Hexun Investment Advisor Qiao Lifang: The market breaks below 3,900 points, how will it perform next week?

On April 3rd, we can see that today the market broke through the 3,900 level. Yesterday I also told everyone that when the broad market rises here, it might break below 3,900 points for you—but it will likely fall more than expected. According to Qiao Lifan from Hexun Investment Advisory, today nearly 4,800 stocks across the two markets are falling—this is the extent of the decline, and the acceleration of the drop is relatively large.

So yesterday’s market was extremely bearish, and this extreme bearishness doesn’t necessarily have to be followed by a move into the next bullish leg. As we said, if this extreme bearishness is the extreme bearishness caused by the resistance pressure in the Dragon Lake’s first three lines, then in order to see a shift to the next bullish leg, the market would generally need particularly big positive news, right? But now you look at the situation in the Middle East—it has escalated again, and they’re starting to rattle their saber again. So from this perspective, at present the market has no positive catalysts, meaning this extreme bearishness will further add bearish momentum for you.

And on top of that, it’s the Qingming small holiday. Every year during this Qingming small holiday, everyone may worry that this market will have Saturday and Sunday, plus Monday. Also, with the current Middle East geopolitical issues, people may worry that at this level the market could sell off further.

So today, in reality, the market is just a bit like everyone is selling off. Today’s market is still a decline on shrinking volume. You say “panic,” but today the combined trading value of the two markets is slightly above 1.6 trillion yuan. Today’s decline is slightly on lower volume; actually, a decline on lower volume isn’t particularly good. If it were a decline on higher volume, that might be better. With a decline on lower volume, next week we’ll look at the March 27 low. The March 27 low is 3,852 points. Today the market closed at 3,880, with the intraday low at 3,871—so it didn’t reach the March 27 level.

We’ll see whether the March 27 level can provide support. From the current situation, on the 60-minute timeframe the rising momentum is merely that the 1-line and the 2-line have crossed. Yesterday I also told everyone that on the 30-minute timeframe, even though yesterday afternoon the market basically got you back up, the 1-line still didn’t actually form a cross. So today, after the first hour of a rebound in the early session, we saw then rapid selling pressure appear. Ultimately, the 1-line and the 2-line indeed crossed. On the 30-minute timeframe, it also gave some oversold signals. And on the 60-minute timeframe, today’s four-hour timeframe the 1-line also crossed—yes, it crossed.

But as of now, on the 60-minute timeframe, it hasn’t formed an especially obvious “random value” oversold condition. So for this level, next week you’ll see whether on Tuesday, within that weekend range, there is any positive news. If there’s no positive catalyst, then it may go check the 3,852 support next week.

Now the whole market is oversold. Look—how many stocks are in the green today? Only a few hundred—around 6 to 700. Nearly 4,800 stocks are down.

So today, you say your stock can turn green today—that truly has very big difficulty. From a technical perspective, after the 1-line and 2-line cross on the 6-minute timeframe, we need to watch the “random value” for oversold. After it becomes oversold, then basically in the short term you’ll see an oversold rebound come again. Because the 1-line is already continuously moving downward. On the daily timeframe, although the Dragon Tortoise’s three-line resistance is still overhead, the 1-line has also already come down.

From the technical side, people say the market may mimic the last time—after that early rebound, the second time it came down and pressed back, and the room was about the same. Right? Because last time the 1-line was below; it also rebounded a bit, and then adjusted. Now, our 1-line is below as well and hasn’t rebounded yet, and then the market started adjusting.

So as the 1-line keeps shifting downward, we say that in terms of the medium-to-long term—if the 1-line is below, that’s an opportunity. Even though the market is dropping a lot now, it’s still an opportunity when the 1-line is below. When the 1-line is above, it’s a pattern/formation signal—and the gray line above is all considered pattern formation too; the gray line above is also pattern formation. So when the 1-line is below, that’s an opportunity, right?

So from now on, the market has already fallen quite a lot. You say, “My screen can’t be looked at—because it has fallen a lot.” From now, it’s just a matter of holding on, just holding on. Because you say the market structure has fully gone bad—it hasn’t fully gone bad. It’s still standing on the 3,794 level, where a small red ball helped it stabilize and firmly form a bottom.

