Investment Advisor's Market View: Breaking Below the 60-Day Moving Average, Where is the Next Support Level?

On March 17, Hexun Investment Advisor Gao Luming pointed out in today’s market analysis that the three major indices surged higher and then plunged, entering a new downtrend.

Yesterday, the market showed a bottoming and rebound pattern. Gao Luming predicted that there would be an upward push during today’s session, but the prerequisite was that brokerage, insurance, and other heavyweight sectors needed to exert effort, and trading volume needed to increase; otherwise, a true bottoming and rebound would be difficult to form. As a result, during today’s session, securities and insurance sectors indeed contributed to lifting the indices, but trading volume not only failed to expand but shrank significantly. During the early rally, volume shrank by over 140 billion, indicating that outside funds not only did not enter but also showed signs of a false rally, which is a dangerous signal in itself.

Subsequently, the indices fluctuated sideways. By midday, volume had shrunk by over 230 billion, and the mood of caution further intensified, with outside funds showing no willingness to enter. Gao Luming stated that this already indicated a high probability of a sharp decline. Sure enough, the indices fell back, and during the decline, trading volume actually increased. Although the overall volume in the Shanghai and Shenzhen markets shrank by more than 110 billion, over 120 billion in funds were fleeing during the decline. If the main funds continue to sell, it means the short-term correction has not ended and is likely to continue downward.

Second, today’s market correction also intensified. After yesterday’s bottoming and rebound, the Shanghai Composite only fell by 10 points, but today the decline expanded to 34 points, forming a medium-length bearish candle. The Shenzhen Component and ChiNext indices even closed with medium to large bearish candles. This indicates that the short-term downward momentum remains strong, and the adjustment has not yet ended, with further declines likely.

Third, for the market to confirm a bottom, the rebound must break through the 4106-point level, which is the 10-day moving average. The index briefly touched 4106 points but then retreated after encountering multiple moving average resistances. Currently, the moving averages are beginning to suppress the index downward, and today’s market broke below the 60-day moving average, further indicating that the short-term adjustment is not over. Although traditional sectors showed some performance, energy and technology stocks that drive market sentiment retreated collectively, showing a clear short-term weak sentiment.

Overall, Gao Luming believes that the market is likely to continue adjusting in the short term. The next support level is around 4,000 points and the 120-day moving average, where a rebound may then occur. In terms of specific operations, since the market lacks volume, even if there is an intraday rally, it does not necessarily signal a good entry point. Investors should not rush to buy the dip, as the market is still rotating. While some low-priced stocks may rebound in rotation, it is limited to recently initiated sectors. For stocks that are struggling to rise or show no momentum, it’s better to take profits when possible and sell. The overall market remains weak, and most stocks are likely to fall back. Currently, risk prevention should be the priority, and maintaining a moderate or below position is safer.

(Editor: Zhang Yan)

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