Recently, a question has been frequently asked.
Has the market trend reversed, and is this the new starting point for a bull market?
Everything seems so beautiful.
An extremely low valuation, the country's support, restrictions on short-selling mechanisms, policy direction guidance, and loose monetary policy.
The market trend seems to be reversing.
But upon careful reflection, when the market plummeted at the end of January, the above conditions seemed to exist and hold true, so why did the stock prices continue to fall?
Apart from the policy adding a few more items at the beginning of February, the fundamental changes so far are not significant.
Perhaps it is the eight consecutive days of rising, the index returning to 3,000 points, that has changed many people's beliefs and expectations.
Let's discuss the current market and whether the market trend has undergone any fundamental changes.
(Note: The original text contains HTML character references, such as " ", which are used to preserve spaces in HTML documents. In the translation, I have removed these references to maintain the natural flow of the text.)Translate the following passage into English:
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1. From a technical perspective, looking at this market.
The four major broad-based indices, the Shanghai Composite, Shenzhen Component, ChiNext, and STAR Market, currently the trend of the Shanghai Composite has begun to reverse.
However, the Shenzhen Component, ChiNext, and STAR Market, from a technical point of view, have not yet completely emerged from the downward channel.
The reversal of the trend should at least be discernible from the weekly line.
The index's point stands above the 10-week line, and the 10-week line turns upward, which is the most basic confirmation signal.
Only the Shanghai Composite meets the criteria, indicating that it is too early to talk about a reversal in the overall market.
Historically, each time it is the Shanghai Composite that reverses first, because the Shanghai Composite has a majority of blue-chip stocks, which will start first under the condition of low valuation.
The first part of the market is often led by the large indices, the middle part is the domain of themes and small and medium-sized science and innovation, and the end part will return to the direction of blue chips.
The biggest problem now is whether the market can have a certain continuity when entering the second phase.
Technically judging the bottom, there will often be a process of a second bottom, although 2724, 2635 is also a double bottom pattern, but there will definitely be a retest on the right side, but it will not be so deep, possibly around 2930.The article translates to:
Judging the trend's direction in this place, the most important thing is actually to predict the height of this round of rebound, where it will go, and whether it can break through the trend at the monthly line level.
The reversal of the big trend must be at the monthly line level, standing on the 20-month line, and reversing the 20-month line. This cycle must take at least 3-5 months, so it is impossible to make an accurate judgment at the moment.
That is to say, technically, the so-called cycle bottom confirmation is actually very lagging, and it can only be seen as it goes.
But from the daily line level, the 2635 phase bottom has been confirmed without doubt, and it has been confirmed when the index hits back to around 2900.
At this stage, whether it is a rebound or a reversal, it is key to prioritize the market.
2. Look at this market from the perspective of the basic surface.
The basic surface includes the macroeconomic level, the policy level, and the expected level of listed companies.
On the macroeconomic level, it is mainly about whether the pace of economic recovery is in line with expectations.
This may be closely related to consumption, social financing, and real estate.
The macroeconomy is a very complex thing, which determines the entire market environment.The turnaround of macroeconomics is not like the turnaround of stocks, where a few bullish candlesticks appear and it seems as if there has been a significant change.
Macroeconomics is a continuous process with a very long cycle, not something that happens overnight.
Macroeconomics can affect the long cycles of bull and bear markets, but it does not affect the turning points of bull and bear markets, which are natural turning points of the market.
At the policy level, how much effort is there in guiding and supporting industries?
How much tax relief and even subsidies for high-tech enterprises can there be?
The profits of blue-chip companies are relatively stable, and the most difficult situation is for small and medium-sized enterprises.
Most small and medium-sized enterprises actually need a certain level of support, especially when the economic outlook is not very good.
Some key industries, such as pharmaceutical innovation, semiconductor chips, artificial intelligence, big data, and software research, cannot do without government subsidies.
The extent of this effort determines how much money these companies can ultimately make. It is not the time for these companies to develop independently.
Finally, there is the performance of listed companies, whether they can improve or not.To be honest, it is extremely difficult for the performance of listed companies to undergo a qualitative change in 2024.
On one hand, the investment in research and development for science and technology companies continues to grow.
On the other hand, there has been no significant improvement in the demand side of the entire market, and orders are not expected to increase dramatically.
If the overall consumer end does not pick up, it will be difficult for listed companies to make more money.
Some people might say that in the era of AI, reducing costs and increasing efficiency, if a large amount of labor costs are compressed, it means more unemployment, and the macro situation of the market will be even worse.
Therefore, at least the vast majority of listed companies are unlikely to have better-than-expected performance in 2024.
This underlying poor performance is also the main factor that restricts the market from moving further.
3. Looking at this market from the perspective of capital.
On the capital side, it should be the simplest, mainly to see whether there is an increase in capital.
The entry of incremental capital is divided into two levels.The first is at the policy level, whether there are measures to guide capital into the market.
For example, the national team's market rescue, such as the social security fund entering the market.
Of course, there are also major companies' buybacks, share cancellations, etc.
It also includes attitudes towards foreign capital, as well as some guiding policies for insurance capital, private and public funds.
These are from the policy level, the guidance of the entire capital is actually very important.
The second is at the market level, the profit effect will definitely bring capital into the market.
If the market continues to rise and the profit effect is good, capital will naturally enter the market to gamble.
However, this requires a very long process, not overnight.
Such a continuous rise, not only does not give the capital the opportunity to consider, but also makes the cost of capital entry higher.
From some perspectives, continuous rise can restore confidence, but it is not particularly friendly to the entry of capital.If the range of 2600-3000 is considered an undervalued zone, then once it returns above 3000, the game of capital entering will be mainly dominated by short-term trading.
Closely monitoring the movements and dynamics of speculative capital, as well as the hot spots in the market, is key to monitoring the flow of market funds.
As for the current situation, the market has basically established a rebound trend, and it is not a short-term one; it can last at least 2-3 months, and we can see it extending to April and May. However, if we talk about a reversal and claim that 2635 is a historically significant bottom, it seems a bit premature.
The biggest issue on the fundamental side is the net profit of listed companies, which is an insurmountable obstacle.
Including some of the very hot technology concepts that are currently being hyped, it is difficult to present a satisfactory report card.
In the end, this market will still depend on performance to determine the rise and fall.
However, there are many ups and downs on the road of rising and falling.
Rather than discussing whether it is a rebound or a reversal at this point, it is most important to focus on completing the market trend.
After all, the opportunities that can be grasped at the moment must be seized and cherished.The A-share market has always been characterized by short bull markets and long bear markets. Therefore, when the market trend arrives, it is essential to do more homework to earn the money that should be made.
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