After a rapid rise at the opening, there was immediately another quick sell-off, causing several major indices to dive from high positions and turn red, with the Shenzhen Composite Index and the ChiNext Index leading the decline, with the Shanghai Composite Index being relatively more resilient, experiencing a morning high and then falling back. I believe there are two main reasons for this:

Firstly, large funds are still reducing their positions at higher levels, with domestic institutions continuously net outflowing, with a net outflow of over 20 billion in the first forty minutes of the morning, while the overall market volume is continuously shrinking. In comparison, the amount of money outflowed by domestic institutions is still quite significant.

Secondly, the Hong Kong stock market dived in the morning, which had a certain drag on the A-share market.

In fact, from my understanding, it was inevitable that the market would sell off today, but it was unclear whether it would start selling off directly at the opening or during the trading session. Different methods have different impacts on the market. Comparatively, selling off during the trading session is more likely to attract funds to take over at lower levels.

The reasons why I believe there would be a sell-off today are as follows:

Advertisement

Firstly, there is still momentum for a sell-off on the technical front, as there was almost no resistance during last Friday's trading session.

Secondly, the weekend news once again put pressure on the market. Many people have interpreted the weekend press conference of the Ministry of Finance as a major positive. I do not deny the role of positive news, but no matter how large the direct economic stimulus plan is, its impact on the stock market must be less than the 924 policy combination, right? The market has already overspent the benefits of the 924 policy combination and must pay for the previous impulsiveness and undergo a slow recovery. The Ministry of Finance's stimulus plan to boost the economy cannot stimulate the short-term stock market. On the contrary, the CPI and PPI data released over the weekend both fell short of expectations, which naturally brings adverse effects to the market that plummeted last week.

In summary, it is normal for the market to sell off during the trading session today, and the key lies in how we respond. From my understanding, the short-term market has overreacted to positive news, and a good hand has been played badly by the market. It is necessary to undergo a longer period of repair. My short-term view is very clear.

Firstly, the volume is still large, and the aftermath of extreme emotions still exists, so there is still a large fluctuation in the short-term market. However, it is basically impossible for a strong and sustainable rebound to occur next. If the short-term market fluctuates upward rapidly, it is necessary to reduce positions, and only when there is a sharp and rapid decline can we consider adding positions in batches.

Last Friday, during the trading session, I slightly increased my position when the market plummeted. The reason I dared to increase my position was that I had significantly reduced my position on the first trading day after the holiday, with ample chips in hand, which is why I dared to enter when the market plummeted. However, my view was criticized by some investors, saying that I was misleading others. I also accept this with an open mind and will be more cautious with my words in the future. Since I am not very optimistic about the market going forward, I果断ly exited the positions I added on Friday after the morning increase exceeded three points. However, another stock I added is still slightly trapped, but my overall position is not large, so it doesn't matter. I will only consider adding positions again when there is a significant and rapid decline in the future.Secondly, there is the issue of chip distribution, which I have been emphasizing recently. If you believe that a bull market will form next, even if you think that a bull market will start from 924. However, the market must go through a long period of reshuffling at around 3000 points, and the chips will be redistributed before setting off again. The volume level of 3.4 trillion will at least become the sky volume for a relatively long period in the future. A large amount of funds are concentrated at the starting point of the bull market, and there is no more money that can be mobilized next, and no one is passing the baton above, how can a bull market be formed. A bull market is a relay track, which requires a large amount of funds to continuously exchange chips above, continuously raise everyone's holding costs, and the market can rise.

Due to the unprecedented stimulus of policies, the determination to develop the capital market is very clear, and it is supported by real money, while the reform of the capital market is also continuously advancing. We have reason to believe that the A-share market will have a bull market in the future. It's just that the emotional release in the short term is too fast, disrupting the rhythm that a bull market should have. Besides, this kind of crazy bull market is not the result that all parties want to see. In the short term, the market can detach from the fundamentals and achieve a large increase. However, the development of the market in the medium and long term is not something that can be achieved by capital-driven alone. If it relies solely on capital-driven, it will eventually be no different from the big bull market in 2015. In the medium and long term, we must have a macro perspective, and we must have the support of the fundamentals. The increase in the performance of listed companies must match the rise in stock prices, and listed companies can actively and stably return to investors, rather than thinking about running away as soon as the stock price rises.

Overall, in the short term, we must be rational and keep a clear mind in the market's sharp rise and fall. If the market suddenly rises sharply and significantly, it is still necessary to leave the market and enter in batches during a sharp decline.

Next, let's talk about some hot topics.

1. Why did the military theme rise sharply in the early morning today?

The speculation of the military theme has its particularity, and everyone understands it. We are not convenient to discuss it. I mainly discuss the significance of the sharp rise of the military theme to the overall market.

The significance is very clear to everyone. A sharp rise in the military theme means that the external situation is unstable, which is naturally not conducive to the overall market. However, looking at the performance of the market in the early morning, it rose and fell, and the funds' willingness to bottom fish has increased. The main market is still powerful, and it is normal to have a rebound after the sharp decline last week. As of around 11:10, the trading volume has shrunk by more than 54 billion, and the net outflow of domestic institutions has exceeded 22 billion. It is obvious that the market is rising, which is greatly related to the fact that institutional funds have not continued to net outflow significantly.

If the amount of institutional funds outflowing in the afternoon does not expand, then the market has a greater possibility of maintaining a red plate attack. If the outflow of institutional funds expands, the market will definitely fall again.

It's just that after the overall net outflow of institutional funds exceeded 500 billion last week, the momentum for short-term further killing is insufficient. However, the overall attitude of institutional funds is very clear, and they will not pull up. They are more likely to sell at high positions. So it would be great if the market can maintain the gains of the morning rise in the afternoon.

Looking at the rise of military stocks, it would be great if there is no significant net outflow of institutions, and we should not expect institutions to do a U-turn and do more. It would be great if we can maintain the gains of the morning rise in the afternoon.2. Chief Economist of the National Economic Center: China's Stock Market Should Be a "Long Bull" and "Slow Bull"

Recently, Chen Wenling, the Chief Economist of the China Center for International Economic Exchanges, stated that the monetary policy in the previous period played a crucial role in boosting confidence in the stock market. She believes that the strength of our monetary policy should not be reduced, and we must maintain momentum to transform China's capital market into a "long bull" and "slow bull". Boosting confidence in the stock market is the first step in reversing expectations for China's economy.

It is believed that there will be a bull market in the future, and a slow bull is everyone's common wish. However, the large number of retail investors in A-shares leads to sharp fluctuations in the market in the short term. Without changing the structure of investors, A-shares are likely to have fast bulls and crazy bulls, making it difficult to have a slow bull. To achieve a slow bull, the management needs to do a lot of work.

We small retail investors live more in the present, focusing on short-term matters first. Do not change from short-term to long-term just because you are caught in a position. Everyone comes in to play short-term and wants to make quick money. However, it is easy to enter but difficult to exit. After experiencing this roller coaster, A-shares are not far from the era of national stock speculation. As the number of players increases and market fluctuations become larger, short-term trading becomes more challenging with easy sharp rises and falls. It is essential to be brave enough to leave the market during significant increases and dare to enter in batches during significant declines.