After two trading days of rapid gains in the A-shares post-Chinese New Year, today’s situation may be about to change. The main index approached the 4100-point psychological level, and although the trend remains strong, there is a high probability of short-term consolidation at high levels. After 13 consecutive positive days, the first decline is very likely to occur today.

This is not necessarily a bad thing. The magnitude of the first decline should not be large, and the index will still stay above the 5-day moving average. Essentially, this is a form of proactive rhythm control, aimed at digesting profit-taking and shaking out weak hands. If you interpret this as a breakdown of the trend and a plunge, then you are mistaken.

The truly important signals actually come from individual stocks. Although the index is still pushing higher, the number of declining stocks is clearly increasing, which is completely different from the atmosphere of the past two days. To judge whether market sentiment is declining, it’s not enough to just look at whether the index will fall sharply; the key is to observe changes in the number of stocks rising and falling. Last night, multiple strong stocks were suspended for inspection, which in itself suppresses short-term sentiment. Additionally, many companies issued reduction announcements—every time the index surges to new highs, the number of reduction notices increases. These are important indicators to assess short-term market sentiment through regulatory attitudes and major shareholder behaviors.

The broad rise in individual stocks did not reappear after the opening; instead, the number of declining stocks increased. If a situation develops where declines outnumber advances, then even if the index pushes higher, a pullback is inevitable. This reflects the drag of sentiment on the index.

Today, the major financial sector will lead the index’s rhythm. Looking at the performance of brokerages, insurance, and banks reveals the pattern—oscillations up and down, surging then retreating, and sideways trading. The entire financial sector lacks uniform upward momentum, indicating that today’s focus is on controlling gains rather than continuing to break through. From the performance of the financial sector, we can infer that the expectation of a high-level pullback and consolidation will also be fulfilled.

Market liquidity also shows signs of suppression. After the holiday, trading volume increased from just over 2 trillion yuan to over 2.8 trillion yuan, indicating that large institutional funds have entered the market. However, don’t assume that the market will accelerate just because volume has expanded rapidly. From a slow bull perspective, these days the index has risen somewhat aggressively. The spring market needs to slow down appropriately; sideways consolidation at high levels is actually more conducive to a slow bull trend, providing ample time for both bulls and bears to rotate positions.

Based on this logic, today’s A-shares are likely to see reduced trading volume—that is, relatively lower volume, indicating a cooling of trading activity. The trading volume surpassing 2.5 trillion yuan suggests that confidence in the bull market has been restored. However, after a short-term emotional peak, it is necessary to suppress trading activity to control rapid gains.

Overall, today’s market will show a clear change compared to the past two days. Although the index remains at a new high for the phase, individual stocks are no longer resonating with the index. Coupled with the fact that the Asia-Pacific markets are also mainly consolidating this morning, it indicates a higher probability of consolidation in the A-share market today.

The global financial markets are trending upward, and the spring trend in A-shares is unfolding. However, in the short term, attention should be paid to the pullback after reaching new highs. This pullback is part of the trend’s buildup; don’t always expect the index to return to 3816 points or even lower. Once the trend is established, there’s no need to keep waiting for a chance for missed-out funds to re-enter.

For domestic funds, it’s necessary to adjust positions and rotate stocks during high-level consolidation, shifting holdings from those with large gains to other sideways or potential breakout sectors. For external funds that missed out, many stocks’ pullbacks are actually opportunities to gradually build positions. Since they missed the index rally, they should not miss out on individual stock opportunities either.

Currently, the index is becoming more stable, and opportunities in thematic stocks are increasing. The leading sectors today, such as photolithography and semiconductors, have been analyzed yesterday. The review of export licenses for rare earths, along with benefits for domestic substitutes in rare earths, electronic chemicals, and semiconductor equipment, is positive. The entire spring market remains centered around technology, because after trading volume expands, funds will first favor sectors with greater elasticity for speculation.

When technological stocks stop rising and phase consolidation occurs, funds will shift to defensive sectors, such as pharmaceuticals, consumer goods, or high-dividend yield sectors. This is the market’s natural rhythm. Given the current atmosphere, once tech stocks lose momentum, in the short term, either some profits should be taken at high levels, or funds should rotate into defensive sectors, or investors should patiently wait for trend divergences to add positions.