The A-share market experienced a general trend of fluctuating decline over the five trading days this week, with the Shanghai Composite Index (SCI) closing with a small bearish candlestick, down by 34.5 points, a decline of 1.14%. Particularly on Friday, the SCI opened below the 3,000-point mark, and by the close, it settled at 2,998 points, ending the week with a collective minor decline.
With the SCI losing the 3,000-point level on Friday, it implies that the psychological defense line in the market and among investors has been breached. This will inevitably lead to concerns that the drop below 3,000 points could trigger panic selling, causing funds to rush out. If this scenario unfolds, it could lead to a wave of panic selling and profit-taking in the A-share market. Will the A-share market really accelerate its bottom-fishing next week?
To better analyze and predict whether the A-share market will indeed accelerate its decline to find a bottom next week, it is necessary to further understand the current situation of the A-share market, combining its current position, environment, and trading volume for analysis and consideration. Currently, there are three key points to be aware of regarding the A-share market:
1. The A-share market is still in a phase of adjustment and has not yet found a bottom. The 2,985-point level of the SCI this week is not the stopping point, and there will inevitably be lower points next week, implying that there is definitely room for further decline in the A-share market.
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2. The trading volume in both the Shanghai and Shenzhen markets has significantly contracted, with recent volumes being just over 700 billion. It is quite surprising that the volume on Friday shrank to less than 620 billion. A contraction in volume during an adjustment phase is not a good sign, and one should be wary of a potential increase in volume followed by a sharp decline. Therefore, a contraction after an increase in volume, followed by a sharp decline and then another contraction, is the most favorable scenario.
3. The overall environment for the A-share market is currently poor, with no real profit effect in the market, and investor confidence is very low. The main reason is that the market has been experiencing individual stock declines, and most investors are currently in a state of being stuck. The severe lack of investor confidence, with many choosing to lie flat and not trade, is also unfavorable for the A-share market's trend next week.
From this, it can be deduced that after the fluctuating decline of the A-share market this week, the A-share market is currently in an accelerated adjustment phase, with a significant contraction in trading volume in both the Shanghai and Shenzhen markets and a severe lack of investor confidence, which will undoubtedly put great pressure on the market's trend next week. Will the A-share market accelerate its decline to find a bottom? Regarding this question, I have the following three viewpoints:
Viewpoint One: It is basically certain that the A-share market will continue to decline and adjust next week, as trends do not deceive; the reason is that after the SCI lost the 3,000-point level, it will indeed increase the selling pressure in the market, especially as risk-averse investors will sell, adding pressure to the secondary market next week.
Viewpoint Two: It is inevitable that the A-share market will continue to decline next week, but the probability of an accelerated decline to find a bottom is relatively low, as there are heavyweight stocks taking turns to support the market, and the national team will intervene to stabilize the stock market, not allowing the A-share market to experience another wave of panic selling.
Viewpoint Three: Even if the A-share market does experience an accelerated decline to find a bottom next week, investors need not panic. If the decline is swift and decisive, it is not a risk but an opportunity to buy low, especially if the SCI falls below 2,900 points, which could present a golden opportunity everywhere.In summary, this week the Shanghai Composite Index (SSE) lost the 3,000-point mark with reduced trading volume, which is indeed very unfavorable for the A-shares next week. This will bring greater selling pressure to the A-shares in the coming week. Without a complete release of the floating selling pressure, it is difficult for the A-shares to stop falling and rise in the short term. However, to truly release the floating chips, a brief panic selling must occur. After the floating chips are completely squeezed out, the A-shares will have truly bottomed out, and a new round of rising market will follow.
In conclusion, the outlook for the A-shares next week is not optimistic, with a continuation of the downward adjustment to find the bottom. Whether it is a bottoming oscillation with a slow decline or an accelerated sell-off, there is no need to guess blindly. Everything should follow the trend and go with the flow.