Hexun Investment Advisor Wang Haiyang: Accurately Predicted Index Breaking 4050, Bull Trap Followed by Sell-off, Where is the Adjustment Target?

Today’s market indeed broke below 4050 again. Wang Haiyang from Hexun Investment Advisory analyzed that I warned everyone yesterday that this lower shadow indicates our index will soon break below 4050 again. The difference is, if it’s quick, it might confirm the break the next day, with a downward confirmation of the lower shadow breaking 4050; if it’s slow, there could be a rebound—rebounding for 1-2 days before breaking. Today’s market combined both scenarios: it initially released some rebound momentum in the early session, then pulled up slightly, and then broke through. In the afternoon, it plunged directly, breaking 4050. Currently, the index closed near yesterday’s level.

Why do we emphasize that it will definitely break? I explained clearly in yesterday’s video. Some formations may not be certain to fall, but some are almost certain to fall, so don’t have any wishful thinking. We’ve been warning these past two days that the 4050 level will definitely be broken. Everyone must be prepared.

Specifically, switching to the index: if you believe me, during the early session’s surge, you wouldn’t blindly add positions or chase highs. Yesterday, I explained that this was just a false rally—an unreliable lift. We need to be cautious. In the afternoon, the market declined. The reason it’s unreliable is explained clearly in our internal course. The index rebounded briefly in the morning to lure in traders, but that was fake. Many people thought it would rebound for a day and then fall again. In the early session, we clearly stated in our advanced class that this rally was very fake, very unreliable. So, in the afternoon, the market dropped again.

Because of this, chasing in the morning was futile. Those who chased in the morning found it very difficult in the afternoon. We’ve said many times that three lower shadows touching 4050 are like a downward “pointer,” indicating the market will make new lows. This lower shadow level must be broken through; we need to be patient. The market’s correction should at least test the left-side bottom of the box, and if that bottom isn’t done with reduced volume, it could go even lower—around 4400, 4200, or 4000 levels. If volume doesn’t shrink, it might go lower. Don’t think that because there are three lower shadows or it hasn’t fallen yet, you can be overly optimistic. Although many sectors have already fallen heavily, the index has not yet adjusted properly. Without proper adjustment of the index, sectors that want to rise cannot do so.

Today, the financial sector played a strong role in supporting the market because it was previously weaker than the index and was actively adjusting. But even with financial support, the market still declined. We believe only when both the index and sectors are properly adjusted can a true big rally begin. In the short term, we must remain resolutely bearish; in the long term, bullish. The short-term trend is definitely downward. There’s no doubt about that. First, the bull market has not ended, but the current box structure must see volume shrinkage. Currently, volume has not decreased; it needs to shrink and test this level again. That confirmation is necessary. After confirming and reducing volume, I believe a new wave could unfold. Until these actions are completed, I think the market will struggle to make a significant upward move. If it suddenly forms a strong bullish candle, that might be possible, but a quick rise of one wave is unlikely.

All these predictions are based on technical analysis. I warned at around 700 points in 2000 that the bull market could start at any time, and I’ve been consistently bullish since then. The overall direction has proven correct. Over the past two to three years, we’ve mostly been bearish, except when 2635 appeared, signaling the end of the bear market. We then indicated a double-bottom formation for the bull market, which successfully launched afterward. All our judgments have been correct—this is strength.

Why do we insist that 4050 will definitely be broken? We explained clearly yesterday that it’s because these three lower shadows, especially the two that nearly confirm the break, make it almost certain. Plus, the ChiNext has gaps, and today it gapped again. Such large gaps are impossible to leave unfilled. Therefore, until the gaps on ChiNext are filled, we shouldn’t be overly optimistic or bullish.