Zheshang Strategy: Volatility Spillover Shifts Market Focus Downward, Range Fluctuation and Steady Planning

1. Market Overview for This Week (2026-03-23 to 2026-03-27)

(1) Major Indices: The market focus has begun to shift downward, with most major broad-based indices closing lower.
　　(2) Sector Observation: Energy remains strong with a cyclical rebound, while non-bank TMT leads in declines.
　　(3) Market Sentiment: Trading volume in Shanghai and Shenzhen continues to decline month-over-month, with most stock index futures contracts trading at a discount.
　　(4) Capital Flow: The balance of margin financing has slightly decreased, with the proportion of financing purchases falling, and net outflows from stock ETFs.
　　(5) Quantitative “Black Technology”: Major index valuations are above the median, while the growth enterprise index valuation is relatively low.

2. Market Attribution for This Week

(1) Ongoing geopolitical conflict in the Middle East;
　　(2) Iran rejects the U.S. ceasefire proposal and puts forward five conditions;
　　(3) Foreign Minister Wang Yi speaks on the phone with Iranian Foreign Minister Amir-Abdollahian as requested.

3. Market Outlook for Next Week

Due to the “input shock” brought about by the geopolitical turmoil in the Middle East, which cannot be resolved in the short term, the global capital markets are expected to remain in an adjustment state. Among them, A-shares have formed a “downward volatility range” due to a rapid decline recently. Taking the Shanghai Composite Index as an example, the volatility range has “flipped downward” from the previous 4000 to 4200 range, with the new lower bound at the 0.382 level of the “third wave of the bull market” since last April, which tested support this past Monday; while the upper bound of the new range, from a chip distribution perspective, is at the integer level of 4000 to 4040, which is a “trading concentration area” formed over the past few months. We expect that in the short term, the Shanghai Composite Index will operate in a manner of “finding a bottom through range fluctuations, with lower support and upper pressure,” with most broad-based indices likely moving in tandem. A slight exception is the growth enterprise index, which recently hit a new high on March 20 and continues to show stock component differentiation and weekly MACD divergence, indicating potential adjustment pressure in the future. Looking at a longer cycle, a stable mid-line bottom structure in the market may form around mid to late April, with the potential for a weekly-level rebound; while the continuation of the “systematic slow bull” pattern depends on whether it can “strongly” return to the original volatility range when challenged at the 4000-point mark.

In terms of allocation, based on the judgment of “downward shift of volatility focus, with support below and pressure above,” we recommend: remaining cautious in the short term and treating the market with range fluctuations—when the index reaches the new volatility range “lower bound,” overcome fear and moderately “buy low,” while when the index approaches the new volatility range “upper bound,” abandon greed and appropriately “sell high.” If the situation in the Middle East becomes clearer after mid-April and the mid-line bottom structure of A-shares is formed, then it would be possible to actively increase allocations and expand flexibility.

4. Risk Warning

Domestic economic recovery may fall short of expectations; there are uncertainties in global geopolitical situations.

(Source: Zhejiang Securities)