Investment Advisor Market View: Afternoon Selloff, How to Interpret?

On March 20th, Gao Luming from Hexun Investment Advisory pointed out in today’s market analysis that the market dropped again on Friday, with nearly 4,800 stocks declining and market sentiment remaining subdued. However, investors should not overreact with panic selling in the short term; next week, the market is likely to see an important low point.

From a capital perspective, Gao Luming believes positive signals are accumulating. Funds had already started entering the market ahead of the close yesterday, and today this signal was further strengthened during trading. Near midday, the index quickly rebounded from a decline of 21 points to turn positive, with trading volume rapidly increasing from 60 billion to 170 billion yuan, indicating that over 100 billion yuan of funds chose to enter at this level. Although the gains were not maintained in the afternoon, the behavior of increasing capital inflows often signals that the bottom is not far off.

Additionally, regarding the adjustment cycle, this correction has lasted 14 trading days since the top on March 13th. Historically, a complete wave adjustment typically lasts between 13 and 18 trading days, so we are approaching the end of this time window. Structurally, the index has formed a clear three-wave correction pattern and is now in the final stage of wave C. Once wave C completes, the market is likely to see a strong rebound. Moreover, sectors like photovoltaics and new energy showed early signs of movement today, further supporting the view that the bottom is near.

Finally, from an emotional standpoint, Gao Luming also mentioned that although the midday plunge was unexpected, there are some positive signs. The rapid decline, quick bottoming, and swift rebound are typical features of the current correction. Today’s trading volume exceeding 170 billion yuan indicates some panic selling, which is also a common characteristic near the end of a correction. While a clear bottom signal has not yet appeared, the market is getting closer. He advises investors not to blindly buy the dip before the bottom is confirmed, to avoid being caught in the last stage of acceleration. For those already heavily invested and trapped, there is no need to panic and sell. Since the correction is nearing its end, patience and waiting for the rebound to come is a more rational approach—reducing positions at the high points and re-entering after a pullback is a better way to manage risk.