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On August 6, the market opened high and then fluctuated and diverged, with the ChiNext Index leading the gains and the Shanghai Composite Index falling. As of the close, the Shanghai Composite Index rose 0.23%, the Shenzhen Component Index rose 0.82%, and the ChiNext Index rose 1.25%.

In terms of sectors, education, photovoltaics, games, innovative drugs and other sectors saw the largest increases, while insurance, online ride-hailing, automobile manufacturing, banks and other sectors saw the largest decreases.

Overall, more stocks rose than fell, with more than 4,700 stocks rising in the market. The turnover of the Shanghai and Shenzhen stock markets today was 654.2 billion, down 136.3 billion from the previous trading day.

Yesterday was “Black Monday” and today is “Red Tuesday”, and the volatility in the peripheral markets remains intense.

Some people said that the U.S. stock market opened lower overnight without any suspense and the decline narrowed significantly, which gave the Asian market the confidence to rebound this morning; others said that yesterday's epic plunge was itself an excessive panic.

According to analysis, on the one hand, this is because investors have gradually calmed down from the panic over the impending recession in the U.S. economy and have adjusted their investment strategies toward Japanese stocks and other Asian markets.

On Monday, the ISM Services PMI index for July released by the Institute for Supply Management rebounded to 51.4, in line with market expectations. The employment index jumped 5 points to 51.1, indicating that last week's non-agricultural report may have exaggerated the weakness of the US labor market.

On the other hand, the rebound in Japanese stocks on Tuesday may be related toExiting the Carry Trade WaveIt also has something to do with the gradual calming down.

Some overseas investors predicted before the opening of Japanese stocks that the shocking historical trend in Asian markets on Monday was mainly due to the large-scale liquidation of margin positions, so it is expected that there will be a strong rebound in the market after the opening of Tuesday.

However, the person also warned that after such a fierce leverage adjustment, major Japanese banks have suffered heavy losses and now only the bravest people may dare to enter the market.

Regardless of the real logic of the rise and fall, look at the candlestick chart below and you will find that the storm has not subsided yet.Now is definitely not the time for conservative right-side traders to enter the market.

it is known,The "reversal" action after the big drop is very importantBecause this indicates a trend change, the rebound of the stock index is often more credible than that of individual stocks.

Let's do a simple calculation:

The Nikkei 225 index, which suffered a record drop of 12.4% yesterday, rose as much as 11% during trading today and closed up 10.23%. So how many points is the current price away from reversing Monday's negative line?

The answer is about 1.65%.

If the index wants to recover the losses since last Thursday, it will need to rise by about 10% starting tomorrow.

Today's rebound in the Korean stock market ended up with only a bearish cross, so the willingness to reverse is naturally weaker.

Why do we recommend you to do such calculation questions?

Because in the stock market, it is important to have a set of "return formulas". To borrow the words of a netizen:

If it drops by 10%, or rises by 11.1%, your investment will be recovered.

If it drops by 20%, it will need to rise by 25% to recoup the investment.

If it drops by 30%, it will need to rise by 42.8% to recoup the investment.

If it drops by 40%, it will need to rise by 66.7% to recoup the investment.

If it drops by 50%, it needs to rise by 100% to break even.

can be seen,After the loss exceeds 20%, it becomes increasingly difficult to recover the investment.Therefore, many investors and institutions set a 20% loss rate as their liquidation line.

For investors, it is equally important to admit mistakes and stop losses in a timely manner and to realize profits in a timely manner.

Back to A shares, let’s look at an extreme example:

In today's early trading, the big bull stock that went up 11 times yesterdayTenda TechnologyThere was a huge shock with large volume. After hitting the limit down at 9:35, it rebounded at 9:39 and finally hit the limit up at 10:10. However, affected by the decline of the market and the retreat of high-priced stocks, it exploded before the close of the morning. It was unable to rise in the afternoon and finally hit the limit down again at the end of the trading day.

If you buy at the lower limit in the morning and sell at the higher limit, you can treat it as a 20cm big T. At the very least, you can recover some losses.

But today, a certain netizen's operation was circulated online, and the screenshot showed that he cleared his position at the lower limit price and bought it back at the upper limit price.

Everyone already knows the subsequent trend, so we have to do calculations again:

Assuming that all operations are full-position, no more funds are replenished, and transaction costs are not considered, how much did this investor who sold at the lower limit and bought back at the upper limit lose by the end of the day?

The answer is about 26%. If you don’t cover your position or exchange shares, the stock needs to rise by about 35% to get your money back.

To be honest, is this easy?

Compared with the ups and downs of Tengda Technology, other popular stocks at high levels today, such as Volkswagen Transportation, King Long Automobile, Jinjiang Online, etc., have not made much movement after the limit down. The daily loss of holders may be "only" 10%. What lies ahead for them is what to do tomorrow.

Some analysts said that the direction of high-priced stocks holding together has begun to loosen, and today's index performance was weak mainly due to the decline of heavyweight sectors such as large financial sectors, but the sentiment at the individual stock level is still good (more than 4,700 stocks rose), and some compensatory growth opportunities can still be found in the high-low rotation in the future.

For example, today, funds from the market rebound have flowed into education, photovoltaics, games and other sectors.

The decline of the banking sector can be understood asThe recent small-cap stocks are active and the correction of dividend stocks continues。

Haitong Securities Research Report pointed out that ① After May this year, the excess returns of the dividend sector gradually converged and the internal trends diverged. The main reason behind this may be the concentration of funds and the decline in investment cost-effectiveness, similar to the core assets in 2021. ② The current internal performance differentiation of the dividend sector is due to the differences in company performance and the advancement of state-owned asset reform. The sub-sectors of state-owned asset reform with better fundamentals and involving market value management may be more preferred. ③ The Politburo meeting emphasized counter-cyclical regulation. The policy increase in the second half of the year may promote the recovery of fundamentals. The improvement of overseas liquidity is expected to support the A-share center to step up. Structurally, we will focus on high-end manufacturing with superior performance.

As for the insurance sector, the Financial Regulatory Bureau issued the "Notice on Improving the Pricing Mechanism of Life Insurance Products" to the industry on August 2, requiring that from September 1, the upper limit of the scheduled interest rate for newly registered ordinary insurance products will be 2.5%; from October 1, the upper limit of the scheduled interest rate for newly registered dividend insurance products will be 2%; and the upper limit of the minimum guaranteed interest rate for newly registered universal insurance products will be 1.5%. It is worth noting that the "Notice" proposed for the first time to establish a mechanism for linking the scheduled interest rate with the market interest rate and a dynamic adjustment mechanism.

Some analysts pointed out that the sharp drop in the insurance sector was mainly due to the recent rapid downward trend in interest rates and the greater uncertainty on the sales side after the scheduled interest rate cut, which aggravated market concerns. After July, under the influence of the high base and the proactive reduction of the commission rate for incremental life insurance, the performance of new orders and value was relatively weak. The market was worried that after the pricing rate cut, the liability side of TaiPing Insurance, which relied more on incremental life insurance, would be hit harder.

Investment is risky, independent judgment is important

This article is for reference only and does not constitute a basis for buying or selling. You should bear the risks of entering the market at your own risk.

Cover image source: Screenshot of market software

Reporter Zhao Yun, Editor Xiao Ruidong

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