Today, the market opened at 3867 and closed at 3875, with a low of 3864 and a high of 3895, and a transaction volume of 1.7096 trillion, with a decrease of 73.5 billion. The ratio of gains to losses is nearly even, with gains accounting for 51%. Of course, this is still the result of a late rally; otherwise, it should theoretically have more gains.
The most severe outflow of funds was in software development and advertising marketing, and towards the end, consumer sectors also experienced a drop. Initially, the semiconductor sector was profitable, but as AI hardware declined, semiconductors followed suit. Currently, batteries are leading the way, and while batteries also saw a slight recovery, overall, at least half remains. If anyone did not heed the advice and chased AI hardware this morning, they might be feeling a bit uncomfortable, with at least a 3% loss.
Overall, while today’s downturn felt like a roller coaster, it is important to note that everything is within reason. The current rhythm is as it is; do not expect consecutive strong gains. The good news is that there won’t be a significant drop, but the downside is that we are experiencing this stagnant fluctuation. In such times, choosing the right sector can yield profits; otherwise, one can only suffer floating losses. However, there is no need to panic; 3800 is still a strong support level. The worst-case scenario would only drop to 3730, and currently, the opportunities outweigh the risks. For instance, the probability of the Federal Reserve lowering interest rates has further increased to 84%. More importantly, the next potential Federal Reserve Chair, Kevin Hassett, is a supporter of Trump, which could lead to significant changes. However, this is still just a possibility and will take time to unfold next year. On another note, apart from the Federal Reserve, the onshore and offshore RMB against the US dollar has continued to appreciate, breaking through the 7.08 mark. Historically, when the RMB appreciates against the dollar, the A-shares tend to perform well, which is logically related to the repatriation of overseas funds by our companies. No one wants the money coming back to be worth less, and similarly, during periods of RMB depreciation, companies tend to keep overseas payments or funds outside longer to maximize returns through exchange rate differences. The repatriated funds need a place to go, and the stock market often becomes one of those channels; that’s the basic logic.
Most importantly, as Old Wang mentioned yesterday, there is a new king on the other side, reviving the love logic. Currently, the market’s acceptance seems reasonable, so it is only natural for it to rise for another month or two. Therefore, overall, there is no need to worry too much. However, I must remind everyone that although there is a new king on the other side and the market’s acceptance seems reasonable, we are also following up in related sectors. But everyone should resist the urge to chase blindly, especially after a consecutive rise of two or three days. It is essential not to enter during such times, as related institutions are likely to take profits, and entering would only lift their shares. Moreover, the current market acceptance is not yet fully established; you can feel it from the daily highs followed by corrections. Therefore, I suggest everyone be cautious. Even if you want to enter, wait for a small correction range to appear.
Finally, the most crucial factor is the overall environment. Don’t you feel that the relationship between the top two has become less tense? Although it cannot be described as close, at least they are not at each other’s throats. Today, “water control” and “gold cloud” are in play, and Old Wang believes that this relationship will not deteriorate for at least six months, which is vital for the overall environment. Funds are inherently risk-averse; if the overall environment is not safe, where can safety be found?
So please set aside your anxieties and follow the main trend steadily.