Today's trading volume surged dramatically to 3.135 trillion yuan, an increase of 758 billion yuan from yesterday. Behind this sudden volume spike, the indices performed a dramatic rise-and-fall scenario.
In the morning session, driven by continued fermentation of SMIC's DUV testing news, the market capitalized on this development, leading semiconductor stocks to collectively strengthen. The Shanghai Composite Index once surged to 3899.96 points, hitting a new short-term high. However, the afternoon brought sudden changes as the three major financial sectors - securities, insurance, and banking - collectively plummeted with declines exceeding 2%, directly overturning the market sentiment.
The risk signals were actually present early on. Two days ago, warnings were issued that if bears increased volume during declines, it would trigger further attacks. The morning session's decline already showed obvious volume expansion signs, but the market was immersed in the euphoria of the surge, completely ignoring the lurking risks.
What's more concerning is that the securities sector is currently just one step away from the seasonal line. Compared to insurance and banking, its potential adjustment space may be larger. Yesterday's analysis clearly indicated that while there were upward opportunities from Monday to Wednesday, the bulls had already shown signs of exhaustion.
Today's apparent opportunity to capitalize on gains actually concealed traps - many investors who chased the morning surge ended up trapped by the afternoon reversal. The height driven by sentiment-led index over-rallies must eventually be pulled back to reality by fundamentals. When the index should have entered a correction phase around 3500 points, market sentiment couldn't cool down, forcing nearly 400 additional points higher, now pushing securities, insurance, and banking into head-and-shoulders patterns.
Consider this: if the index wants to continue challenging 4000 points while core weighted sectors are consolidating, is this possible? More critically is the capital flow issue - when the three major financial sectors decline, will funds necessarily rotate to small and mid-cap stocks? Not necessarily.
Banking stocks are mostly institutional favorites, and once this clustering loosens, the chain reaction from capital rotation is more worrisome. Don't forget that previous reports have explicitly mentioned "excessive capital concentration in technology tracks" - this structural imbalance harbors inherent risks.
From a volume perspective, today's decline accompanied increased volume, with the volume trend showing a downward breakthrough slope - this signal is quite ominous. This bearish candle has the flavor of an initial decline. If the head pattern is formally established subsequently, the index will ultimately return to fundamentals.
Regarding market expectations for next week's central bank interest rate cuts, while weak economic data indeed requires policy stimulus, does the 3899.96 point level really still need interest rate support? This isn't the 3000-point level that urgently needed market rescue.
Interest rate cuts at 3000 points provide support, but rate cut expectations before 4000 points feel more like market greed. At 3899 points, expectations for interest rate support seem inappropriate - policy stimulus should match fundamental lows, not markets pushed up by sentiment.
For the index to escape the shadow of a top formation, it either needs weighted sectors to repair valuations and resume leadership, or technology tracks to deliver performance-backed rallies. Otherwise, returning to reasonable valuation ranges will be an inevitable process.