A-shares surged to 4100 points this week, with a fierce rally. However, I guess many people are now starting to fear missing out. As the old saying goes: the biggest risk in a bull market is not losing money, but missing the opportunity. Once you miss out, your mindset gets distorted, and it becomes easier to make mistakes. Many people's losses come from this.

**So the question is: can 4100 points hold steady?**

The core still depends on liquidity. Since September 24, I have been emphasizing that liquidity is the driving force, and fundamentals are actually less important. Why? Because this round of rise is driven by liquidity; the A-shares market has not yet entered the performance-driven stage. When liquidity is abundant, the stock market can rise to levels that make you doubt your senses—despite poor earnings, why is it still rising? Many people are scared out of the market this way, only to watch the market continue to climb later.

Many are watching whether the central bank will cut RRR or interest rates, but the central bank remains on hold, which frustrates people. Interestingly, the absence of cuts has become a positive signal. Since 2024, I’ve been explaining this logic; many didn’t believe it then, but now they should—though the opportunity to profit has already been missed.

**Is liquidity still ample now? Here are a few reasons why it still is:**

The central bank continues to promote moderate easing, so domestic liquidity is unlikely to face major issues. The Federal Reserve will also keep cutting rates; it’s just a matter of time. More importantly, cross-border capital is rushing back aggressively. Last year’s foreign exchange settlement surplus approached $150 billion, which is about 1 trillion RMB. That’s equivalent to the central bank releasing 1 trillion RMB of liquidity. Do you think that’s how the stock market has risen? Now, with the narrowing of the US-China interest rate differential and Trump starting to break rules to compete for resources, America’s sense of security is declining. These factors will accelerate capital inflows. Additionally, funds from the real estate and bond markets are also moving into stocks.

The CPI and PPI released on Friday both exceeded expectations. Some wonder why they beat expectations, thinking that demand is insufficient for prices to rise. The problem is liquidity flooding the market—of course prices will go up. Don’t wait until the central bank completes its price assessments to jump in; by then, the economy will feel good, but you’ll already be a bagholder.

**Trading volume is a thermometer.** This week, the daily trading volume has already exceeded 30 trillion RMB, indicating new funds are entering the market. A simple formula: stock price = trading volume / ( free float capital × turnover rate ). In the short term, with capital stock unchanged, the stock price is determined by trading volume and turnover rate. As long as the growth rate of trading volume exceeds that of turnover rate, the stock price can continue to rise.

If this wave’s massive volume reaches 35 trillion RMB, the market can continue upward, reaching 4300 points without issue. As the proportion of medium- and long-term funds and index funds increases, the turnover rate growth in A-shares should slow relative to trading volume growth, which is beneficial for subsequent gains.

**The last variable: the willingness of the management.** The stock market’s rise and fall must align with national strategies, not just market trading results. Recently, signs of market control have been evident during trading. We just need to grasp the overall trend; the rest is about managing positions and dancing with volatility. In fact, moving a bit slower can be healthier. As liquidity recovers, the economy and prices will gradually rebound, providing fundamental support for the stock market. Once fundamentals are in place, healthy growth aligned with earnings is sustainable, and there’s no bubble.

Many people have become accustomed to pessimism, even to the point of not believing in economic cycles anymore. That’s a foolish idea. Cycles may be delayed, but they will not be absent. The later they arrive, the greater the rebound potential.