The starting point of this downturn was January 30, 2023, just as the starting point for blue-chip stocks was February 18, 2021.
However, due to the structural market conditions, the Shanghai Composite Index had a high point of 3418 in May.
But the truly devastating part of this decline ultimately occurred from January to early February 2024.
In January, the Shanghai Composite Index fell by 6.27%, the Shenzhen Composite by 13.77%, the ChiNext by 16.81%, and the STAR Market by 19.62%.
Among the other broad-based indices, the weight representative Shanghai 50 only fell by 3.09%, the representative of small and medium-sized science and innovation, the STAR 100, fell by 26.51%, and the CSI 2000 fell by 20.97%.
In the industry sectors, the science and innovation chip fell by 23.95%, biopharmaceuticals by 22.13%, and smart cars by 20%.
There are also a bunch of indices that fell by more than 15%, all of which are very miserable.
It should be noted that a 20% drop requires a 25% increase to recover.
For most stocks, the destructive power in January is essentially half a life, and the famous scene is re-enacted.
In fact, if we carefully analyze the decline in January, it is divided into four stages.Phase One: The Plunge at the Start of the Year.
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At the end of December, there was actually a small rebound.
The sector with the largest increase at that time should have been photovoltaic, leading the rebound of the entire index.
At the beginning of January, it was not entirely without merit; travel stocks were the ones that ignited the whole market at that time because Harbin was on fire.
However, it still could not avoid the plunge that started on January 2.
The Science and Technology Innovation Board was the one that suffered the most in the broad-based index, with a seven-day losing streak that directly stunned the market.
At that time, the explanation was that public funds restricted redemption in December, and a large amount of redemption started in January.
This round of decline completely opened up the space for the fall, and the low point of 2882 was broken, indicating that there would be more brutal sell-offs later.
Many people have not yet reacted to this round of plunge, and the Shanghai Composite Index is also relatively tenacious, with a total drop of only 100 points.
Phase Two: Panic Selling.The panic selling began on January 17th, and the target of the selling was the Shanghai Stock Exchange Index.
The Shanghai Stock Exchange Index has been long absent of a bearish line of more than 2%.
Next was the 2760 point mark, then after a one-day break, there was another sharp drop of 2.68%, and then the 2724 point mark was seen.
This round of sharp decline began to affect sentiment, and the target was set on the snowball products.
Because the snowball's knock-in is an open card, most investors at that time focused on the knock-in points of the snowball.
The panic selling at 2724 aimed to clear out the snowballs, and to get all the chips of the snowballs in hand.
When the market has knocked in more than 80% of the snowballs, it seems to have the intention to stop.
Phase three, the rebound to lure more.
On January 23, the index began to bottom out and rebound, and the Shanghai Stock Exchange showed four consecutive bullish lines, completely with the posture of forcing the empty.
The stocks of the central enterprises rose rapidly, due to the good news of the state-owned enterprise's market value management.The rebound in this round, from the results, is a blatant lure for more investors.
Moreover, the capital is clustering around the "Zhong" (central) sector, including banks and coal, also preparing for the subsequent sharp decline and sending out signals.
After three days of rebound, apart from the Zhong direction, almost no other directions showed particularly obvious performance.
At this stage, the market sentiment is actually rapidly increasing, which is also the most dangerous period.
At least most people did not predict the sharp drop in the last few days, which came so suddenly.
Phase four, the sharp decline to conclude.
The most brutal part is the last few days of January, which is simply a massacre, with the collapse caused by the micro-plate stock direction.
4.5%, 3.8%, 6.3%, a 14% drop in three days.
This is just the beginning, the four trading days starting in February, 5.8%, 12.8%, 3.7%, 9%, another drop of about 30%.
There is only one explanation for the sharp decline to conclude, forcibly killing more to burst the financing plate.In the short term, a decline approaching 50% is certain to be even more unbearable for individual stocks, with margin trading positions being wiped out across the board.
The first round of decline clearly eliminated the snowball effect, and this round of decline has clearly wiped out the margin trading positions.
Killing micro-cap stocks here also has a very important point, which is targeting quantitative trading.
Quantitative trading has made a lot of money in the past two years, and this round of significant decline in micro-cap stocks has basically squeezed out the profits that quantitative trading has made in these two years.
In this light, the end of this sharp decline is also within expectations.
Let me review the script for everyone, which is very important.
1. There is no space above, so first dig a pit downwards, and a large amount of capital flees.
2. Start creating panic, using the strategy of killing more with more, first hit the index to a low position, and clean up the snowball.
3. Bottom-fishing funds enter in groups, using the protection of the Chinese characters to create a false prosperity.4. Identify the direction of financing and implement a feasible plan to break through the financing market.
5. Bring back the quantitative funds that have made a lot of money in the past two years, as well as the micro-cap stocks that have never fallen, to their original state.
6. In the event of penalties, a round of harvesting has been done on the speculative capital that made money.
7. In the end, it is destined to be a short squeeze, taking away all the money from those who made profits from short selling.
If the script really is like this, then it is indeed a grand play.
Many people ask, why is this happening, why is there a sharp decline, hasn't it been falling for a long time?
The answer is actually only four words: chips and space.
The essence of all sharp declines is to obtain chips, and then start the market, which requires corresponding space.
From the perspective of the Shanghai Composite Index, without a 500-point space, the market generally cannot be made.
For example, from 2863 to 3418, it is 550 points.For example, from 2885, it rose to 3414, which is an increase of 530 points.
This time, the low point occurred at 2635, with a gain of more than 500 points, needing to break through 3100 points.
The market space is the space for capital operation. Without space, it is difficult to withdraw completely, so the capital chips are the fundamental reason whether the funds are willing to do the market.
At 3100 points, it is not that it cannot rise, but there is no space.
Counting 500 points from 3100, it is 3600, and the selling pressure is too great.
The funds deliberately avoided the area with heavy selling pressure this round and started working at 2600-2700.
After all, when the stock price is pulled up to more than 2900, the actual selling volume is not large.
The real big selling pressure is at 3100, or even above 3200 points, because it can free a lot of people, and the pressure is heavy.
Starting from 2600, it is also just over 500 points.
History always seems to be surprisingly similar, and some people don't know why it repeats like this.In fact, the fundamental reason is quite simple: it's because the laws of capital operation are more or less the same, leaving market traces that are roughly similar.
Each round must plunge deeply into everyone's flesh, until someone jumps off a building, until emotions are completely extinguished, and the chips are thoroughly cleaned, only then will it cease.
The sharp decline in January can at least bring a space for market correction for the first quarter. From a rational perspective, it is actually good.
Otherwise, a half-dead market is the chronic poison that makes people lose money.
May the market that is reborn from the ashes bloom with beautiful colors at the beginning of the Dragon Year.
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