Closing review: A-shares opened high and fell, trapping people. Who is shorting

2024-03-23

The A-share market today has experienced a high opening followed by a low close, trapping investors, which is truly a headache-inducing trend! After a collective high opening in the morning, the market gradually trended downward with fluctuations. The afternoon session saw a plunge that turned the market green into red, indicating a loss. Even with support after the plunge, it was not enough to reverse the trapping trend of the A-share market today.

Facing such a high-opening trapping trend like today's, many investors would be tempted to curse, as the index is supported by heavyweight stocks, which are "as stable as a dog," but the sectors and individual stocks are extremely weak. The widespread decline in individual stocks increases the losses for retail investors. Who is profiting from short selling? The specific reasons and situations are as follows:

1. The major indices opened high and trended low with fluctuations, mainly due to the influence of the heavyweight sectors. Cyclical stocks, led by real estate, as well as oil, metals, construction, and coal, along with heavily weighted stocks like banks, insurance, and liquor, are all working hard to stabilize the index. They neither pull up nor smash down the market, hence the index remains as stable as a dog.

2. Apart from some heavyweight sectors that slightly increased to support the market, the rest of the small and medium-sized thematic sectors almost all declined. AI led the decline, and telecommunications operations also fell unilaterally. Today's thematic stocks were indeed very weak; small and medium-sized thematic stocks had no resistance at all, sliding all the way since the opening, with the decline expanding after the lunch break, clearly trapping investors.

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3. In fact, today's high-opening and low-closing trend of the A-share market is also directly related to the overall trend. After the Shanghai Composite Index fell to 2,845 points on Tuesday of this week, it has been in a narrow range of fluctuations in recent trading days. There is no strength in either rising or falling, and the biggest factor is the unclear trend. Ultra-large funds dare not easily take long or short positions, or perhaps ultra-large funds are brewing a bigger market movement, which is why the A-share market was pressed down again today, returning to the vicinity of the new low.

4. Confidence and trading volume are the most lacking elements in the current A-share market. Since the adjustment of the A-share market, investor confidence has plummeted, mainly because investors have been trapped and continuously losing money. This has led to a weak willingness to trade, with a strong atmosphere of caution. Today's trading volume shrank again to less than 600 billion, which is pitiful. It is normal to trap investors with such a low volume.

Will the A-share market continue to decline next Monday?

This week, the A-share market has been dominated by a trend of fluctuating and sliding over five trading days, with the trend center of major indices moving downward, which is very unfavorable for the A-share market next Monday.Predicting that the A-share market will decline next Monday, which means it will once again test the new low of this week's phase, and after returning near the new low, it will fluctuate and linger for a while, and then the bulls and bears will choose a direction again; if the weight stocks do not come out to pull the market in time, the trend of next Monday is not optimistic, and the decline to find the bottom is inevitable.

Why is the trend of A-shares predicted to fall next Monday? This is a forecast made in combination with the current situation of A-shares, and the reasons are as follows:

1. With the A-share market opening high and closing low today, the universal decline seems to indicate that the bearish forces are getting stronger. Today's bears may just be warming up, and the real decline will be delayed until next Monday.

2. In the past four trading days, the A-share market has not been able to rise at all. The Shanghai Composite Index has clearly been blocked by the 20-day moving average. Since it cannot rise, it can only be seen as bearish, so let's wait and see.

3. It is believed that after the volume shrinks, it will increase again. Today, the two cities of Shanghai and Shenzhen shrank again, with a total of less than 600 billion, and the lack of volume is not optimistic for the trend of next Monday.

In summary, the high opening and low closing of A-shares today trapped people, and behind it was the drag of weight stocks, the unilateral decline of thematic stocks, the pressure of the downward trend, and the insufficiency of volume, among other unfavorable factors. In the face of multiple bearish factors, it will continue to next Monday, so the trend of A-shares next Monday is also not optimistic.

In short, the current A-share market is still too weak, and the phase adjustment has not ended. Before the Shanghai Composite Index has stopped falling and stabilized and a reversal signal appears, it is recommended that everyone should operate steadily and conservatively.