Resistance from moving averages has become increasingly pronounced, bringing the broader market's five-day winning streak to an end.
On August 11, the Shanghai Composite Index opened slightly lower and continued to fluctuate, with multiple intraday rallies failing to turn positive. Selling pressure intensified significantly as the index approached the 250-day moving average. The decline widened in the afternoon session, with the Shanghai Composite Index pulling back toward the 5-day moving average. The Shenzhen Component Index briefly recovered during the session, temporarily holding above the 30-day moving average before a sharp intraday reversal, ultimately closing just above the 5-day moving average. Among the three major indices, only the ChiNext Index managed to buck the trend and close in positive territory. It is noteworthy that key weighted stocks, including Zhongji Innolight Co.,Ltd. (300308) and Eoptolink Technology Inc.,Ltd. (300502), which had weighed on the previous session, rebounded, providing support for the ChiNext Index to finish in the green.
At the close, the Shanghai Composite Index finished at 3,934.09 points, down 0.82%; the Shenzhen Component Index closed at 14,259.44 points, down 0.4%; and the ChiNext Index ended at 3,549.16 points, up 0.34%. After the rebound stalled, investor sentiment turned more cautious. Total turnover across the Shanghai, Shenzhen, and Beijing exchanges reached 2.3357 trillion yuan, a contraction of 200 billion yuan from the previous trading day.
In terms of sector performance, only a few industries, such as oil, telecommunications, pharmaceuticals, and banking, posted modest gains. Sectors like non-ferrous metals, national defense and military, chemicals, and transportation were among the top decliners. On the stock level, more than 1,600 stocks across the entire A-share market advanced, including 60 that hit the daily limit up, marking a noticeable decrease in limit-up stocks compared to the previous session. Conversely, nearly 3,800 stocks declined, reflecting a broad-based sell-off after several consecutive days of recovery.
With the rebound meeting resistance, downward pressure on the market has clearly increased. Securities analyst Wang Xiaoli, who was interviewed, commented: "Considering the market has rallied for several consecutive days, accumulating significant unrealized gains, and has repeatedly failed to break through the 250-day moving average, a short-term pullback is likely to occur for a new round of consolidation." Wang further analyzed that the Shanghai Composite Index should watch for support from the 5-day and 30-day moving averages. A breach of the 3,900-point integer level could face significant downside risk. The STAR 50 Index has fallen back below its upward trend line. If it fails to recover this line in the short term, the possibility of moving back toward its previous lows cannot be ruled out. Investors are advised to control positions, avoid chasing rallies or panic selling at current levels, and wait for the index to stabilize before taking action.
"From a trend perspective, the A-share market is still in a phase of bottoming and consolidation, and it has not yet exited the pattern of repeated volatility at the bottom," said Chen Yuheng, a senior investment consultant at Jufu Investment Advisors. "This round of recovery is essentially a sentiment-driven rebound following an oversold condition, not a trend reversal. The foundation for a sustained uptrend is not solid. Furthermore, the market's deleveraging process is not yet complete. Negative factors, such as expectations of external rate hikes and persistently low domestic trading volumes, remain. A second dip in the short term is a distinct possibility, and volatile swings will become the norm. However, from a medium-term perspective, the valuation floor of A-shares is solid, and the policy support logic is robust. The overall downside for the market is limited. The medium-term trend of fluctuating upward remains unchanged, and the short-term adjustment actually lays a stronger foundation for future market recovery."
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