The first trading week after the holiday has come to an end. This week, A-shares experienced significant ups and downs in the morning, once again going through the hustle and bustle of a bull market. Many people went from ecstasy to disappointment, all within a single trading day. The decline is tiresome, and many are curious about the trend of A-shares next week. I would like to share a few personal opinions for everyone's reference.
Firstly, the weekly chart of A-shares indicates that this wave of rebound has come to an end. Although many people are still full of enthusiasm, reality is always so stark. This is mainly reflected in the following aspects.
Firstly, as the leading sector, the securities index has already reached its peak, which could be a significant high within a year. The increase in the securities index is substantial enough to surpass many people's expectations. If we extend the trend of the securities index, the weekly closing on July 12th was at 689.87 points, and the highest closing this week was at 1173.23 points, marking a 71% increase. Looking solely at the increase in the last three weeks, it is also at 56%, and considering September 30th as a single week, the increase is only 10%.
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Such a significant increase, for a sector, has already completed its upward push. The remaining task is to find someone to take over the positions. Although there was a significant sell-off on October 8th, this is far from enough. It can only be said that the main force has taken profits and locked in gains. No matter what happens next, the big money has already been made, and the remaining chips can be slowly played with. With the cooperation of favorable news, they will eventually be distributed. Looking at the retail investors who are eagerly waiting for a bull market, the main force smiles happily. Please see the weekly trend of the securities index in the figure below.
Secondly, the trading volume this week is likely to be the peak for this year or even within the next two years. With four trading days this week, a total of 4.3 trillion was traded, surpassing the level when the market reached its peak of 5178 points in 2015. Excluding the factor of market value expansion, this level is also a historical record and is difficult to surpass in the short term, or even within one or two years.
If it were a bull market, trading volume would have to continue to increase. We take the weekly trading volume of 4.3 trillion as the starting point, with a minimum increase of 600 billion yuan per week. The bull market has a cycle, and according to a three-week calculation, the trading volume by the third week would need to reach nearly 7 trillion. This is unimaginable under the current economic situation. Many people say that the current household deposits in our country have reached 141 trillion yuan, and it's not a big deal for 10% to take over such a small amount of chips. But are retail investors that easy to fool now?Therefore, the trading volume of A-shares next week will experience a significant retreat, reaching 3 trillion, while still managing to avoid consecutive substantial declines, and allowing for a rebound to attract more retail investors. Many retail investors believe it's a great bull market, and now that the prices have dropped, they think it's a good time to buy and wait for their investments to double. However, this is merely a tactic used by the main forces to offload their holdings. If you don't chase high prices, I'll let you bottom-fish; there's always a strategy that suits you.
Thirdly, the weekly technical indicators of the A-share market have become severely oversold and dull, necessitating a significant correction. See the chart below:
The main chart shows the Bollinger Bands trend. At the beginning of this week, it had exceeded the upper band, but after a substantial decline, it returned within the channel. However, this is far from enough. This correction should at least reach the middle rail of the channel, around 3000 points, before the first wave of adjustment can be considered over, leading to a second rebound.
The two technical indicators in the secondary chart are the weekly KDJ and CCI. The most noticeable is that the weekly KDJ has already turned downward, and the CCI will also show a decline next week.
By examining the three key factors of this significant rebound in A-shares—leading sectors, trading volume, and weekly technical trends—it is undeniable that the rebound in A-shares, at the weekly level, has already come to an end.
Secondly, where will A-shares go next week? I believe it will be a pattern of rising first and then falling, without a new round of significant increases. This is because:
Firstly, A-shares will experience a rebound at the beginning of next week.
This conclusion is mainly drawn from the daily and 60-minute trends of the A-share market. After this week's massive fluctuations, with a market swing close to 14%, there are signs of being oversold in the short term. The 60-minute technical indicators have fallen to an oversold state, even becoming dull, indicating that a short-term rebound is imminent, but the height will be limited, and the duration will not be long. It is merely a correction of short-term technical indicators. Do not associate it with a bull market again; it has nothing to do with a bull market.
Secondly, after the initial rebound next week, the market will continue to explore the bottom, with the target being the gap position shown in Chart 2.The gap left on September 30th reached its lowest point at 3087 points, which means that the position to be probed next week is between 3000 and 3100 points. Does everyone think this is the end? No, after reaching this position, there will be a rebound to attract another batch of bottom-fishing funds, reaching the 3200 point area, then turning down to test the 3000 point mark. The battle to defend the 3000 point mark is still necessary, of course, this is something for late October.
Thirdly, based on the analysis of the three key points mentioned above: the leading sector - the securities sector, weekly trading volume, and weekly technical trend analysis, the adjustment of the market's weekly line has just begun this week and will continue until the end of October.
The daily trend of the A-share market actually reflects the weekly trend. Next week will be another big bearish candle, which everyone needs to pay attention to, especially the decline of small and medium-sized stocks may be greater than the market index. Therefore, flexible operation, moderate reduction, and timely entry are the essence of next week's operation. At this stage, chasing highs is not advisable, and blindly bottom-fishing is even less advisable.
No matter what, the A-share market has seen huge gains, and the risks are also huge. As retail investors, it is essential to put risk awareness first. Never get angry with the market, stock commentators, or yourself. Go with the flow. In the A-share market, no matter how blindly arrogant you are, the market will eventually teach you a lesson. This market is fair and impersonal. If you get angry with it, that's your own business.