Hexun Investment Advisor Gai Yinan: The Shanghai Composite fluctuated and closed with a star, is the bull market still ongoing?

The Shanghai Composite opened flat, moved sideways, then picked up another bout of consolidation with small star-shaped candles, and it was also an extreme contraction of trading volume. This is also due to the reason that Hong Kong stocks are closed for the holiday. According to Hexun Investment Advisory’s coverage, Ge Yinan’s analysis, at this point it’s been trading in a range around the 3930 area. It looks like a pullback again in the past, so we believe today could go up or could go down—it’s a very plain, uneventful trading day. From the standpoint of the news flow, it’s all about expectations for the overall market going forward, not that the news over this weekend would directly send it straight toward the prior low the way everyone is watching for. More than that, we think it can keep bouncing and trading here repeatedly. After tomorrow’s Hong Kong stock trading session, our volume should rise, and we’ll see whether that all-time low volume can form. At the current level, it needs repeated back-and-forth; it needs time to grind. Everyone has made preparations for a while, because as long as things outside the region don’t end, we don’t have the strong upward condition. More likely, we can hold it steady here, keep the consolidation and stabilize the chop, right? Repair the golden price range established from last August to October, and after another round of sorting and consolidation, we will also wait on the Middle East situation—it will keep making new highs.

Next, we switch to the chart for an explanation. From the chart, on the day of the big drop, we already told our classmates: you need to draw this line around the 3930 area. Ah, it will start consolidating for a period of time. After the contraction in volume, then look for a rebound. After the rebound, if the environment gets a little better and the catalyst is a little stronger, it may produce a bit more. Ah, after lifting it, there will be another round of pullback. Because once a gap has been formed with a jump, this is not something it can pass in one go. You see, in the Asia-Pacific market, right? It broke through here and hit it several times before finally getting through, right? You see, at the earlier point where we broke above the record high of previous years, we also formed a reversal situation. Right here, after that extreme tug-of-war happened several times, only then did it finally clear this streak of 17 consecutive bullish days. So, since it has come down this time, to get rid of this level, it will still require a period of time for that situation to occur.

The three conditions Nange mentioned: first, the current back-and-forth of the index is already成立, right? Second, the sustained rally of the leading sectors—that hasn’t成立. Third, these three weight-stock financials—the three of bank, brokerages, and insurance—haven’t shown that either: no bullish candles have appeared, and no bullish “rotation linkage” has appeared. So for these conditions, they’re not met for now. What we’re more seeing is to trade in a range around here for a while. So if you want to “try it” and “pick some” here, it can be done too, but you must understand that in a choppy, range-bound market, the likelihood of making profits is not big. In the short term, it’s more like that “electric fan” style行情—right? If you want to trade it, first you have to bear the back-and-forth, and second, you either need to have patience and wait until it shows an “offensive” signal. Well, because once it gets to 4050—even to 4070—there will still be a bunch of individual stocks and sectors hanging around at the bottom. The market may have already found its bottom, but sectors haven’t found their bottom yet, individual stocks haven’t found their bottom yet either. Tops and bottoms won’t coincide on the same day. Right? It’s like the top: when the market topped that day, did sectors top? Did individual stocks top? Individual stocks won’t top on the same day—they do it over a period through repeated moves for months. For example, in the wave around April 7th, let’s take the financial sector—bank, broker, insurance—as an example. Banks pulled first, right? It rallied up to July-August levels. Then insurance and securities rallied in June—rallied into August. Their timing is not synchronized, not to mention most targets across different markets.

For the power sector, we’ve always told our classmates: on a big bearish candle day, don’t act immediately. Be cautious, cautious. Here, since it has formed this “rising fast and falling fast” pattern—and has answered the prior launch position—we believe the power sector needs to consolidate for a period of time. Even if there’s a rebound, more likely it still needs a pullback process. It’s not just a single K-line candle; it’s a combination of K-lines—just like at this point. After a round of decline, it needs to trade sideways for a while. After this round of decline, it needs a consolidation and整理 period. Let it go ahead and consolidate for now.

As for the oil and petrochemicals sector—right? Oil prices have already risen solidly, reaching 109, then 111—but these oil stocks basically just come right back to where they came from. So we’re very bullish on the oil and petrochemicals sector, including energy reserves and natural gas chemical engineering, which can also be followed for the medium term. More than that, it’s been fiddling around at the bottom first, with some back-and-forth—what we’re looking at is a wave-style行情. As for financial stocks and the securities direction—including digital economy, digital currency, finance, tech, and diversified finance—we’re still relatively bullish. They’ve basically been squeezed down to the January 2025 launch position. In fact, some individual stocks have even returned into their box range—an 2600-to-~3000 point range box—so the valuation and risk-reward are very good.

For securities, we believe that in this shrinking-volume decline, where volume has fallen and then volume stays low—this long, slow, downward grind—what it is actually doing is compressing and squeezing out the final “water” in the move. What matters is the patience at the end. For the securities sector, for the medium to long term, including financial stocks and the digital economy, we still remain very optimistic. Wait for it to have some bullish candles and to eat up that jump gap. For the short term, look at the jump gap. For the medium term, you can see the huge horizontal pressure at these positions—those levels that, in previous rounds, couldn’t be broken through. So from a monthly-line perspective, at least after August completes a full retaking and reversal (a complete back-covering), then we can talk about acceleration and attacking. Right now, it only has these kinds of rebounds.

(Editor: Wang Gang HF004)

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