He Xun Investment Advisor Zhang Shunan: Low Volume Decline Across the Board - Is This a Market Reversal or Normal Correction?

Let’s review the major market trends from Tuesday. Based on trading volume, both markets have shown a pattern of decreasing volume and broad declines over the past two days. This trend aligns with our previous warning after last week’s continuous rebound, which was to “be cautious of short-term profit-taking outflows.” Therefore, at this stage, it can be viewed as a normal pullback under reduced trading volume.

In earlier reviews, we also emphasized two main risks: first, high-flying tech stocks that may drag down the index; second, sectors lacking earnings support and relying solely on thematic hype. From today’s market performance, the primary factor pulling the index down is the technology sector. Meanwhile, the defensive sectors that had adjusted earlier showed slight gains as tech stocks weakened, which is consistent with expectations.

Regarding allocation strategies, it is advisable not to be overly aggressive recently, but also avoid excessive panic. From a volume perspective, the market is currently in a shrinking phase, making continuous large-scale declines less likely in the short term. However, if the volume continues to shrink, it indicates that the market will need more time and patience to digest the adjustment.

Besides the tech sector, cyclical sectors such as non-ferrous metals and chemicals, which have price-increase logic, have also seen frequent high-level turnover recently. Given the ongoing decline in trading volume across both markets, these stocks also require waiting for more suitable entry points. If the market later shows a significant increase in volume, it could present new opportunities for deployment; until then, a wait-and-see approach is recommended.

In contrast, some defensive sectors and those with earnings support that haven’t been heavily speculative recently may not need to be overly worried during earnings reporting periods.

(Edited by: Zhang Yan)

【Disclaimer】This article reflects only the author’s personal views and is not related to Hexun.com. Hexun.com maintains neutrality regarding the statements and opinions expressed herein and does not provide any explicit or implicit guarantees regarding the accuracy, reliability, or completeness of the content. Readers are advised to use this information for reference only and assume full responsibility. Email: news_center@staff.hexun.com