Market Review Today
On April 13, the A-shares faced pressure in the morning, with the SSE Index dipping 0.17% during the session. In the afternoon, resource products and growth sectors joined forces to push the index into positive territory. By the close, the SSE Index rose slightly by 0.06% to 3988.56 points, the Shenzhen Index increased by 0.69%, and the ChiNext Index and STAR Market 50 rose by 0.8% and 0.79%, respectively. The total trading volume for the day was 2.16 trillion yuan, slightly contracting from the previous trading day but still at a high activity level.
There was significant divergence among sectors. The building materials sector led with a 2.81% increase, with the fiberglass index soaring 6.64% in a single day, and leading companies like China National Building Material and China Jushi hitting the daily limit. Power equipment rose by 1.22%, and the lithium mining index increased by 2.93%. On the downside, the media sector fell by 2.04%, and transportation dropped by 1.21%. The market currently tends to pay a premium for &#34;earnings certainty,&#34; with resource products becoming a consensus direction for funds.
The Essence of Trends: Fundamentals are the Only Force that Breaks the Balance
After spending a long time in the market, one gradually understands a simple truth: price fluctuations around value are normal, but what truly drives prices away from their original trajectory and into a trending market is not the temporary excitement or panic of emotions, but irreversible significant changes in fundamentals.
The so-called equilibrium state refers to a temporary balance achieved by the forces of supply and demand within a certain price range. Its typical characteristics are gradually converging trading volumes, continuously declining volatility, and prices oscillating repeatedly within a relatively narrow range, leading the market into an unclear oscillation period. This state can last for weeks, months, or even longer. During this period, various disturbances in news—such as a policy rumor, an industry data release, or a piece of geopolitical news—can cause prices to temporarily deviate from the center, but as long as there is no substantial change in fundamentals, prices will eventually return to their original positions, as if pulled back by a rubber band.
Many investors repeatedly enter and exit in a volatile market, trying to capture every small fluctuation. They chase in due to a favorable news today and cut out due to an unfavorable news tomorrow, often resulting in wasted transaction fees and a worn-out mindset, only to find that prices are still stagnant. The biggest trap in a volatile market is that it creates a false impression of &#34;many opportunities&#34; through frequent small fluctuations, while in reality, most fluctuations lack tradable value.
The Key to Breaking the Balance is Only One—Qualitative Changes in Fundamentals.
Such qualitative changes can manifest in various forms. They can be permanent contractions on the supply side, such as the clearance of production capacity for a key resource or geopolitical conflicts leading to irreversible restructuring of supply chains; they can be structural explosions on the demand side, such as the penetration rate of a new technology crossing a critical point or the arrival of a scaling inflection point for an emerging industry; or they can be systematic reshaping of a certain industry by the policy environment, such as fundamental adjustments to regulatory frameworks or redefinitions of industry standards. Regardless of the specific form, their common characteristic is that they change the consensus expectations of market participants regarding the future cash flow discounting of enterprises.
There is a key distinction that needs to be clarified: not all fundamental changes possess the level of &#34;qualitative change.&#34; Small fluctuations in raw material prices, seasonal fluctuations in quarterly sales, and marginal adjustments to individual policies—these belong to the &#34;quantitative change&#34; of fundamentals. They may trigger short-term fluctuations in stock prices but are insufficient to break the equilibrium state and give rise to trends
A true qualitative change is one that allows a sufficient number of market participants to realize that &#34;the original valuation framework is no longer applicable.&#34; When this consensus begins to spread, the seeds of the trend have already been sown.
The formation of a trend usually requires two confirmation signals, both of which are indispensable.
The first is the fundamental signal. It often appears in the form of industry data, financial report performance, or policy documents, telling the market that &#34;some things are different now.&#34; The characteristic of this stage is information asymmetry—only a few investors who have deeply researched the industry chain have noticed the marginal changes, while most remain immersed in the old narrative framework, skeptical about the nature and sustainability of the changes.
The second is the technical signal. When prices effectively break through the upper or lower bounds of a long-term trading range with increased volume, it means the market has voted with real money on the changes in fundamentals. The significance of this breakthrough lies in: it marks the convergence of divergences towards consensus, and the funds that were previously on the sidelines are forced to make directional choices. When both resonate, it is the day the trend is established.
However, what tests one's skills in trend trading is not identifying the trend itself, but finding the right entry point. The market has an intriguing characteristic: during the stage when fundamentals have quietly turned but most participants have not yet noticed, the random fluctuations in price often run counter to the direction of the fundamentals. This &#34;divergence period&#34; is precisely the best window for establishing a trend position.
This phenomenon occurs because there is a natural lag in the market's understanding of changes in fundamentals. When industry data begins to show marginal improvement, most people are still bound by memories of past declines, viewing every price rebound as an opportunity to exit, while every pullback is interpreted as &#34;see, it still doesn't work.&#34; The existence of this cognitive inertia makes the price movement during the early stages of fundamental improvement often appear hesitant or even awkward.
Until a certain critical point is triggered—perhaps a significantly better-than-expected financial report, or perhaps some authoritative data validating the industry trend—the market's consensus will be instantaneously reset. By that time, prices have often moved quite a distance away from the bottom area, and funds chasing the rise must face a cost disadvantage. Those funds that positioned themselves against short-term price fluctuations and in line with the direction of fundamentals during the divergence period gain a first-mover advantage.
It is important to emphasize that not all changes in fundamentals are worth participating in. Only those changes that are far-reaching, irreversible, and not fully priced in possess trend-level trading value. The judgment criteria can be simplified into three questions:
First, is this change cyclical or structural? Cyclical changes mean they will eventually revert, while structural changes may give rise to sustained trends. Second, to what extent has this change already been reflected in the current stock price? If the stock price has already been fully priced in advance, even if the change occurs as expected, the upward space will be limited. Third, at what stage is the market consensus regarding this change? Entering when consensus has not yet formed allows for excess returns; chasing when consensus is crowded often places one at the tail end of the trend.
Once these three questions are clarified, the approximate weight of positions and holding periods will also have answers
Trends never arise out of thin air; they are rooted in the soil of fundamentals. Technological breakthroughs are tools for confirming trends, not compasses for predicting them. The truly valuable moments for building positions often occur at that subtle juncture where fundamentals have quietly shifted, yet prices are still hesitating and lingering. Understanding this is more important than mastering any technical indicators.
Investment Message
In the short term, stock prices are a voting machine; in the long term, they are a weighing machine. Instead of chasing daily fluctuations, it is better to spend time understanding what value a company is actually creating. The truly good companies will reveal the answer over time.
Note: The market carries risks, and investment should be approached with caution. The content of this article is based on publicly available information and does not constitute any investment advice

399001

000001

159943

510300

510760

510210

Today's review of the A-share market shows that the SSE Index rose slightly by 0.06% to 3988.56 points, while the Shenzhen Index increased by 0.69%. The trading volume was 2.16 trillion yuan, indicating an active market but with significant differentiation. The building materials sector led the gains, while the media and transportation sectors declined. Market sentiment fluctuated frequently, and investors need to pay attention to changes in fundamentals to avoid losses caused by frequent trading in a volatile market. The key to breaking the market balance lies in the qualitative change of fundamentals

腾讯新闻 - 财经

Shenzhen Index

SSE Index

Dacheng SZSE Component ETF

Huatai-PB CSI 300 ETF

Guotai SSE Composite ETF

Fullgoal SSE Composite ETF

Breaking the deadlock in a volatile market, there is only one key to breaking the balance