Market Pullback: Opportunity or Risk?

Today, as tech stocks across the board pulled back, the broader A-share market opened lower and moved steadily downward. Early on, real-estate and non-ferrous metals staged a first-wave rally that pushed the benchmark index to an intraday high near 3,856, but the rebound came on thin volume and soon fizzled. In the afternoon, liquor names tried a second-wave lift, yet still failed to turn the tide—by then most traders had already mentally checked out for the holiday, a ritual repeated before every long break: “old bulls” out of ammo, “young cubs” hitting the sell button, leaving the market to limp home in the red.

Market breadth was ugly—more stocks down than up. Leaders on the downside were copper-cable/ high-speed interconnects, NVIDIA concept, CPO, AI-phone/PC, cloud gaming and digital-tax software. The winners were niche plays such as plant-based meat, combustible ice, pest-control, rental-equity, desert-reclamation and arms-trade themes. Around 60 stocks hit limit-up while nearly 30 locked limit-down. ChiNext cratered more than 2 % and under-performed the main board.

The engine of this rally has unquestionably been tech, so the rule of thumb is simple: the main board sets the slow beat, the STAR Market and ChiNext provide the bull charge. Whether the up-move is over therefore hinges on those two indices. Today ChiNext fell hard but still hasn’t broken its 5-day line; even if it tests the 20-day line around 3,050, it remains a strong up-trend—nothing more than a routine technical breather. The STAR 50 hasn’t even touched its 5-day yet, so talk of trend death is premature. The main board, on the other hand, has printed two consecutive shooting-star highs—proof that large-caps are running out of steam. The action will stay in tech.

The “anti-involution” trade out-performed. Chemical-fiber names led, with the sector index gapping 4 % higher on expanding volume. Shenma Shares hit limit-up within a minute of the open; Xinfengming also locked up and marked a four-year high, followed by Hengyi Petrochemical and Tongkun. After a 2024 de-stocking cycle, several chemical sub-sectors are showing clear bottom-line inflection. As year-end approaches, other 1H anti-involution plays like pork and lithium miners could have their turn in the spotlight.

Autos also shone. Seres surged to limit-up and an all-time high after announcing its H-share IPO has received CSRC approval, dragging the whole new-energy chain with it. Domestic NEV sales remain robust, while in Europe BYD has outsold Tesla for two straight months—an added confidence boost. XPeng, Chery and peers followed, but liquidity is still camped inside tech; everything else is a supporting actor.

Today’s tech wreck has two drivers: (1) outsized recent gains prompting profit-taking, and (2) the A-share holiday closure while NASDAQ keeps trading—no one wants weekend headline risk from NVIDIA or Apple.

Bottom line: today’s pullback is mainly a pre-holiday safety crouch. More selling is likely next Monday, yet the broader up-trend is intact—use the dip.