Hexun Investment Advisor Gai Yinan: The Shanghai Composite Index has opened lower and recovered over the past two days. How should we interpret the future market trend?

The Shanghai Composite Index opened lower again today and then rebounded strongly. It was another close call with no real danger. It’s one day after another that it opens lower and then turns higher. According to Tongxun Investment Consulting’s You Yinan’s analysis, today was a day of weak-market consolidation—so you don’t need to worry too much. You don’t need to be as anxious as some people in this market who think that today will touch the previous low again, touch a new low again, right?

Nangge explained this clearly to the students. We believe that if the news environment is a bit worse from here, there may be a lower open—but we won’t directly dig down further. Because after just adjusting, falling again so quickly in such a short time doesn’t have much meaning, and not many people would cut their positions. Only if it gets pulled up and then consolidates for a few days—then if it falls again, many people may end up surrendering.

For the next stage, based on today’s lower-open and higher-close and yesterday’s lower-open and higher-close, we’re telling everyone—at this spot—to cultivate this awareness of “opening lower and entering.” This kind of mindset matters for what could happen on some day when it truly drops with a lower open—meaning it may go and test the low point of the shadow. The main board is a bit better. For the ChiNext and this Shenzhen market, a single peak is not a bottoming signal. As for the shadow low, I think it will be touched again.

From the perspective of the Shanghai Composite, I think if tomorrow’s surrounding (external) news isn’t too bad, it may go and attack the gap from the open. Ah, that would leave a shadow point around 39403950 to be touched. If the external conditions are slightly worse, then today’s key is really to watch the performance of the financial stocks—especially the stance of brokerages, which is very important.

Next, let’s switch to the intraday chart for an explanation. From the chart, over four straight days it’s been launching an attack around 3930, but it keeps failing to break through, right? Then there’s a resistance level here for a rebound. This line that Nangge drew is also very precise, right? We believe that around 630 is a major resistance zone. And based on the experience of the previous trading range box, this is also how we’ve been demonstrating the effectiveness of the “golden box,” right? At that time it couldn’t go down, right? Now it can’t go up either—so what’s left is mostly consolidation.

For tomorrow, what I just said applies: if external news is a bit worse, then it may open lower and then rebound—another lower-open and higher-close setup. But you need to prevent a scenario where it’s lower-open and higher-close for two consecutive days, and whether it pulls back that same day or a second wash occurs the next day. This is about cultivating the entry mindset of retail investors.

If external news is a bit better, right? After a flat-to-even open, it may launch an attack from this area. It’s even possible to leave a “stab up then pull back” long upper shadow. But it won’t keep going straight through in one continuous move. It won’t just rush up continuously. There will be some back-and-forth first, right? Then at that point, it’s more about how the financial stocks perform. Because brokerages are already within an oversold zone in this round. They’ve pulled back to the starting level from last January, so there isn’t much risk. Some stocks even have already rebounded well—so in terms of this box, the cost-effectiveness is much higher than that of many other sectors.

Without any strong bullish breakout candles, it may also be because the overall market hasn’t adjusted properly—so it’s more about friction at the bottom. Today it did a lower open—right? That lower open was caused by external events. So it’s hard to achieve a higher-close that’s sustained and continuous attack. Tomorrow will depend more on the financial stocks’ stance. These firms—including insurance—have also been making new lows continuously. Even though the pace has started to slow, this has happened before in this kind of situation, so you can’t rule out that they may form another lower low.

So you need to see them produce a medium-to-large bullish candle, and that it can stay stable—meaning it’s not just one single candle ending the story. Instead, there should be some combination of several candles, right? For example, if this pattern appears—these candles often reverse, and can even make a new low. So you can’t determine it after only one or two trading days. You can only confirm that this area is effective, not that it can quickly surge upward. And more of the confirmation will rely on repeated moves—like, whether it’s one or two candles, and whether the medium-term bullish phase forms while still breaking that gap. Even though it has entered the oversold zone along with the broader market, what can you only verify? That the previous trading-range box is effective. You can’t verify that this spot can quickly rise up. More realistically, you can only watch the repeats—this applies to brokerages as well.

Also, the banks have been consolidating for a while here; the volatility has started to tighten. I think the banking sector and the brokerage sector may both see some bullish candles appear next. Insurance is oversold too; it may show bullish candles as well. But it’s only a single one-candle move, not a candle pattern combination—so it’s not sustained rebound momentum that keeps going, right? It can’t form that kind of situation.

As for power stocks today: they again experienced a significant pullback—following the whole market. We originally said in the morning livestream, and also in the past two days, that at this spot you can only look at the “bottom foundation” that hasn’t started yet. This “top has already started” is much riskier. If it really got pushed down today and the decline was relatively large, and after that drop a bullish candle appeared and moved upward—wouldn’t it be a fast wash like a “one yin, one yang, followed by three yin”? So tomorrow, power stocks may first form a shooting-star-like candle, then quickly rebound—or even rebound directly.

If tomorrow morning after the power stock does this one wave of slow pressure and quick decline, it’s forming a quick wash and then rebounds upward—then when it forms again, we’ll see whether it can quickly move back up again.

If power stocks are very active in the early session tomorrow, and in the end they still manage to “hold the close” (settle back above), then the day after tomorrow is the opportunity. If in the early session the bottom leaders are able to move, and are strong enough to push up—or if the prior leading names can move up—then it’s possible that there will be a push upward that same day. So tomorrow morning, you should pay close attention to power stocks.