Hexun Investment Advisor Liu Changsong: How to View A-shares Breaking Below the 4000 Point Mark?

On March 20th, Liu Changsong from Hexun Investment Advisory stated that the A-shares broke below 4,000 points. Whether you agree or not, I personally accept it. Let’s analyze from two perspectives: first, the index. After breaking support levels, support turns into resistance. When can we say the decline has stopped and stabilized? It requires confirmation on both the 60-minute and daily charts, and a successful break above the 5-day moving average, which I mentioned yesterday.

Next, looking at the profit-making effect, recent times have seen poor profitability, with difficult operations and fast pace. Although some viewers of my videos said they made money today, there weren’t many stocks rising today; most stocks declined significantly. So even if some made money, luck played a large role. In such market conditions, we need to wait for effective stabilization before focusing on when profitability will recover.

For long-term investment, the focus should be on structure. Although the macro cycle is influenced by market sentiment, the overall structure won’t change significantly. The overall trend of A-shares remains stable and improving, but the current pace is fast and the structure complex, making it hard to judge.

Specifically, the Shanghai Composite closed below 4,000 points, forming resistance in the upper range because of trapped positions. When support is broken and turns into resistance with trapped positions, the trend usually first forms an upper pattern, then a lower one. Currently, the Shanghai Index is below the 5-day moving average; only a successful break above it indicates stabilization. The 60-minute chart shows a double dead pattern, requiring a double golden cross to challenge and stabilize above the 5-day moving average. The 120-minute chart also shows a double dead pattern; only when both the 120-minute and 60-minute charts show double golden crosses can we judge that the decline has stopped and stabilized.

In Shenzhen, the index hasn’t broken below the lower band of the box, but testing that level is likely, and it is also below the 5-day moving average. Neither the 60-minute nor the 120-minute charts show a double golden cross, indicating both Shenzhen and Shanghai have certain representative significance.

Looking at today’s market ratio of gainers to losers, the situation is poor: only 662 stocks rose, while 4,786 stocks are waiting to rise. The market has entered a freezing point and shows signs of stagnation. When will this stagnation thaw? We need to watch the first hour of trading; if the market can stabilize, profitability can recover, and a structural recovery of profit-making effect is possible.

In summary, although the overall structure remains stable and improving, the current adjustment should not be ignored. Waiting for effective stabilization before further observation is advisable.