Zhongtai: The market broke the trend line and returned to a pattern of consolidation with decreasing volume.

Zhongtai released a research report stating that the market is in a volatile pattern, with the key variable being the change in risk appetite. In the short term, next week's two sessions will come to a close, and risk appetite may decrease accordingly; the conflict in the Middle East continues, causing a sharp rise in oil prices which will suppress risk appetite. In terms of price and volume, the market saw a rebound with decreasing trading volume on Thursday and Friday, but the decrease in turnover is still below the critical value of the model, indicating a possibility of a continuation of the downward trend. Overall, the current market is in a volatile pattern, and the short-term adjustment may not have ended yet. Patiently waiting for turnover to shrink below 2 trillion yuan may bring about a rebound. Zhongtai's main points are as follows: Last week's indication: In the short term, as the two sessions approach, the overall market has been relatively stable in the past ten years; however, the conflict in the Middle East may suppress risk appetite. Ultimately, the Wind A index fell by 2.3% for the whole week. In terms of market capitalization, the small-cap stocks represented by the CSI 1000 index dropped by 3.64% last week, the mid-cap stocks represented by the CSI 500 index fell by 3.44%, the CSI 300 index dropped by 1.07%, and the CSI 50 index declined by 1.54%; among the first-tier industries of the CSI, the industries with the highest gains last week were petroleum and chemical, and coal, with a 7.18% increase in petroleum and chemical, while media and computers performed weakly, with media down by 6.96%. In terms of trading activity last week, there was a noticeable capital inflow into the petroleum and chemical as well as the agricultural industries. From the perspective of timing system, the difference between the long-term moving average (120-day) and the short-term moving average (20-day) used to distinguish the overall market environment has significantly narrowed, with the latest data showing the 20-day moving average closing at 6784 and the 120-day moving average closing at 6432 points. The short-term moving average continues to be above the long-term moving average, with the difference between the two lines at 5.47%, the absolute value of the distance continues to be greater than 3%, and the market trend line is near 6790 points. The profit effect has just begun to turn negative, at -0.1%, indicating that the market has entered a volatile pattern. The market is in a volatile pattern, with the key variable being the change in risk appetite. In the short term, as the two sessions come to a close next week, risk appetite may decrease accordingly; the conflict in the Middle East is still ongoing, causing a sharp rise in oil prices which will suppress risk appetite. In terms of price and volume, the market saw a rebound with decreasing trading volume on Thursday and Friday, but the decrease in turnover is still below the critical value of the model, indicating a possibility of a continuation of the downward trend. Overall, the current market is in a volatile pattern, and the short-term adjustment may not have ended yet. Patiently waiting for turnover to shrink below 2 trillion yuan may bring about an effective rebound. In terms of allocation, the mid-term industry allocation model shows that the TWO BETA model continues to recommend the technology sector and suggests paying attention to the oversold rebound opportunity of commercial aerospace (ETF 563230.SH). The performance trend model suggests focusing on the industrial chain related to computing power (semiconductor equipment ETF 159516.SZ, communication ETF 515880.SH) as well as the cyclical (oil and gas ETF Huatai code 159309.SZ, energy and chemical ETF Jianxin code 159981.SH) and agricultural (agricultural ETF Yifangda code 562900.SH) sectors. In addition, in a defensive strategy, one can consider focusing on the bank ETF in the short term. In terms of valuation indicators, the Wind A index's PE ratio is near the 90th percentile, indicating a relatively high level, while the PB ratio is at the 50th percentile, indicating a moderate level. Combined with the short-term trend judgment, according to the position management model, it is recommended to allocate 60% of the portfolio to stocks with Wind A as the main asset in absolute return products. Timing system signals show a 5.47% difference in the moving averages, the absolute value of the difference continues to be greater than 3%, and the market trend line is near 6790 points. The profit effect has just begun to turn negative, at -0.1%, indicating that the market is in a volatile pattern. The market is in a volatile pattern, with the key variable being the change in risk appetite. In the short term, as the two sessions come to a close next week, risk appetite may decrease accordingly; the conflict in the Middle East is still ongoing, causing a sharp rise in oil prices which will suppress risk appetite. In terms of price and volume, the market saw a rebound with decreasing trading volume on Thursday and Friday, but the decrease in turnover is still below the critical value of the model, indicating a possibility of a continuation of the downward trend. Overall, the current market is in a volatile pattern, with the short-term adjustment may not have ended yet. Patiently waiting for turnover to shrink below 2 trillion yuan may bring about a effective rebound. Zhongtai's mid-term industry allocation model shows that the TWO BETA model continues to recommend the technology sector and suggests paying attention to the oversold rebound opportunity of commercial aerospace (ETF 563230.SH). The performance trend model suggests focusing on the industrial chain related to computing power (semiconductor equipment ETF 159516.SZ, communication ETF 515880.SH) as well as the cyclical (oil and gas ETF Huatai code 159309.SZ, energy and chemical ETF Jianxin code 159981.SH) and agricultural (agricultural ETF Yifangda code 562900.SH) sectors. In addition, in a defensive strategy, one can focus on the bank ETF in the short term. Risk warning: Market environment change risk, model based on historical data.