Hexun Investment Advisor Zhang Shunan: Silent Fall with Shrinking Volume, Is It a Turning Point or Normal Correction?

Today, let’s review the major market performance on Tuesday. In terms of trading volume, both markets have continued to show a pattern of declining volume and broad declines over the past two days. This trend aligns with our previous warning after last week’s continuous rebound, which was to “be cautious of short-term profit-taking outflows.” Therefore, at this stage, it can be viewed as a normal correction under reduced trading volume.

In earlier reviews, we also emphasized the need to focus on two main risks: first, high-flying tech stocks that may drag down the index; second, stocks lacking earnings support and relying solely on thematic hype. From today’s market performance, the main factor pulling the index down is the technology sector. Meanwhile, the previously adjusted safe-haven sectors experienced slight rebounds as tech stocks weakened, which is consistent with expectations.

Regarding allocation strategies, it is advisable not to be overly aggressive recently, but also not to panic excessively. From a volume perspective, the market is currently in a shrinking volume state, making a continuous decline on high volume less likely in the short term. However, if volume continues to shrink, it indicates that the market needs more time and patience to digest the adjustment.

Apart from the tech sector, cyclical sectors such as non-ferrous metals and chemicals, which have price-increase logic, have also seen frequent high-level turnover recently. Considering the ongoing decline in trading volume across both markets, these stocks also require waiting for more suitable entry points. If the market later shows a significant increase in volume, it could present new opportunities for deployment; until then, a wait-and-see approach is recommended.

In contrast, some defensive sectors and those with earnings support that have not been overly speculative recently do not need excessive worry during the earnings disclosure period.