"Black Thursday's Truth: A-Share Rare Buying Opportunity; 2 Stocks to Lead Rotational Gains"

After four consecutive trading days of oscillating upwards, the A-share market has seen new changes in the past two days! It's not just about the broad market turning down; it also involves the overall market trend for a period in the future, as well as the shift in market hotspots. Therefore, the fluctuations in the A-share market and hot sectors in recent days deserve everyone's high attention!

Perhaps at this point, some investors may feel pessimistic and worry whether the broad market will change downward?

Firstly, I want to give everyone a reassurance. I still maintain my recent view that after the broad market stopped falling and stood back on the 5-day moving average last Friday, the entire market will either step on the 5-day and 10-day moving averages and move up slowly; or it will oscillate horizontally along the 5-day and 10-day moving averages, waiting for the 20-day moving average to catch up before changing upward. In other words, the broad market will either go up directly or move sideways for a while before going up; the probability of changing downward is relatively low.

Advertisement

Friends who are familiar with me know that when analyzing the later trend of the entire market, I will not only look at the technical side but also comprehensively analyze the news, fundamentals, and capital flows with the technical side, because only in this way can we get the most accurate answer!

In many previous articles, I have repeatedly discussed changes in the other three aspects with everyone besides the technical side. In terms of news, there has been a dense array of policy benefits during this period, with the degree of benefits far greater than the negative news; in terms of capital, funds outside the market are still queuing to enter, the scale of funds has reached a historical high, broad-based funds are still in the construction period, and foreign capital is also increasing its holdings; in terms of fundamentals, driven by stimulus policies, the expectation for GDP to pick up in the fourth quarter is very high.

Since there have been many detailed analyses before, I will not elaborate here. In summary, besides the technical side, the operating environment of the A-share market in the fourth quarter is relatively good, and it is not likely to fall back into the previous bear market!

Since I have analyzed the other dimensions quite thoroughly before, today I will talk with you about the technical changes of several important indexes, especially the Shanghai Composite Index representing the entire market and the ChiNext Index representing small-cap stocks. After several days of horizontal oscillation and today's turn down, what changes have occurred? And what will happen next?

Let's first look at the trend of the Shanghai Composite Index and the ChiNext Index last Friday. Both indexes showed a long positive pull on the day, but the upward momentum of the ChiNext Index was obviously stronger. First, because the decline after October 8 was greater, the strength of the self-rescue rebound was greater; second, because the elasticity of small-cap stocks is inherently greater than that of large-cap stocks, the fluctuation of the ChiNext Index will naturally be higher than that of the Shanghai Composite Index.

Although both the broad market and the ChiNext Index closed with a long positive on Friday, the closing positions were different. The broad market was still suppressed below the 10-day moving average, while the single-day increase of the ChiNext Index exceeded 8%, far stronger than the broad market, and finally broke through two pressure positions and stood above the 10-day moving average. Since the upward momentum of the ChiNext Index on that day was not fully released, the ChiNext Index continued to be strong on Monday this week and drove the broad market to rise slightly. After continuing to strengthen on Monday, the broad market finally stood on the 10-day moving average pressure position.On Tuesday and Wednesday, the two indices showed a similar trend, both operating above the 5-day and 10-day moving averages, which is a very healthy trend, and there is not much to say about it.

However, today there has been a new change, with the Shanghai Composite Index and the ChiNext Index experiencing different degrees of pullback. The Shanghai Composite Index, supported by heavyweight stocks such as finance and real estate, is relatively resistant to falls, so the support level of the 5-day moving average has not been effectively broken through. However, the ChiNext Index opened directly below the 5-day moving average, and the high point of the day's rebound, near the 5-day moving average, did not continue to expand its gains.

Therefore, starting on Thursday, the entire market's single-edged upward trend has been shaken! So, what will happen next?

According to the analysis above, against the background of continuous improvement in news, capital, and macroeconomic fundamentals, only the technical level slows down the pace of ascent, which can only be understood as accumulating strength for the next round of upward movement!

