Today's market performance speaks for itself, with an extremely limited number of gainers, less than 300, and a median decline of -6.69%, with a large number of micro, small and medium-sized stocks unfortunately falling to the limit, which is very similar to the market situation on February 5. The reason for the decline has also been found, will the market trend of February 6 be replicated tomorrow?
1. The market has continued to adjust sharply, and the reason for the decline turned out to be a misreading of some of the provisions of the nine articles of the new country:
Article 9 of the new country clearly stipulates that enterprises that do not pay dividends for a long time may face ST treatment or even delisting. Affected by this, those who have long been stingy with dividends of the "iron rooster" concept stocks suffered a heavy setback today, yesterday's sharp decline in micro-cap stocks combined with this, which in turn led to a large-scale decline in today's market. The release of the new national nine articles has made the market aware of the huge number of potentially problematic companies hidden in many stocks. It is worth noting that the micro-cap sector, where quantitative funds gather, is one of the focuses of this adjustment. However, in the process of cleaning up quantitative funds, many ordinary shareholders have also been affected. On April 12, the China Securities Regulatory Commission (CSRC) issued a new version of the delisting opinion and the exchange's revised stock listing rules, in which the reform of the delisting system is the core point, but this is not specifically aimed at small-capitalization stocks. The market interprets the policy tailwinds as bearish, reflecting the extreme instability of the current market sentiment and the strength of the short-selling force.
2. Will history repeat itself in the A-share market?
So far this year, the A-share market has witnessed two rare 1,000-share price limits, one on February 5, 2024 and the most recent one. Unlike the rapid recovery of the market after the first 1,000-share drop limit, and the low point of the Shanghai Composite Index was found soon after, and then the Spring Festival market was launched, the current round of market adjustment cycle is shorter and has not experienced a deep decline that lasted for more than a month. At present, although the index remains above 3,000 points, many sectors and individual stocks have actually fallen back to their lows for the year. However, if the market continues to weaken, it means that the previous Spring Festival market is only a short-term rebound in the process of decline, and the subsequent market risk will further increase. As a retail investor, Feng Feng is keenly aware of the subtle situation in the current market, and I suspect that the protective funds may have noticed this situation. However, it remains to be seen whether the funds will intervene again or allow the market to adjust on its own.
3. Correct understanding of the plate:
The original intention of the introduction of the new policy was to benefit the market, structural adjustment is beneficial to long-term healthy development, and a certain degree of short-term pain is acceptable in the reform process. However, the market should not have such a drastic one-size-fits-all reaction that does not distinguish between specific circumstances. This sharp decline has hurt the ordinary retail investors the most, who are almost powerless to resist in this turmoil, ruthlessly deprived of their low-priced chips, and the continuous decline is designed to destroy the psychological defenses of retail investors, forcing them to sell their holdings in panic. At a time when the market mood is bleak, even worse than last year's most difficult period, it would be futile to try to reason with the market. In such an extreme market environment, any operation may be at risk. However, since the market can fall for no reason, it can also rebound without warning, as we learned at the beginning of the year. Therefore, it is wise to wait patiently for the market to rebound illogically, and quietly wait for the turnaround for the market sentiment to improve.
The last position tells everyone that what we need to do is to be as patient as possible, but at the same time, we must pay attention to good mentality management, because the continuous killing of the market is definitely not comfortable, and now there are more and more people waiting and watching, and now it can only be said that the market is in a relatively bottom area, but it is not the best time to launch a Jedi counterattack. Wind and rain has also been paying attention to the changes in market sentiment, once the turnaround is determined, it will be in the banner to raise a long signal, if possible, wind and rain will notify everyone as soon as possible!
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