Although the Shanghai Composite Index slightly declined by 0.1% in the early trading session and the ChiNext Board also experienced a small pullback, this may not necessarily be a bad signal. After a rare nine consecutive days of gains, a technical adjustment in the market is quite normal—similar to building momentum for the afternoon rally. The Shenzhen Component Index turned red alone in the early trading session, indicating that funds are not pessimistic; instead, large investors are quietly positioning themselves.

From a liquidity perspective, as the year-end approaches, although some investors need to cash out for holidays, this pressure has largely been released by mid-morning. The remaining funds in the market are mostly determined forces planning to hold their positions across the New Year. More importantly, institutional big players usually do not miss the year-end window—pushing up the index and leaving a good-looking close for this year is also a positive signal for the start of next year.

The biggest concern for incremental funds observing the market is: once they see the market stabilize and stop falling, they worry about missing the rebound. Once the market shows signs of stabilization after the afternoon opening, these funds are likely to rush in, further driving up the market. From a technical and psychological perspective, the probability that the three major indices of Shanghai and Shenzhen will turn red and close higher in the afternoon is not low.

Friends holding positions might as well be patient and wait for the afternoon performance; on the eve of the last trading day, the market’s attitude will become clearer.