Hexun Investment Advisor Wu Zhipeng: V-shaped Reversal on Friday, What Should We Do Next Week?

Black Friday sees a V-shaped reversal—does that mean the A-share market next week will be稳了, and that the upward move will accelerate from here?

According to Wu Zhipeng, an investment advisor at Hexun, I’ll share my view from this point. First, don’t be in a hurry. At this time, don’t be overly expecting that this market index can move too high. Up to now, the pressure level for the entire Shanghai Composite is still there, between 3960 and 3930. Why do I say there’s a possibility that when prices rise at this stage next week, it could lead to a pullback after making a spike? Because at this point we can go through the market action for everyone:

First, today’s rebound is a shrinking-volume rebound. What does that indicate? There are signs of a potential trap for chasing gains, right?

Second, the sectors that have risen today are basically small-cap stocks, mainly lithium mining and pharmaceuticals—these two directions have received message-driven stimulus. Other scattered directions are relatively mixed, but the directions that fell today were much more uniform. They are basically weight-bearing sectors—such as banks, coal, insurance, power, transportation, and water utilities. These are all big-weight, large-cap directions. So, from two levels, the current market’s shrinking-volume rebound lacks continuity.

Third, after dropping from 4200 points, following the accelerated selloff process that came earlier—from 4200 to 4150, and even down below 4000 points—everyone will find that the lowest point at 3794, is that it was set on Tuesday of this week by which kind of long candle? Was it the banks? The bank sector pulled up on a huge volume. We saw on that day that it was a situation at an “ice point.” Why does hitting an ice point mean a huge volume must appear? Because there were more sellers, and at this same time, some bargain hunters increased that day. So when buying and selling are both added together, the trading volume naturally ends up much higher than in the previous few days. This is the logic behind the “ice point.” Hitting that ice point means bargain-hunting capital has started to move in. Then the following day, the banks managed to stabilize the move. On the third day, technology started to add fuel to the rally. With weight-bearing banks acting as the platform, the technology sector came out to play the leading role—but clearly, technology did not manage to fill the gap, and it didn’t deliver a big rebound that had a strong upward effect.

Then today is also a rebound driven by small-cap stocks. So with this type of market, what is the big-picture view? Why do we say that next week still needs to spike and then pull back, and there’s a possibility that the market could continue to step down and press things down to make it more solid? So what’s our strategy? What should we do? Don’t chase when it spikes up—try to look for opportunities to buy on the dips when it drops down.

(Editor: Shao Xiaohui)

     【Disclaimer】This article only represents the author’s personal views and is not related to Hexun. Hexun makes no explicit or implied guarantees regarding the accuracy, reliability, or completeness of the statements, viewpoints, and judgments contained in the text. Readers should treat this only as reference and bear all responsibility themselves. Email: news_center@staff.hexun.com