Hexun Investment Advisor Zhu Yiming: Market Surges on Reduced Volume - Can the Rally Continue?

As we discussed yesterday, the 3794 points are near the lowest point of this wave of the market. Today’s market was quite strong, closing near the highest point. Let me check the closing level; the upper target is 3881 points. The Shanghai Composite Index rose by 1.78%. However, many friends might say, “Teacher, look, today’s trading volume shrank to 350 billion. What do we do?” Shrinking volume during a rally is often seen as a bad sign. According to Zhu Yiming from Hexun Investment Advisory, in our analysis yesterday, we mentioned why I thought yesterday might be the bottom. Because there was a gap, which is a clear sign of a significant downward move with strong selling pressure, indicating that the market’s acceleration has reached a short-term extreme.

Therefore, during today’s rally, we can basically confirm that 3794 is the bottom of this cycle. The volume decrease today also proves that the rally is just beginning. After the selling pressure was largely released during the decline, upward movement doesn’t require much volume because the sellers have already sold off. Under these conditions, as the market moves higher, the selling volume will decrease. Even if the rise is large, the volume won’t increase significantly.

This explains why today’s volume was low. But looking at the number of advancing and declining stocks, over 5,000 stocks rose today, which is the opposite of yesterday. So, based on today’s performance, it’s basically confirmed that the index has bottomed out. Some friends might ask, “Old Zhu, what do you think about tomorrow?” Given the current trend, I believe the index has no intention of stopping. At least from the current trend, the probability of further upward movement remains very high. I think this wave will at least see a rise to the gap at 3955 points. Currently, there’s about 70 points of room to reach 3955. Everyone can enjoy the opportunities brought by this rally again. I don’t know if any friends have added positions at the low, bought the dip yesterday, or even bought at the bottom. These situations definitely exist. But I believe as long as you follow the overall rhythm of the market, it won’t be too problematic. The main focus remains on high-dividend stocks.

You see, today’s ChiNext Index rose significantly less than the Shanghai Composite. During its previous decline, the ChiNext had some rebound tendencies, especially in sectors like CPUs, PCBs, and batteries. When the market was falling earlier, these sectors didn’t decline much. Now that the market is rising, they are starting to catch up and pay the price for their earlier resilience. You can’t hide from the market’s rise and fall; that’s the logic.

(Edited by: Wang Gang HF004)

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