Hexun Investment Advisor Mi Jiyayue: Trading volume continuously surpasses 2 trillion, identify the key milestones

For the major indices, the trading volume in both markets is still below 2 trillion. So the trading volume of 1.56 trillion has indeed set a new low. According to Hexun’s investment advisor Mi Jia Yue’s analysis, in this market, the行情 is now repeatedly influenced by external factors. As for the行情, it’s up today and down tomorrow, up today and down tomorrow—meaning you want to enter while withdrawing in stages. As for this current行情, with all the major indices continuously shrinking volume, where should we go from here? How should we handle position control and what decisions should we make next?

Now, for the major indices, the trading volume is 1.5–1.6 trillion, so it is still staying below the scale of 2 trillion. So, previously we discussed that trading volume below 2 trillion has become the norm for the market. As for market scales below 2 trillion, they are basically a game of stock-pile (inventory) capital. Therefore, the game of stock-pile capital will tilt toward difficulties in the sustained performance of sectors. If sectors can’t sustain, then the sustained performance of the stock index also will have difficulty. So today may rise tomorrow and may fall again; today may fall tomorrow and may rise again.

As for today specifically, the strength of small and mid caps (SMEs) is relatively good. The main reason is that during this period both small and mid caps and the stock index have been continuously selling off (pulling back). Therefore, for small and mid caps today, there has been a rebound. But as of today, the volume is still even smaller than yesterday. Therefore, at this point, incremental capital for small and mid caps has not entered. For example, the CSI 1000 and the Shenzhen 1000 have both been extremely volume-shrinking. So, along with it, this includes these Hang Seng 300 constituent weights—ah, including the Shanghai 50, Shenzhen 5, Shanghai 100, including the Shenzhen 50, etc.—all of which are seeing shrinking volume.

From a technical standpoint, these weights are all at extremely low volume. If we exclude external factors, then if this area forms this kind of “repeat-processing” phenomenon, it is a normal occurrence.

Therefore, afterward, once in the early session there is a coordinated force between weights and small/mid caps, everyone can use very light positions to gamble on some very short-term trading setups. So why can’t you use a heavy position to gamble? Because there are two key nodes here. The first node is that volume continues to shrink. Naturally, this is a bottoming phenomenon. Continuous shrinkage should lead to a change and transition here. So this area has the possibility of a rebound. But because external factors are unstable and because we are now at that very important external factor node, what exactly it’s going to be about—we won’t go into detail. If, by chance, there is a larger adverse impact, then if the index continues to sell off downward, or you see a doji/medium bearish day, a big bearish candle, or a “warm water boils a frog” style decline, then all of that is possible.

In summary: this shrinkage in volume has the possibility of a transition, but because external factors continue to be sustained and repetitive, this transition becomes uncertain. So in this stage, I believe maintaining an empty-position mode, or maintaining a very light approach to do those very short-term trades, is appropriate. I think there are two directions. You can keep an empty position; you can keep a very light approach to game very short-term trades. As for tomorrow, there is one very important piece of news—whether it will continue or not—basically, there’s a high probability that it will produce results tomorrow. If tomorrow the situation at the “cut-in point” eases, then once this area conducts “repeat-processing,” you all can play it with your own very light modes. But right now there is no mainstream sector launching an attack, and there is no continuity in any mainstream sectors.

So in this stage, if external factors don’t ease and don’t become peaceful—even if you do a rebound or trade range/oscillation here with small volume—it is basically still likely that the market will continue to oscillate or even sell off later. Because in this period, mainstream funds haven’t entered. For example, take the Shanghai 50—also Shenzhen 50, as well as the Hang Seng 300 constituents—they all have no volume. So in this stage, since super-mainstream funds have not entered the market on a large scale, it’s hard for this area to generate strong upward momentum and move forward at a higher level. In this sense, on the right-hand side (confirmation side), you need some volume to come out. Before volume is released, all consolidation, oscillation, rebounds are considered “playing games/messing around.”

So now there’s a saying: I want to return to fundamentals. That means judging the market based on technical aspects and signal aspects, not using a subjective approach and personal beliefs to look at things—especially not to take some matters and treat them in absolute, subjective ways. That mindset needs to be corrected.

So in this time stage, if we return to fundamentals and get that enlightenment, we will slowly see the effect. So now there are two options for the market: either you stay in cash (empty position), or you do a very light bet with very light very-short-term trading setups. Because external factors currently haven’t obtained big, clear certainty, and there may still be repeats, or even something bigger could happen. Is it possible for the market to continue selling off later? Of course it is possible. Is it possible that the sell-off in this area, or the sell-off in the Shenzhen index and these areas, could continue and release more volume? That is also possible.

So therefore, in this area, I think the best approach is either to stay empty, or to respond in a very light way. This could also help you avoid the downside this month. So now the market has a lack of popularity—there’s no momentum/enthusiasm (no “people,” no participation). If there is no popularity, you only need to wait until the event-easing factor is confirmed, and then only super-mainstream funds may enter. And when funds enter, there still is no volume. Without volume, if you want to generate a big rebound, you will still have opportunities later. So the market is basically in this situation right now.

（责任编辑：王刚 HF004）

     【免责声明】This article only represents the author’s personal views and is not related to Hexun. Hexun’s website maintains a neutral stance toward the statements, viewpoints, and judgments made in the text, and provides no explicit or implicit guarantee regarding the accuracy, reliability, or completeness of the content included. Readers should read for reference only, and bear all responsibility themselves. news_center@staff.hexun.com

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