An article pushed by Junlin last week: When will the bull market end?

, is very popular among readers, and the reading volume has broken the recent record!

Readers' reactions were also polarized, and the debate was fierce.

One view is that the market is over and there is no bull market at all, such as the one below - but Junlin does not agree with this view.

Junlin believes that the first chapter of the bull market, that is, the mad bull-financial bull, may have ended, but the slow bull with a longer span may be slowly unfolding.

Because this is the need of decision-makers.

01 Why did the spring market in 2019 end?

Let’s start with the picture below.

Many investors will still remember the market rally at the beginning of last year.

At the beginning of last year, the Shanghai Composite Index rose from 2,440 points to 3,288 points, an increase of nearly 35% in three months.

Various technology stock concepts have taken turns to be speculated, which is quite bullish.

But unexpectedly, after April, the market plunged and the market ended quickly.

The current market trend in 2020 seems to be so similar to last year’s curve!

Is it a perfect replica?

So, let’s take a look, why did the market at the beginning of last year end suddenly?

Breaking it down, last year's market can be divided into three stages: The first stage, January, 2440-2600.

At this time, A-shares experienced a long bear market for the whole year of 2018. The valuation was extremely undervalued, and foreign investors began to quietly buy.

Yes, only foreign capital is buying, while domestic capital is standing still.

The second stage, February, 2600-3100.

Domestic capital increased its positions on a large scale, with buying funds of about 200-300 billion yuan, and its positions increased by about 10%.

Promoted the rapid rise of the stock index and the popularity of the market.

The third stage, March to mid-April, 3100-3300.

The lack of incremental capital inflow caused the market to hesitate, and then domestic and foreign capital retreated one after another. The company management set off a wave of reductions in holdings, and the market ended.

As we analyzed in the previous article, there are four forces at play in the A-share market: foreign capital, domestic capital, legal persons, and retail investors.

In a bull market, foreign capital is usually the first to predict the situation.

They are good at looking for opportunities in the global market and go wherever they are underestimated.

Therefore, foreign capital usually enters first and lurks.

Domestic investors are trend investors who are alert and follow up in a timely manner. They can usually make big profits.

Legal persons are usually rational investors because they control first-hand dynamics of business operations and require large amounts of capital in and out. Therefore, they are also a group of people who are extremely sensitive to capital.

More importantly, the funds they control account for half of the A-shares, which is enough to influence market changes.

Although retail investors have a large trading volume, they are usually a group of people who are late-minded.

Under normal circumstances, when the bull market enters the mid-to-late stage, and after the stock index reaches a new high, retail investors will enter the market in large numbers and become the main trading entities of the junk stock market.

Let’s look at last year’s market conditions.

First, the Federal Reserve is shrinking its balance sheet and U.S. bond interest rates are rising, causing funds to flow back to the United States from emerging market countries.

Foreign capital began to retreat after March 6.

Then it was time for the two sessions in mid-March, and the signals released by the decision-makers were either loose or tight, focusing on stability.

On the one hand, the GDP target is 6-6.5%, which is lower than the 6.6% in 2018. The target is not high, and there is insufficient motivation to release water; on the other hand, the core policy is to reduce taxes and fees, and to rest and recuperate.

In other words, after deleveraging has just been carried out, it is okay to rebound, but don’t dream about releasing large amounts of money.

As a result, after the two sessions, domestic capital also withdrew.

Both foreign and domestic capital have withdrawn one after another, and legal entities and retail investors have not increased their positions, so the market will naturally be unsustainable.

02 Why did the spring market in the past ten years fail to last?

The market in 2019 is essentially a regular interpretation of the spring market in previous years.

Experienced investors know that in the spring of many years, A-shares will have a medium-sized "spring market."