Panic selling has arrived! Today, the Shanghai Composite Index opened with a gap down and continued to decline throughout the day, showing no resistance at all, and continuously setting new lows! As the decline in the Shanghai Composite Index continued to widen, the entire A-share market followed suit, with the entire market turning green, and today is another day of harvesting leeks, which is too tragic!
Especially during the afternoon session, the Shanghai Composite Index fell even more sharply, indicating that panic selling pressure has emerged, which means that the selling of flesh-cutting chips or risk-avoiding chips has occurred, implying that the A-share market has completely collapsed today! However, what many investors did not expect is why the Shanghai Composite Index suddenly plummeted today. The actual reasons are as follows:
What is the trigger for the gap-down crash?
In fact, the decline in the Shanghai Composite Index today was expected, but the gap-down crash was indeed unexpected!
It turns out that the trigger for today's gap-down crash in the Shanghai Composite Index was the "collective decline of global stock markets." European and American stock markets fell, and Asia-Pacific stock markets also fell, with global stock markets experiencing varying degrees of decline.
The trigger for the global stock market decline was the far lower-than-expected U.S. non-farm data in August, leading to market concerns and triggering investor panic selling, putting pressure on European and American stock markets to fall. This concern-driven decline spread to the Asia-Pacific stock markets, thus igniting the trigger for today's gap-down crash in the Shanghai Composite Index.
Advertisement
What are the reasons for the gap-down crash?
The stock market does not crash without reason, especially a gap-down crash. Through careful observation of the market, the real reasons are as follows:
Reason one: The large-cap stocks are responsible for the Shanghai Composite Index's decline, with the three major financial stocks falling collectively, and liquor stocks leading the decline. Additionally, public transportation plummeted by 7%, and resources stocks such as oil, coal, and non-ferrous metals all fell sharply. Therefore, the collective decline of large-cap stocks is the real culprit behind the Shanghai Composite Index's crash.
Reason two: The A-share market has entered a panic, reaching the most risky stage of selling; mainly because the Shanghai Composite Index has formed a 45-degree downward trend, which is the result of continuous new lows for six consecutive days. No one can withstand such a decline, and it will inevitably trigger market panic selling, igniting the trigger for a plunge.Reason Three: Due to the strong short-selling force inherent in A-shares that can drive the market down, this force is adept at seizing opportunities. Whenever A-shares decline, the short-selling force will exert its influence to drive the market down. For instance, quantitative funds, short-selling securities, foreign capital, stock index futures, or main force funds, there is inevitably a strong short-selling force that is currently driving down today's A-shares.
Will the selling accelerate tomorrow?
Currently, A-shares are experiencing the most risky and coldest winter, and it is evident that they have entered a phase of accelerated decline. It would not be surprising if there is another round of accelerated selling tomorrow.
It is expected that A-shares will open lower and decline collectively tomorrow, and during the session, they will inevitably face short-selling pressure, leading to accelerated selling. However, the speed and duration of this accelerated selling will be brief. At this moment, mysterious funds should step in to support the market, indicating a higher probability of a "rebound after suppression" scenario for tomorrow.
To put it bluntly, A-shares will indeed experience accelerated selling tomorrow on Tuesday, but after the accelerated selling, a counterattack by the bulls is expected, and it might even mark a genuine stopping point for the decline. There are two reasons for this:
Reason One: Following today's significant drop in the Shanghai Composite Index, panic has set in among the A-share market and investors. When panic-driven selling emerges, it will inevitably lead to accelerated selling. Coupled with the fact that the index is in a phase of accelerated bottom-seeking, it is an inevitable trend to drive the market down in search of a bottom, thus leading to the belief that A-shares will continue to decline tomorrow.
Reason Two: Should the Shanghai Composite Index indeed experience accelerated selling tomorrow, and it falls near the 2700-point mark, it would be very close to the bottom. At such a critical juncture, mysterious funds should step in to support the market, and the national team should act, not allowing A-shares to continue their downward spiral, and will inevitably defend the market with full force.
In conclusion, from the above analysis, it is clear that today's gap-down significant drop in the Shanghai Composite Index was mainly due to the drag of the global stock market decline, as well as the impact of large-cap stock selling, panic-driven selling pressure, and short-selling forces. Following this selling trend, A-shares will likely experience accelerated selling tomorrow on Tuesday, so let's wait and see.
In summary, after a series of consecutive declines in A-shares, the final accelerated selling is not to be feared. There will be a significant rise after a significant drop. At this moment, do not panic, and do not blindly sell out. Lie flat and wait patiently; do not become a victim in the darkest hour before dawn.