Hexun Investment Advisor Li Jingfeng: Is the market expected to bottom out and rebound?

Today, the broader market has a chance to hit the lows and rebound. Even if the market doesn’t rebound today, it’s still likely to rebound tomorrow. Why do I say that?

Sometime around 9 a.m. this morning, Trump issued tough remarks, saying he would continue taking even more forceful action, which pushed crude oil higher again. Looking at the tempo of crude oil, does it feel familiar? A couple of days ago, I mentioned that the situation in the Middle East has shifted from one-sided tension to signs of easing. Signs of easing don’t ease continuously; there will inevitably be times when easing happens, and also times when tension returns—even later, there will be easing again and tension again. This is an inevitable stage. So once you accept this phenomenon, you have to accept that there are both phases of easing and phases of tension. For the next period, the crude oil trend should be in a state of consolidation at high levels.

For China A-shares, this morning there was again weakness right after the open. Looking at the 30-minute chart, there is still room upward. During the pullback, has the uptrend completely ended? Pay attention to trading volume. The pullback is happening on a shrinking volume basis, which indicates it’s only an impact from sentiment. No matter what Trump says, he hasn’t truly changed the state of the Middle East situation; he only triggered a market-sentiment reaction. The good remarks released a couple of days ago didn’t change the situation, and the bad remarks also didn’t change the situation. In the easing phase, market sentiment is also in a period of fluctuation, and the stock market’s performance will be in a period of fluctuation as well. So a pullback isn’t scary.

The ChiNext is performing more dismally. The reason is that recently the total weight of the ChiNext has been leading the decline, with a typical example being Sungrow Power Supply. Sungrow Power Supply has been oversold in a short time, so after being oversold there is an expectation of a rebound. After moving away from the moving averages, yesterday’s big-volume selling was due to concentrated liquidation because earnings were poor, but today the pullback is on reduced volume—meaning the selling pressure is no longer as heavy. After moving away from the 5-day moving average, the percentage of shares trapped in positions is larger, so stop-loss selling will also decrease. In the future, it is highly likely to return toward the 5-day moving average. If it returns toward the 5-day moving average, then the ChiNext Index should also rebound. CATL is also a heavyweight in the ChiNext. Today, the overall pullback is on reduced volume; it’s a strong consolidation, and the volume shrink is extremely small. A pullback on lower volume means there’s a higher probability that the trend will move upward afterward. EVE Energy has also been leading the decline recently, but it has started to show signs of a rebound because it fell earlier; after moving away from the moving averages, it also needs to return toward the 5-day moving average. These signals pointing to the new energy theme suggest there’s a short-term expectation of an oversold rebound, which could help the ChiNext rebound.

In terms of AI hardware, stocks like Tianfu Communications were strong yesterday, and today they pulled back—but the pullback is on reduced volume, not increased volume. After a period of strength, it’s normal to see a brief pullback when it hits a resistance level. InnoLight is also pulling back on reduced volume, not panic selling. When looking at hot themes and the overall market trend, you need to identify the performance of the heavyweight stocks that affect the broader market, and determine whether it’s panic selling or a pullback on reduced volume caused by normal sentiment.

Overall, after the broader market pulls back, it will likely rebound again afterward. If it’s fast, it could show up this afternoon; if it’s slower, it may be dragged down a bit again tomorrow morning after US stocks finish falling tonight, and then it’s also likely to rebound again. But do note that the rebound room won’t be particularly large; it will mainly be consolidation with a trading range.

(Editor: Zhang Yan)

     【Disclaimer】This article only represents the author’s personal views and is not related to Hexun. Hexun does not provide any express or implied guarantee regarding the accuracy, reliability, or completeness of the statements and judgments contained in the article, and remains neutral toward them. Readers should view this as for reference only and bear full responsibility for any actions they take themselves. Email: news_center@staff.hexun.com