Once again, it’s a big bowl of noodles, over 200 stocks are rising, while over 5000 stocks are waiting to rise.
The rise and fall ratio today is approximately 5.2%, which is the same as the GDP growth rate of China in 2023.
A large bearish candlestick with no feet is a typical breakdown pattern, indicating that the low point of Wave A at 2863 has been effectively breached.
The next support level is the Jiangcheng bottom at 2646, which I mentioned last night.
The decline of the major C wave
Since May 9, 2023, the market has formed a standard major C wave decline structure, with the index falling unilaterally and almost no significant rebounds; each rebound has been a continuation of the decline. After more than 8 months of gradual decline, it has finally broken through the low point of Wave A, entering a phase of accelerated decline.
In the past two weeks, I have repeatedly mentioned that in this bear market, the market will drop to around 2650. A few days ago, no one might have believed it, but after today’s large bearish candlestick, more people might start to believe it.
In the past few years, I have often made a bold claim, my bearish outlook has never been wrong, whether it’s on individual stocks or the overall market.
When I am strongly bearish, do not harbor any lucky thoughts.You can forgo dividends, you can stay in cash, but do not gamble on your luck; it will likely lead to a near-certain loss.
After New Year’s Day, my views on the market should be very clear; have you seen me say this in the past two years?
It is still not the time to buy.
Tonight, I mentioned on the platform that if we extend the time frame to three to five years, or even eight to ten years, being below 3000 points indeed presents opportunities that far outweigh the risks.
However, from a trading perspective, when the market falls below 3000 points, it is precisely not the time to buy stocks, but rather the time to sell stocks.
Because each key technical support level of the market generally will not be easily breached; either it holds, or if it breaks, it will at least drop another 10%. 3000 points is a key technical support level, and 2863 is also such a key technical support level.
Breaking below 3000 points is not the time to buy stocks; breaking below 2863 points is even less the time to buy stocks. Between 2863 and 2650, the vast majority of stocks will again fall significantly; within these 200 points, the market will eliminate all overvalued stocks, with growth stocks’ valuations dropping below 15 times earnings, and value stocks’ valuations dropping below 10 times earnings.
During each bear market’s major C wave decline, it is the easiest time to incur significant losses; until a true policy bottom appears, one must maintain a light position.
We are still far from a time of abundant opportunities.
What kind of valuation should a major bear market give?
15 times PE is considered expensive, 10 times PE is considered reasonable, and 5 times PE is considered cheap.
With the bear market being this severe, there is still over 600 billion in trading volume, which is far from the trading level of a major bear market. Let’s talk about the bear market bottom after the Shanghai market’s single-sided trading volume falls below 200 billion.
After New Year’s Day, I have repeatedly reminded everyone that this year in the A-share market, the only way to survive is to rely on the high dividends of central state-owned enterprises; all other paths are basically dead ends.
You may not care about a few percentage points of dividends, you can forgo dividends, or you can stay in cash, but it is best not to gamble on other paths, as it is highly likely to result in significant losses.