Bullish on tomorrow's market!!

$SentinelOne(S.US)hanghai Composite Index sh000001$ Shanghai Composite Index sh000001 Today's A-share market was quite interesting, following a path of "protecting the index while individual stocks fell"—major indices first fell then rose, bottomed out and rebounded, but sectors and individual stocks collectively weakened, with most stocks falling throughout the day. At the close, indices were mixed, but individual stocks were bleak.

To explain why this happened, the core issue is the divergence between large and small sectors. You see, big players like securities and insurance actively supported the market, but consumer stocks and Hainan-related stocks kept falling, dragging down thematic stocks with them, resulting in a weak and divergent market performance for the day.

Today, indices were mixed, but individual stocks fell broadly, mainly for the following reasons:

First, large-cap stocks played the trick of "only protecting, not lifting." At the open, both large and small stocks fell together, dragging the market down. At the crucial moment, the securities sector stepped in to stabilize the situation, and later the insurance sector took over. These two became the most active players in market support today.

Second, thematic stocks collectively "lay flat." Looking at today's losers, the top decliners were mostly thematic stocks, especially consumer-related and concept stocks, such as hotels, tourism, Hainan-related sectors, and free trade zone stocks, which fell sharply. With these two hot spots cooling off, other thematic stocks were dragged down as well.

Third, trading volume in the Shanghai and Shenzhen markets shrank again, and by a significant margin. Investors closely watching liquidity would have seen that after the open, trading volume kept declining, indicating weak new capital inflows and low trading interest. The worst part is that this directly pushed the market into a "cash crunch" dilemma.

Fourth, the overall environment for A-shares is indeed weak now, unable to withstand even minor turbulence. Over the past three trading days, indices have been oscillating near short-term moving averages, eroding market and investor confidence. More and more investors are adopting a wait-and-see approach, and risk-averse sentiment is rising. Many fear their holdings will be trapped, worrying that A-shares might fall further.

Ultimately, this all boils down to technical issues. The 5-day and 10-day moving averages have been breached, indicating a downward shift in market momentum. As a result, the market environment is worsening, and many investors are hesitant to act, waiting for clearer signals. Thus, today's weak divergence is closely tied to the market environment and investor sentiment.

Tomorrow is Friday, and I think there's a high probability that this short-term consolidation will end, with a strong rebound and rally. Heavyweight stocks will push the indices higher, and tech stocks will lead thematic stocks in a collective surge. In other words, tomorrow is likely to see a strong rally after the consolidation. Overall, I'm quite optimistic about tomorrow's market.