Hexun Investment Advisor Li Guanqin: Broad Gains on Reduced Volume, Strategy for Thursday's Market Reversal

Wednesday’s market saw broad-based gains, with the larger indices rising by more than 1% as well, which counts as a bullish up move with a “middle-to-large” candle. Among the sectors, the main theme was defense—meaning that, at this time, market funds have not chosen an aggressive attack; instead, it’s defensive healthcare that’s being lifted. Although technology also showed some strength, technology remained defensive rather than taking the lead during the session. At the close, more than 4,000 stocks turned red across the board. Under these circumstances, will Thursday keep pushing higher with sustained strength?

He Xun Investment Advisor Li Guanqin said that people should watch two signals. The first is that, as of now, the overseas market action on Wednesday night looks relatively good. Second, at 9:00 a.m. on Thursday, Trump is scheduled to deliver a speech. If the speech is positive-leaning, the market will likely gap up. If it is negative-leaning, then tomorrow will be a gap down. Of course, a gap down isn’t scary; what’s scary is a gap up. Because our market is about to enter the Qingming Festival holiday period, and Thursday is also the last day when institutional funds withdraw. The most important thing to monitor is whether the market’s increment increases ahead of the holiday. If trading volume expands before the holiday, then after the holiday the market will likely continue moving higher. But if activity contracts before the holiday, then everyone should prioritize defense.

From a structural perspective, we still define the current environment as competition within limited liquidity, with a fourth-wave rebound. So before the holiday, it’s hard to expect big moves. In that situation, first, everyone should give up on some chase-the-rally setups. Second, for positions, you should take profits when it’s good and not hold on too long. For the band-and-trend folks, you should look for signals that the market is turning around.

(Editor: Shao Xiaohui)

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