Core Viewpoint - The current A-share market is experiencing a paradox of "index rising with shrinking volume," indicating potential risks of a false breakout, similar to historical patterns observed in March 2025 [1] Group 1: Volume-Price Divergence - The index has risen while trading volume has decreased to around 800 billion, close to the lower end of short-term liquidity [3] - Historical data suggests that a genuine breakout requires volume to increase by more than 300% and be sustained, whereas current volume is only one-third of peak levels, indicating weak buying interest from major funds [3] - A true breakout example occurred in February 2025 when a significant volume increase of 320% led to a doubling of stock prices within a month [3] Group 2: Fund Diversification - Despite a broad rise in individual stocks, the flow of funds reveals the intentions of major players, with significant concentration in a few leading stocks in the new energy sector, such as solid-state batteries and photovoltaic equipment [5] - Financial stocks, including banks and insurance, have shown a decline, yet their intraday movements have artificially boosted the index, creating a "false prosperity" scenario [5] - Today's net inflow of major funds was only 42.7 billion, a significant drop compared to previous inflows that often exceeded 100 billion, with funds highly concentrated in specific sectors [5] Group 3: Technical Divergence - Three major technical indicators signal potential risks: MACD divergence, where the index rises but MACD histogram shortens, and RSI shows overbought conditions [6] - The Shanghai Composite Index remains below the 5-day and 10-day moving averages, with the 20-day moving average acting as a critical support level [7] - A disorganized distribution of shares before the breakout, with some popular stocks showing over 30% turnover but stagnant prices, suggests potential selling by major players [7] Historical Context - A historical reference from August 2025 indicates that after a 26% volume drop, a false breakout occurred at 3700 points, leading to a subsequent retest of lower levels [8] - Investors are advised to use a "3-day confirmation" rule to assess the stability of key levels post-breakout, maintaining a conservative position [8] - A strategy of retaining leading stocks while liquidating those without performance support is recommended [8] Conclusion - The current market is in a "weak recovery" phase, characterized by a shrinking volume rise, which is more indicative of a bear market retreat rather than a strong bull market [9] - Investors should remain cautious, as 80% of breakouts are likely false, and only a combination of volume, funds, and technical analysis can help identify potential traps set by major players [9]