The index plunges, trading volume sharply decreases! The 3936-point resistance level's "power" becomes evident. Will it test the bottom again?

Pressure at 3936 points is evident, and the lack of volume in the rebound ultimately triggered a rapid pullback.

On March 26, the Shanghai Composite Index opened slightly lower, followed by a brief rebound, reaching a high of 3937 points before starting to oscillate and plunge. The strong resistance at the upper level was clearly suppressive. In the afternoon, the index accelerated its drop, ultimately filling the gap below before closing below the 3900-point mark.

The Shenzhen Component Index also saw a brief surge in the morning, but began to correct as it approached the 10-day moving average. The decline significantly widened in the afternoon.

Shanghai Composite Index daily K-line chart

By the close, the Shanghai Composite Index finished at 3889.08 points, down 1.09%; the Shenzhen Component Index closed at 13606.44 points, down 1.41%; the ChiNext Index ended at 3272.49 points, down 1.34%.

The trading volume shrank significantly, with the combined trading volume of the Shanghai, Shenzhen, and Beijing markets at 195.71 billion yuan, a decrease of over 23 billion yuan compared to the previous trading day. Notably, this is the first time the trading volume of the three markets has fallen below 200 billion yuan since the recent phase of pullback.

On the sector front, oil, energy metals, batteries, and logistics sectors rebounded against the trend. Insurance, power generation equipment, precious metals, and software sectors ranked among the largest decliners. In terms of individual stocks, only about 900 stocks advanced, with the number of stocks hitting the daily limit down significantly reduced to 52, while nearly 4500 stocks closed in the red, indicating a widespread decline.

From a medium-term perspective, the A-shares, impacted by events, have already seen a certain degree of decline, which instead presents a better allocation window.

CITIC Securities pointed out that while short-term trends still carry some uncertainty, the risk in the A-share market has been further released after adjustments, and valuations are at relatively reasonable levels. In the medium term, the macro environment in which the market operates has not fundamentally changed, and the logic supporting a “steady progress” in the A-share market remains valid. The release of risks and the adjustments in price are expected to bring about better allocation opportunities.

Kaiyuan Securities also stated that a rebound signal will be evident once the impact boundaries of events are clear or the effects fade. The next most important signal does not come from where oil prices eventually settle, but rather when the volatility of oil prices converges. In terms of height, the index is likely to restore its levels before the impact; thus, even if unexpected escalations occur, they can be viewed as excess returns gained by holding cash in position management, allowing for gradual increases in position.

However, in the short term, market volatility will continue. It is worth noting that the outflow speed of stock ETFs has significantly accelerated.

Statistics show that on March 25, the net outflow of stock ETFs reached 21.33 billion yuan in a single day, marking the largest daily outflow since March 6. Analysts pointed out that when expectations of “national team” support and passive capital inflows resonate, some short-term speculative funds begin to choose to cash out. As a significant source of incremental funds in the recent market, the reversal of ETF flows often serves as a leading indicator. Combined with the ongoing decline in trading volume, the current market has transitioned from a “fund-driven” phase to a “expectation speculation” phase, intensifying the intensity of stock fund speculation.

“The significant shrinkage in trading volume indicates that the willingness to chase high prices is not strong, while cautious sentiment has clearly risen at critical points,” said securities analyst Li Dalei in an interview with a financial investment reporter.

In Li Dalei’s view, external influences remain a key variable for the short-term performance of A-shares. Should geopolitical conflicts continue to escalate and global risk aversion rise, A-shares will find it difficult to remain unaffected. From a technical perspective, after a series of short-term rebounds, the market quickly fell near key resistance levels, and a rebound lacking volume support is ultimately hard to sustain. “We believe that the short-term market’s oscillating trend is unlikely to change, and the possibility of a second bottom cannot be ruled out.”

| Financial Investment Reporter Lin Ke |