A hundred-point long bearish candle—have you given up?

Today, the market once again saw a rapid downturn with a long bearish candle of more than 100 points. Last Friday, strongly performing commercial space stocks fell sharply; high-level components, PCB-related concepts, storage chips, and others all accelerated downward. Even relatively strong sectors such as semiconductors and the STAR Market 50 couldn’t hold up and followed the drop. As for other lower-ranked directions, some are down by more, while others are down by less. Is the market switching, or is nothing working? [Tao Gu Ba]

Technically, the overall trend is still upward. A single long bearish candle of more than 100 points today won’t immediately change that. But although the index direction hasn’t changed, the earlier period saw a lot of second-level divergence—other than semiconductors, most sectors have bled out. Now even the high-level ones have come down, while the low-level ones haven’t risen, so it feels very uncomfortable.

Because it feels uncomfortable, people start to think there’s no hope in the market, and many begin to doubt: does the market still have hope? These are normal occurrences and can be understood. Now there are signs that high-level stocks are starting to “fade” after the run-up, while low-level stocks haven’t produced any new direction yet. The market is in a vacuum period, stuck between moving forward and hesitating. After today’s sell-off, many indicators have already shown “bottoming out.” If it drops further, an oversold rebound could happen at any time.

Given this situation, we need to take a serious look. Let’s look at the low-level stocks starting from July—that is, from July 1. In fact, they have gradually been relatively strong. You can freely find 5 to 7 high-level stocks and 5 to 7 low-level stocks, compare their price action from July 1 to now, and see which is stronger and which is weaker.

Why do some people still think high-level stocks are strong and low-level stocks are weak? Mainly because they haven’t looked closely enough. The strength in high-level stocks was mainly before July. Starting from July 1, things have already changed. Right now, bank deposit rates are very low, and there aren’t other good investment channels. Where would the funds that exited high-level stocks go? Most likely, they won’t leave the stock market—they’ll look for opportunities within low-level names.

So, the market falling isn’t what’s frightening. What’s frightening is losing patience. What’s frightening is chasing rallies and cutting lows—saying it will rise because it’s bullish, saying it will fall because it’s bearish. As long as the market’s direction hasn’t changed, it just means you need a bit more time.