stocks that previously didn’t perform well, including some innovative medicines, which may see catch-up rallies or rebounds. Overall, the market will continue to fluctuate, with a shift from low-priced stocks that haven’t risen to high-priced stocks, leading to a state of fear of high valuations or line trading. Be aware of this polarization effect, follow the rhythm, and focus on the key directions.

(Edited by: Shao Xiaohui)

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