A shares suddenly plunged, what happened? Will they continue to fall tomorrow? If nothing unexpected happens, A shares will recover tomorrow!
1. Two message disturbances
The market opened sharply lower in the morning and then went up all the way, turning red at one point, creating a hot scene. However, it weakened and plunged in the afternoon due to the news. There were mainly two pieces of news. One was that there was a new geopolitical change between North Korea and South Korea, and the market was worried that the conflict would spread to Asia. The other was that Bloomberg reported that China had begun to tax the overseas investment income of its super-rich, and the tax rate could be as high as 20%.
Geopolitics caused the military industry to rise in the afternoon, and the taxation of the rich was reflected in the decline of Hong Kong stocks. Rationally speaking, the two pieces of news have no substantial impact on the A-share market, but only bring about emotional changes. However, at this time, the A-share market is in a period of intense long-short game, and short-term disturbances will cause changes in the long-short balance of the market. Of course, the possibility of these two reasons continuing to ferment is not great, and the disturbance will end in the short term.
2. Fierce competition between long and short positions
On the market, the game between bulls and bears continued to be fierce, and the index showed wide fluctuations, from a sharp drop to an increase, and then to a dive, with great fluctuations in sentiment; the public opinion outside the market was also very intense. Two well-known big Vs cursed at each other because of their different bullish and bearish views, and were banned one after another; in addition, the trading volume continued to maintain at 1.6 trillion, and the active trading also reflected the fierce game between bulls and bears.
The current fierce competition between long and short parties is based on the long-term excessive decline and the short-term excessive increase, which is also the inevitable process for the long-term downward trend to change. The result of this long-short game is that the index shows a volatile trend, and the sectors show differentiation and rotation. Therefore, the focus of the later operation is to pay attention to future expectations, such as the third quarter report, changes in industry prosperity, and policy drivers.
3. Quantification
According to the news, the Shenzhen Stock Exchange has recently issued a notice to some securities firms, requiring them to complete the reporting of new stock programmed trading accounts before October 18, 2024 (Friday), and continue to strengthen the monitoring, supervision and screening of programmed trading to ensure that qualified accounts are reported in a timely manner.
This means that the exchange has paid attention to the quantitative trading provided by securities companies for large customers, which is likely to greatly curb the growth of the scale of the entire quantitative trading. From this round of stock market rise, the performance of quantitative trading is generally poor, and even some quantitative long-short balance products have even faced liquidation risks. It can also be seen that quantitative trading is the main force of short selling. Start with quantitative trading as soon as possible.
4. About the market
A-shares were doing well, but two unexpected events led to a sharp drop in the final close. Market changes caused by unexpected factors cannot be predicted because you cannot predict the occurrence of such news.
What will happen tomorrow? If nothing unexpected happens, there should be a low point tomorrow, which is a good opportunity to buy. Recently, you can consider doing some spreads, because the second round of pull-ups lacks the support of brokerages, and the timing of starting is unclear for the time being.