Hexun Investment Advisor Hu Yunlong: Beware of further declines, accelerating bottoming out

On March 31, according to Hu Yunlong, an investment advisor at Hexun, be careful about a potential “gap-down follow-through.” We also saw today’s market index experience the process of filling two intraday gaps, but the market did not complete those gap-fills—instead, it saw a rally followed by a pullback. In fact, this type of price action is more likely to accelerate a deeper pullback. Next, let’s look at market hotspots. Why do we need to remind everyone to be careful about a gap-down follow-through here? The reason is simple.

Earlier, we saw the storage chip sector, which kept issuing good news at high levels. Various self-media outlets and all kinds of information were flooding in with the idea that storage chip prices are rising. But in the end, everyone also saw that after the high-level consolidation, a gap-down follow-through occurred. Now, last night I also noticed another sector: the optical fiber sector—again, good news came out in a flood. Of course, we can’t underestimate these things. The good news is good news, but you should understand that if a stock is already at high levels and then this kind of good news is released, you should be alert to the possibility of a gap-down follow-through.

Of course, we believe this gap-down follow-through process is not entirely a bad thing. After the gap-down follow-through is completed at high levels, it very easily catalyzes the formation of the lows—which is also what we see as the process of accelerating the bottoming out. So after today’s rally and pullback, especially for the ChiNext Index, it has already shown a minor breakdown—meaning it has already broken the 6-month moving average. At this time, it is very easy to see acceleration, and that’s why over the next two days everyone should pay attention to this acceleration process and prepare your trading strategy in advance. For example, if your position size is too heavy, which products need to appropriately reduce exposure now, and which products need to hold on a bit longer.

Of course, overall speaking, if this acceleration downward and bottoming out happens at this point, and if it is not a high-level stock, then for low-position names, logically there is no longer much of a good selling point. Just hold on to the lows, wait for confirmation of the low, and that’s the real deal—then you’ll have another opportunity to buy again. So although what we’re saying sounds a bit wordy, the situation is very simple: wait until after the second pullback, then find that add-on entry point again; when the broader market stabilizes, it’s fine. But this process takes a few days—hope everyone has a bit of patience.

(责任编辑：王刚 HF004)

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