Hexun Investment Advisor Gao Luming: Foreign Markets Plunging! Situation Escalating! Will There Be a Sharp Decline Today?

Last Friday late at night, the stock markets in Europe and America collectively plunged, and over the weekend, the external situation worsened again. Will the market decline again today? What should we do right now?

First, my opinion is that there is still a high probability of market adjustment today. Looking at the external trend, the market fears the spread of panic sentiment, and investors’ risk-averse mood is rising. Last Friday late at night, the European and American stock markets tumbled, and this sentiment could be transmitted to the A-shares. Moreover, over the weekend, the external situation continued to deteriorate, which is likely to bring downward pressure and risks to the market.

From a technical perspective, last Friday, the three major indices all declined. As the market weakened, domestic investors also began to show risk-averse sentiment. After a morning of fluctuation, there was a sharp decline with increased volume in the afternoon. Although some funds tried to stabilize the market at the close, they failed to hold the trend, which will continue to exert downward pressure today. Additionally, the K-line from last Friday has already broken below support levels such as the 5-day, 10-day, and 20-day moving averages. These moving averages have shifted from support to resistance, which will suppress the index’s continued decline. From the 60-minute chart, the market has broken below the small-term upward trendline neckline since this rebound, around 4,100 points. If within the first hour today, the market cannot recover above 4,100 points, especially if the major sectors do not show strength, the probability of a short-term downward correction increases. Furthermore, with major meetings already concluded, the willingness of funds to support the market is decreasing. Overall, the probability of a market correction today is higher.

So, what should we do in this situation? Since the short-term rebound has already begun to weaken, I suggest everyone focus on preventing the risk of a short-term market decline. Currently, market sentiment is already pessimistic, with no significant individual stock room for growth or obvious hot spots. In the absence of main themes and with sectors rotating rapidly, blindly participating could easily lead to losses. The downward space for the index may not be very deep, but individual stocks often experience significant declines.

Therefore, on one hand, before the market shows clear signs of stabilization, do not blindly buy the dip. On the other hand, if within the first hour today, the market cannot recover above 4,100 points—especially for those stocks that have failed to rally or have broken below the level like the index—it is advisable to stay cautious. Be patient and wait for the market to show signs of a bottom or stabilization before considering entering. Particular caution should be taken with sectors like power, which had large gains previously, as they face higher short-term correction risks and pressures.

(Edited by: Zhang Yan)

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