It’s just that after the 3,794 level started stabilizing, the broad market has effectively put in a bottom and stopped falling. Some stocks keep making new lows. Even some sectors—like the brokerage sector that everyone keeps asking about—today they made new lows again. They seem to be making new lows, but in terms of weekly and monthly technical adjustment room, the adjustment space at those positions is already very large.

So at this point, don’t try to bottom-pick first. If you want to bargain-hunt at the bottom, I’ve told everyone in livestreams many times too: you need a long-term mindset. If you have positions at this level, wait until it has shifted to the right side—after it breaks through the Dragon Kui Tu third boundary—then you can add and average in again after it puts volume out. Because if you bottom-pick from the left side, it may keep giving you sideways-to-choppy fluctuations even more; you won’t be able to handle it. You really won’t.

So you need to stretch the timeline to make it work. But most investors basically look at ultra-short-term. If you can’t stretch the timeline, then you can only trade on the right side. Don’t bottom-pick on someone else’s left side. Even for the broad market, you can’t bottom-pick on the left side here—you also have to do it on the right side. “Right side” means: after it breaks above the white line, and then it turns into a day with a middle-to-large bullish candle that moves entirely above the white line, then you act. If it doesn’t move entirely above the white line, then you shouldn’t look at it—don’t average in. You can only do some rolling “T” trades at this level.

But if at this level you want to do some medium-to-long-term “ambush” positioning, you need a strong heart. Because at this stage in the market—after it has fallen to this extent—everyone has all kinds of voices. The fact is, the more it falls, the more people are bearish, and there aren’t many people saying “we’ve seen the bottom at this spot,” right? Even if you’ve gotten a small red flag, it doesn’t mean this is definitely a place to go long. If you go long, why doesn’t it rise? Someone will say something like that, of course.

So from Longhui Investment’s perspective: after the small red ball is given, that is a medium-term bottom. And on the daily timeframe, the extreme bearishness compensates by adding bearishness. In the short term, before next Wednesday, the broad market will welcome the next bullish-leg structure. On Tuesday at the open, and on Wednesday—right? Over the next few days on the 2nd and 3rd, the broad market should welcome what? A secondary—some kind of secondary rise. As for how much space the secondary rise can have, we’ll look at Tuesday’s走势. Because extreme bearishness plus compensation bearishness ultimately realizes the next bullish leg. Even if it realizes a weak next bullish leg, I still need to realize it.

Everyone should know this: on the weekly timeframe, I’ve been telling everyone that as long as the 1-line is above, the weekly chart is always not good. To rise, there is real pressure. Because the 1-line is above—just now we said: on the daily timeframe, the 1-line is above. And on the weekly timeframe, the 1-line is above as well. Including on short-cycle minute timeframes, as long as the 1-line is above, it’s not good either. So on the large timeframe, the broad market’s weekly chart indeed has pressure to rise. But at the same time, the broad market is also extremely oversold.

Technically, we see it has already come to some of these moving-average areas—yes, around the 60-week moving average and those levels. From a technical standpoint, in terms of space, the adjustment has been relatively sufficient. The 30-week moving average—what did it do? It has broken below the 3-week moving average as of last week’s March 27, right? It has already gone below it. So in terms of space, at that 3-week moving-average level there will still be some rebound, and some consolidation—meaning you need to trade in a period of choppy sideways action for a while.

So if we stretch the timeline, we say that at this current level, it really still requires some back-and-forth consolidation. Therefore, we will do more—if you can only do right-side trades, then don’t do left-side trades. Left-side trades require a strong will to wait. People who watch the market every day—today looking, tomorrow looking, and every day looking—those who can’t do it, you can’t do medium-term trades. Medium-term traders generally don’t watch the screen; they can hold the stocks. And psychologically, there isn’t such big volatility. When you’re watching, you see it turns red then green—then it turns green again—and again and again. Right? You can’t take it.

Alright then. Over the weekend, we’ll also combine some news to explain it to everyone again. If the news is good or bad, we’ll further analyze and sort it out for everyone. The main reason is that currently the market is still heavily affected by the Middle East situation. For our domestic market, at this time there is no negative news; more than anything, everyone is focused on maintaining the stability of the capital market—and still caring for the market. So on the weekend, I’ll use some news to talk to everyone again. Tomorrow is also a holiday, so our livestream tomorrow morning will be paused once; we’ll resume after the holiday.

（责任编辑：王刚 HF004）

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