laitimes

Why did the market suddenly explode?

Why did the market suddenly explode?

Under the shroud of pessimism, today's A-shares suddenly broke out, with the Wind All-A Index rising 2.04% throughout the day, and the CSI 300 Index rising 2.34%, which is a rare long white candlestick in recent times.

From the perspective of capital, the substantial inflow of foreign capital is an important driving force. Northbound funds had a net inflow of 13.6 billion yuan throughout the day, a new high since August this year, successfully driving market sentiment to pick up. A large number of bottom-buying funds followed the inflow, and the market trading volume was significantly enlarged, with the full-day turnover reaching 886.1 billion yuan, an increase of 246.2 billion yuan month-on-month.

At the industry level, it is basically a general rise in the market, except for the coal sector, which fell by 1.56%, the other 30 Shenwan first-class industries all recorded gains. Among them, power equipment (5.97% VS year-to-date increase -26.44%), beauty care (5.73% VS year-to-date increase -31.67%), food and beverage (3.56% VS year-to-date increase -14.97%), building materials (2.88% VS year-to-date increase -22.77%) and other top gainers.

Without exception, the four leading sectors are all deep declines during the year. It shows that buying funds today is more of a bottom-buying logic, picking up cheap, doing the left side, and aiming for a long-term layout.

At the end of the year and the beginning of the year, it is the time for institutional funds to make annual layouts. Under the premise that A-shares are at a low level as a whole, it is easier to buy the sectors with the highest declines to achieve good long-term returns.

Based on this, today's buying funds are mainly allocation funds, which brings two revelations:

First, the inflow of funds is continuous, and the market will most likely not be a one-day trip. As an annual allocation fund, since you choose to increase the allocation of A-share assets, you will not run out of bullets in one day, but will last for at least ten days and half a month.

The purchase of funds is sustainable, so the current round of rising market is also sustainable, so you don't have to worry about a day trip, don't be in a hurry to take profits.

Second, once the allocation action is over, there is a high probability that A-shares will revert to the mean, and how to go up may fall down. In other words, this rise is only a short-term market brought about by the concentrated inflow of incremental funds, and after the end of the capital inflow, the driving force of the market will end.

Many people will feel that today's market has risen a bit inexplicably, because there is no obvious catalyst in sight in terms of fundamentals and policies. A V-shaped reversal must be a major turning point in fundamentals or fundamentals-based expectations, and there is no need to expect a V-shaped reversal before a major turning point comes.

If it's not a V-shaped reversal, then not chasing higher is a wise choice.

Investor sentiment is easily swayed by the three bullish candlesticks, in fact, it is necessary to be calmer. Although A-shares have bottomed out, there is a high probability that the medium-term market will still be a weak reversal. In the context of a weak reversal, the market will go back and forth, and the market will continue to give us opportunities to buy, so we don't have to rush for a while.

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div.autoTypeSetting24psection > p,div.autoTypeSetting24psection > section{margin-bottom: 24px;}

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