Hexun Investment Advisor Li Peng: A-shares Five Consecutive Declines, 3.18 Response Strategy

This morning, the market was generally stable, with the three major indices only closing with small downward candles. The number of stocks closing in the red and green was roughly equal. Compared to yesterday’s broad decline, market sentiment has slightly improved. However, it’s worth noting that the main index has now closed with five consecutive downward candles, forming a five-day losing streak. Historically, the last time there was a five-day decline was when the index bottomed at 2,635 points, and a four-day decline was also seen over a year ago. Currently, the market is again showing signs of short-term oversold conditions, which suggests a cautious optimism.

In addition to technical signals, there are two news items before the market opens today worth paying attention to. First, the new regulations for securities lending and borrowing have been officially released. Previously, the market criticized quantitative funds for exacerbating volatility through same-day borrowing and selling. With the new rules, institutions can only borrow securities on the same day and use them the next day, which will effectively curb the impact of high-frequency trading on the market. Second, the China Securities Regulatory Commission has relaxed restrictions on long-term funds such as social security, public funds, and insurance, allowing them to participate more flexibly in short-term trading. Previously, large funds hesitated to operate freely due to concerns about crossing regulatory lines. The easing will help increase activity among market participants. Both measures are substantial positive signals.

Based on the above analysis, whether the market continues to decline or slightly rebounds in the afternoon is no longer the core issue. The conclusion is that the main index has entered an oversold zone, and there is no need to overly worry about the future trend.