Market Overview - The recent trading volume in the A-share market has decreased significantly, nearly 40% from the peak in April, indicating a lack of market momentum [3] - There are two positive signals: foreign institutions have upgraded China's sovereign credit rating while downgrading the US rating, suggesting potential foreign investment in A-shares [3] - Regulatory bodies are encouraging financial institutions to act as stabilizers, which may lead to support from major financial sectors like brokerage and insurance, as their valuations are approaching historical lows [3] Pre-Festival Market Sentiment - The market is experiencing a "pre-festival syndrome," where investors are cautious due to potential risks during the holiday, leading to profit-taking [3] - Historical data shows a 70% probability of market adjustments in the two trading days before the festival and the week after, known as the "Duanwu effect" [4] - However, current policy measures, including recent interest rate cuts, may disrupt this historical trend, providing a more favorable environment for investors [4] Investment Strategy - Investors are advised to manage their positions carefully, maintaining liquidity to respond to unexpected market changes [4] - Defensive sectors such as banking, energy, and public utilities are recommended for their stability and dividend potential, providing a safety net during market volatility [4] - Investors should look for right-side signals, such as trading volume exceeding 1.5 trillion or brokerage sector trading volume surpassing 5%, as indicators of market strength [4] Market Positioning - The current market is at a critical point of "low volume and low price," suggesting a potential convergence of policy and market bottoms after the festival [4] - Historical experience indicates that market corrections often present investment opportunities, emphasizing the importance of long-term commitment in investing [4]