Hexun Investment Advisor Liu Changsong: The market shifted from a widespread rise to a widespread decline too quickly

Everyone is talking about 4000 points. Let’s first discuss 4000 points. If it needs to break, it should have broken early. Currently, the short-term rhythm is very fast. According to Liu Changsong from Hexun Investment Advisory, he said yesterday to watch 4100 and expect a broad rally. Did you see it this morning? At 10:06 AM, over 3,280 stocks rose, and the Shanghai Composite Index reached a high of 4108 points. Did you notice the structure? It’s driven by large financials—banks, insurance, and securities firms pushing the index past 4100. Judging by usual standards, with most stocks rising and fewer falling, today’s market should be relatively stable and smooth. Unexpectedly, near the close, there’s still over 4,300 points waiting to rise. Can you believe it? Of course, A-shares are known for their unpredictability, so short-term predictions are difficult. But this level is repeatedly confirming strong support. If this support were invalid, it should have broken early. Since it hasn’t broken and continues to confirm strong support, with relatively long lower shadows, it suggests the possibility of main forces re-accumulating.

Could this indicate that major players are building positions? If so, I would exclude high-flying stocks, because when the main force exits high-flying stocks, it’s not building positions. The focus should be on mid- and low-cap stocks, especially those in the middle range. From a technical perspective, today’s adjustment is an unconventional trend, so normal methods of judgment don’t apply. Since it’s unconventional, short-term predictions are more complex. But my simple view is: if you’re doing short-term trading, wait for a clear signal before acting. If the overall structure remains intact, then there’s no problem. Wishing everyone success and prosperity.

Let’s skip the fluff and get straight to the core. What is a normal trend? For example, the previous lower shadow shows a clear rebound. Yesterday’s lower shadow also rebounded today. At 10:06 AM, the Shanghai Index surged to 4108 points, driven by large financials—banks, insurance, and securities firms. During this period, 3,280 stocks rose, indicating a broad rally. After 10:06, the A-shares fluctuated and pulled back. Currently, the index is down 0.8%, with more stocks falling than rising—only about 900 stocks up, while nearly 4,500 are waiting to rise. This structure is an unconventional trend, which is hard to judge because the rhythm is too fast.

Yesterday, we said to watch 4100 and expect a broad rally. It was just a prediction. How about short-term? It’s hard to judge, but if I had to say, I believe that any downward movement will be followed by an upward rebound, and the ratio of rising to falling stocks will improve, leading to a broad rally. But the certainty isn’t high because it’s an unconventional trend. From a technical standpoint, the monthly moving average as of May is roughly around 4036 points, which provides some support. This support is still relatively strong. Looking at the 60-minute chart, there’s a series of lows connected, with the line around 4040 points. We need to observe the structure: the weekly indicator has recovered to around 20 this week. Since the 924 market, whenever the daily indicator recovers to a low level and stops falling, an upward rebound usually follows. The rebound can last quite a while, so judgment is needed. If it’s truly effective, breaking 4000 points would mean waiting for stability before making a move. I don’t expect a break below 4000, but is it impossible? Not entirely. Technical analysis is about probabilities—I’d say there’s a 90% or even 95% chance it won’t break 4000. If it does, there’s no need to worry too much. If you’re a long-term investor, as long as the structure remains intact, there’s no problem. The only concern is with high-flying stocks, which carry a lot of uncertainties.

(Edited by: Wang Gang HF004)

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