The jump during the midday session really scared many people. Will the 17 consecutive days of gains come to an end? Let's have a good discussion about the upcoming situation today.

When the market opened with a sharp decline, many were still pondering whether this was a false move by the main players. This thinking trap repeats every year—after a big rally, in the first two or three days, every time there's a plunge during trading, it gets pulled back. After several such swings, investors relax their vigilance and start to see every pullback as a low-entry opportunity. What is the final outcome usually? The profits made earlier are given back.

In fact, this is the market's routine. Most people act as leek farmers, providing liquidity. The trading volume repeatedly hits new highs, creating a seemingly prosperous scene, as if everyone is making money. But essentially, the front-runner is cutting the tail. When new funds are insufficient to continue the rally, the market adjusts downward, profit-taking positions come in to go long, and this cycle repeats.

**Purely looking at the index performance**

Today’s decline isn't actually large—Shanghai Composite Index down only 0.64%, ChiNext down nearly 2%. According to the standard for a single-day volume spike and a long downward candle signaling a top, it’s far from being in place. So, you can't say the market has topped out now; at most, it feels like a possibility. To confirm, we need to wait for more top signals to appear one by one.

But there's an old technical analysis issue here: lagging indicators. If you wait until you see volume surge and break below the 5-day moving average to run, the market has already retraced quite a bit from the high. In a strong trend, breaking the 5-day line can actually be a buying opportunity. So, relying solely on predictions for trading—selling when you think it’s overbought—is likely to be wrong most of the time. For example, some people sold when the index was just four or five positive days, only for another 10+ days of gains to follow.

**The real signals from liquidity**

This is the key. Today, the main force net outflow was 180.5 billion yuan, which is not a small amount. In just the first hour of trading, there was a net outflow of 83.9 billion yuan. I already warned at the time—such a scale of selling attitude is very obvious. Continuing to expand net outflows in the afternoon is no surprise.

This pattern looks very familiar, exactly like the days after 2024/9/24. Back then, the main force was also net outflowing heavily every day, but the market kept rising because retail enthusiasm was so strong that the buying pressure offset the selling. But after a few days, it reached a stage top. The main force exited massively, digesting retail enthusiasm, and the upward momentum disappeared.

**Current situation**

Trading volume hit a record high again—3.65 trillion yuan. This indicates that funds are still in the market, not fleeing collectively, but undergoing a major repositioning. Big players like banks and insurance companies are supporting the index. The previously skyrocketing themes like commercial aerospace have collapsed, but new hotspots like pharmaceuticals, AI applications, and oil & gas have emerged. As long as there are new profit opportunities, the market can continue to fluctuate.

But risks must also be kept in mind. The selling pressure of 180.5 billion yuan is real. If the index effectively breaks below the 5-day moving average, stop-loss orders may flood out. Moreover, today, quite a few stocks hit the limit down or fell sharply. Although most of these are still concentrated in commercial aerospace and haven't spread widely, this trend warrants caution.

Tomorrow is likely to be a consolidation pattern. A direct V-shaped reversal to new highs? Difficult. A sudden crash? Not yet.

**Operational strategies**

**First: Absolutely avoid chasing highs.** Those hot stocks that fell sharply today—like commercial aerospace and some chip stocks—should not be bought just because they fell more. During a sentiment retreat, bottom-fishing is most likely to catch the middle of the mountain.

**Second: Focus on newly emerging hotspots at low levels.** Pharmaceuticals performed strongly today, with AI medical and pharmaceutical concepts hitting the daily limit. This aligns with news about OpenAI and Ant Group increasing their AI medical investments. Oil & gas, precious metals, and power grid equipment also showed some strength today. As long as you're not chasing at the intraday highs, you can pay attention during pullbacks—don’t expect to eat a big fat pig in one bite.

**Third: Review your holdings.** If you still hold thematic stocks that are sideways at high levels and haven't fallen much, beware of further declines. If some new hotspots are resilient today or even outperform against the trend, consider holding more, but set clear take-profit and stop-loss levels.

**Fourth: Control your position size.** In this kind of market, full positions test your mental strength. Keep some cash on hand—if the market drops, you have bullets; if it rises, you won’t miss too much.

**Fifth and most importantly: Stick to your trading principles.** If your technical analysis says to exit after breaking the 5-day line, do so strictly; if you focus on valuation, wait patiently for good prices. Don’t listen to one analyst today and another tomorrow—your own principles are the most reliable.

In the end, the market is just funds undergoing major repositioning, flowing from high-valuation old hotspots to undervalued or catalyzed sectors. As long as trading volume doesn’t shrink too much, structural opportunities remain. We should follow the rhythm of funds—no greed, no panic, and respond flexibly to market signals.