After nearly two months of decline, coupled with the A-share market closing on Friday with a long lower shadow line, the voices shouting for a bull market are once again very loud, which is worth paying attention to. Most stock investors are currently complaining about A-shares, which is a normal phenomenon and there is no need to make a fuss about it. So, what is the current market, a bull market or a bear market? I will share a few points of view for everyone to discuss.
Firstly, A-shares are not in a bull market now, but in a large bear market, and have not yet entered the end of the bear market.
Firstly, investors have forgotten a key factor of A-shares: the rebound that started in early February is a market rescue.
It does not have a real distinction between bull and bear markets. In other words, this market rescue is to delay the A-share market from entering the end of the bear market, the process of falling and building a bottom, because the end of the bear market trend is low and tragic, no matter who, will experience torture.
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Generally speaking, this process is the period when retail investors are squeezed out of the market, and the main force needs to have funds to take over the chips that retail investors cut their losses, which is what we often call the main force absorbing goods, and it is also to prepare for the medium and long-term market. Because the main force has enough chips in hand to sell for decades, coupled with economic transformation, some traditional varieties will eventually be replaced by new technology industries, so there is a process of adjusting positions and changing stocks.
This process is the current market pattern: banks have been rising for nearly 10 years, and now they lack a process of pulling up and selling, which is marked by the large-scale selling of banks, oil, coal, electricity, steel and other sectors from May 9 last year to now. In order to achieve this process, the management has made great efforts to remove all obstacles, with great determination and remarkable results. According to relevant reports, the national team made a profit of 530 billion yuan in the first half of the year, with a return rate of more than 13%.
This is also a half-year summary, what does it indicate? It indicates that the market rescue has been successfully completed, and the next step is to return the market to the market.
Secondly, market rescue will only occur in a bear market, which to some extent indicates that the current A-shares are in a bear market phase, and it is a key node entering the end of the bear market.The starting point of this rebound was the A-share market index at 2635 points, thus, we can consider this level as the policy bottom. Subsequently, the process of finding the market bottom begins, which is the first part of entering the end of a bear market, a market law.
Due to the frequent market interventions in the A-share market, many investors have turned a blind eye to market laws.
Secondly, the current technical pattern of the A-share market has entered a trend of medium to short-term decline.
Looking at the trend since early February, the A-share market has formed a large irregular round top in its trend, which is a complex combination, containing a smaller round top, and above the smaller round top is a double top structure.
This complex top structure indicates that the main force in the market this time had a very difficult time selling, and could only use large index stocks to continuously raise the index, enticing people to take over the positions. If it doesn't work the first time, they try again, and the cycle repeats. This round of "leeks" (a term used to describe retail investors in China) has been cut quite harshly.
This once again shows that the decline from May 21st to now is not a washout or a shakeout, but a real decline, just a resistant decline trend, without a significant drop, quickly closing the large round top structure.
Because the main force has achieved the profit target, there are also secondary forces, such as securities firms with heavy positions, institutions with heavy positions, etc., that also need to achieve profits. The third force, domestic funds, how much capital can be recovered, is still an unknown.
No matter which level of the main force, when they make a profit, there must be someone who loses, this is the iron law of the stock market. Take a look at your own account.
After the market rescue is completed, the A-share market will return to the trend before the rescue, and continue to complete the process of bottoming out and building a bottom, because the rescue interrupted this process.Thirdly, the current A-share market is at the end of the first phase of a bear market: exploring the market bottom. It is a process of bottoming out, not building a base. This is a process that must be completed and is not subject to human will, just like the weather changes with rain or snow. The current market sentiment, which I have experienced many times, is most vividly remembered from the end of the bailout in March 2004, which continued to decline until the end of June 2005, with the index falling from 1783 points to 998 points.
At the beginning, the market atmosphere was similar to the current one, with a lot of excitement, but retail investors had no place to voice their opinions. At that time, there were many stock forums, and in these forums, one could clearly feel the market's suppression and suffering. When the market fell to 1200 points later on, many people could not hold on and had to exit with heavy losses, most of which were more than 60%, and some even led to family breakdowns.
I have a friend who started trading stocks in 1992 and experienced several cycles. When I saw him again in 2000, he was already in a state of mild mental illness, which was quite lamentable. This is the tragic process during the end of a bear market and the slow decline to build a base.
Now, many retail investors have not experienced this process and cry out for a market bottom and a bull market as soon as the market falls a bit. This can only be said to be the boldness of the ignorant, including some of the smart people now. If the market falls today, I will hold a certain position, and if it falls again tomorrow, I will increase my position to a certain level. At this stage of the A-share market, it is necessary to trap these smart people.
In summary, all the above is to remind fans and friends to do a good job in risk management during operations, and never treat a bear market as a bull market. If the trap is not deep, some remedial measures can be taken. If it is deeply trapped, do not blindly add to the position, and do not believe in some people's sweet talk. Respect the objective trend, because in the A-share market, only losses are the most real, and the rest are all illusory!
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