We use the perspective of the more flexible ChiNext Index to judge the trend of the entire market in the next period:

Since each moving average has both support and pressure effects, when the ChiNext Index broke through the 5-day moving average today, the 5-day moving average has shifted from the previous support level to a pressure level. That is to say, the first pressure level for the ChiNext Index in the short term is the 5-day moving average above its head. And the first support level below is naturally the 10-day moving average not far from the current position; the second support level is the 20-day moving average further below; the third support level is the gap on September 30.

When the ChiNext Index operates between the 5-day moving average pressure level and the 10-day moving average support level, the most likely trend in the next few trading days will be to stabilize in a narrow range between these two moving averages, until the 5-day and 10-day moving averages intersect, and the oscillation space is greatly compressed, the ChiNext Index will be forced to make a directional choice, either breaking through the 5-day moving average pressure level and turning strong again, or breaking through the 10-day moving average and turning weak.

Considering that even if the ChiNext Index breaks through the 10-day moving average support level, the second support level, the 20-day moving average, is not far below, so it is believed that the ChiNext Index will oscillate horizontally in the short term, waiting for the 20-day moving average to gradually approach, and then change direction upwards with a high probability!

Let's take a look at the Shanghai Composite Index. The market pulled back today, but it is still stable above the support level of the 5-day moving average, so in the short term, there are four support levels below the market, namely the 5-day moving average, the 10-day moving average, the 20-day moving average, and the gap on September 30, which is stronger than the ChiNext Index. Since there are more support levels below the market, the short-term trend of the market will not be worse than that of the ChiNext. If the ChiNext Index oscillates horizontally and then changes direction upwards, then the market will either continue to walk slowly upwards along the 5-day moving average, or it will be dragged down by the ChiNext Index to the vicinity of the 10-day moving average and then change direction upwards synchronously.

It is not difficult to see that the conclusion obtained through technical analysis alone is basically consistent with the conclusion obtained by integrating several other dimensions in the previous days. Therefore, I am still relatively at ease about the trend of the entire market in the next period, and will not become pessimistic because of today's adjustment or tomorrow's continued pullback!Of course, in the A-share market, no one can accurately predict the trend of the market every day. The reason why Jingyang always takes into account various factors when analyzing the market is to try to improve the accuracy as much as possible. But even so, it is still common to misjudge.

What should be done if the judgment is wrong, misjudging, and the loss is expanded?

This involves actual combat! Investors who are familiar with Jingyang should know that no matter what Jingyang predicts about the entire market and hot plate sectors, they will still strictly follow the pre-set plan in actual operations. When it comes to a break and needs to stop loss, it will not deliberately relax the stop loss conditions because of the previous optimistic analysis. Especially the total position, the market is running in an upward trend or a downward trend, the position limit will definitely be different. If the market falls from the previous upward trend to a downward trend, Jingyang will not insist on keeping the total position at a high level because he is optimistic about the later market, and will often choose to reduce the position first, and then add the position to buy back after the market has indeed changed upward.

The reason for doing this is that not many people can accurately predict the direction of the entire market. To avoid the expansion of losses caused by subjective analysis errors, it is necessary to have double insurance! This is also an old shareholding person's advice to everyone!

Finally, let's talk about the issue of market hot spots. Jingyang introduced yesterday's trading data in detail to everyone. When the photovoltaic and wind power two new energy sectors soared yesterday, a large number of institutions and hot money made high-chasing actions. However, due to the continuous rise of the new energy sector in an overbought state, there was also a significant callback today.

On the surface, the recent market has a very serious situation of hot spots in one day. For example, the technology stocks that rose across the board on Monday showed a serious divergence on Tuesday; the gaming, cultural media and other AI application themes that soared on Tuesday turned down on Wednesday; the new energy that soared on Wednesday also fell sharply on Thursday. However, trading data can tell us more essential things. Not all sectors in technology stocks have large funds to add positions, and institutions and hot money are more interested in semiconductors and CPO; in the AI application end, gaming, cultural media, etc., there are no institutions and hot money to add positions; in the new energy direction, institutions and hot money worked together to add positions in wind power and photovoltaics yesterday.