After trading volume shrinks to the extreme, is the quarterly report season really about to change?

The market is as quiet as a small river frozen with thin ice during winter, with trading volume in the morning session shrinking sharply, much less lively than the days before the holiday. Many people stare at the screens, feeling uneasy, wondering what this quiet scene might indicate. On April 7th, the overall market showed a rare calmness, with transaction volume dropping to over 16 trillion yuan, a clear narrowing compared to before. Such changes naturally remind people of those restless days, when even a slight wind would cause funds to flee, and trading remained high, like a tug-of-war exhausting everyone’s patience.

This sluggish volume, paradoxically, makes selling pressure feel much lighter. Previously, those easily swayed by emotions seem to have been gradually filtered out, leaving mostly those willing to hold long-term. In some internal discussions at brokerages, analysts mentioned that shrinking transactions often reflect a gradual calming of market sentiment, with a subtle shift in the balance between bulls and bears. In reality, such situations are not new; they act like a natural filter, making the market healthier.

Currently, it is the busy period for the release of first-quarter reports by listed companies, starting from mid to late April, with various financial statements gradually appearing. Performance is no longer guesswork but concrete numbers right in front of us. According to public information, some industries’ profit recovery in the first quarter exceeded many expectations, such as certain tech-related sectors and resource industries, supported by data that bolster investor confidence. For example, in recent years, some companies have disappointed investors during earnings seasons due to poor performance, but many have maintained stability through solid fundamentals.

Looking back to late 2022, the market also experienced a period of extremely low trading volume. Later, with policy expectations aligning, the index quietly bottomed out, and quick investors seized the rebound opportunity. The current situation is somewhat similar, but the visibility of fundamentals is higher. Recent weekly reports from multiple brokerages point out that some industries showed strong profit recovery in the first quarter, with hard data more convincing than mere sentiment. It reminds everyone that ultimately, the market will return to the track of performance.

Of course, the market never plays out exactly according to a preset script. Some see shrinking volume and worry about liquidity issues or the lack of follow-up funds. Others believe this is a sign of smart money positioning early. I have a relative who runs a small business; he has some idle cash. After observing the market for a while, he patted my shoulder and said, “At this point, either stay calm and don’t move recklessly, or try buying in stages at low levels—don’t be too greedy.” Such simple advice sounds easy but reveals the real situation many investors face.

During the earnings season, value-focused funds tend to quietly select stocks with solid fundamentals and relatively reasonable valuations. The mutual confirmation of fundamentals and technicals often becomes the trigger for market moves. Previously, many hesitated, afraid of stepping into a trap. Now, those panic-inducing chips have been washed out, and investor sentiment has relaxed. Discussions have shifted from worrying about how deep the decline might be to when to find a suitable entry point. This silent shift often signals an important turning point.

Think about investors who were hurt by unexpected earnings, like neighbor Lao Zhang, who experienced a similar situation last year and felt cold inside from losses. This time, he’s watching the earnings timetable and sighs, “At least now I can see a clearer bottom; whether to act depends on personal courage.” Such experiences remind us that the investment journey is full of ups and downs, but learning to find certainty from data might help avoid some detours. Compared to purely emotional trading, rebounds supported by performance tend to be more stable.

The quality of a market rebound is also crucial. A rally driven solely by emotion may not last long and could quickly deflate, while those backed by real earnings have more staying power. The CSRC’s release schedule for quarterly reports acts like a rhythm reminder, telling everyone not to rush to the front or be completely paralyzed by fear. Being more cautious, paying attention to volume changes and actual performance, and avoiding being swayed by rumors might be wiser choices.

Some ask: those with no positions fear missing opportunities, while those fully invested worry the rebound might be fake—there’s no perfect answer. Perhaps we can learn from Lao Zhang’s approach: try small steps gradually, leaving some room; or like my colleague, wait a day or two, and decide after more earnings data come out. It’s precisely this hesitation and different choices that make the market full of strategic fun and give everyone room for thought.

Looking back, this shrinking volume, while making the market appear cold, also filters out much noise. Companies and industries with real resilience often show stronger vitality during earnings season. Like gold being sifted through a big wave, only the tested remain. Against the backdrop of economic recovery, signs of profit improvement in some sectors are already reflected in data, providing more solid support for the market. I hope everyone can face choices with more composure and less impulsiveness, ultimately finding a suitable investment rhythm. Life is inherently uncertain, and so is the stock market, but attentive observation and learning can always bring growth and insights.