Sou Hu Cai Jing·2025-09-07 10:57Core Viewpoint - The current market has entered a consolidation phase after a prolonged bull market, primarily due to overheating trading conditions and a significant concentration of funds in the TMT sector, leading to a decline in risk appetite [1][2][4]. Market Characteristics - The market experienced a three-day decline from September 2 to 4, with the Shanghai Composite Index falling below the 20-day moving average, marking the first consolidation phase of the current bull market [2][4]. - The consolidation phase is characterized by a relatively mild index pullback of about 7%-9% and a longer duration of 1-2 months, with a tendency for the index to exhibit a trend of oscillation and recovery [2][11]. Sector Rotation - The rotation between sectors is driven by the previous high enthusiasm for AI computing power, which has not been fundamentally undermined. Attention should be focused on sectors that have lagged behind but still have positive growth prospects, such as new energy, new consumption, innovative pharmaceuticals, non-ferrous metals, basic chemicals, and non-bank financials [3][24]. - The dividend yield of the dividend sector has decreased recently, but the attractiveness of dividend assets remains strong due to the 10-year Treasury yield staying below 2% [3][27]. Risk Appetite and Market Support - The decline in risk appetite is attributed to several factors, including the nearing fulfillment of positive expectations from significant events and the Federal Reserve's interest rate cut expectations [2][7]. - Despite the current market adjustments, there are no substantial negative factors, indicating that market support remains robust, and the long-term upward trend is still intact [4][27]. Historical Context - Historical analysis of 11 bull markets shows that during consolidation phases, there is often a high-low switching pattern among sectors, with previously outperforming stocks experiencing larger corrections while underperforming stocks show resilience or rebound [11][22]. - The analysis of past cases indicates that the maximum drawdown during consolidation periods has been around 16%, with the average trading volume at the lowest point during these periods dropping to 30%-40% of previous highs [19][20].