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    Founder Securities: How long is the bull market? At least the last round of A-share bull market

    2019-03-14 08:17:27

    Financial sector website 

    Founder SecuritiesYang Renwen believes that the plunge of the GEM yesterday was only a large-scale correction in the bull market; in this bull market, investors are generally fearful and suspicious, and once they fall, it is likely that there will be a more violent correction on the day. In the bull market from 2014 to 2015, there is a phenomenon that the stock market often says “the bull market is long and cloudy”.

    Report highlights

    On Wednesday, the Shanghai Composite Index fell 1.09%. The recent strong GEM index fell 4.49%, the largest decline since 2018/10/11. We tend to think that this is only a large correction in the bull market.

    There are many A-share investors. Factors such as fundamental drivers, emotions, policies, leverage, market value management and trading will affect the stock price. The consensus is relatively poor and the degree of disagreement is very large. In this bull market, investors are generally fearful and suspicious. Once they fall, it is likely that there will be a more violent correction on the day.

    Statistically, the distribution of index yields in the bull market will change, the data will shift to the right, and the mean and median will rise. At the same time, the variance becomes larger and the tail risk is increased, especially the tail risk on the left.

    The average earnings in the bull market have increased, but the chances of the plunge have not decreased, and may even be more than the skyrocketing. This is the A-share "bull market in panic", while fearing to go empty, while fearing chasing high, the more the more panic, the more down Someone sold. If IV is used to characterize market panic, the continued increase in the implied volatility (IV) in the A-share bull market is a proof.

    In summary, we believe that the plunge of the GEM today may be only one of the characteristics of the bull market, and the market as a whole is still healthy.

    1, bullish long yin

    On Wednesday, the Shanghai Composite Index fell 1.09%. The recent strong GEM index fell 4.49%, the largest decline since 2018/10/11. According to WIND all A-share stocks fell, of which 341 fell by -5% to -7%, 146 fell by -7% to a daily limit, and 46 fell. Despite the general decline in stocks, we tend to believe that this is only a large correction in the bull market.

    There are many A-share investors, and individual investors contribute 80% of the turnover. Stock gains are not entirely driven by the company's fundamentals, and factors such as sentiment, policy, leverage, market capitalization and trading affect stock prices. In general, the consensus expectations are relatively poor, and the degree of disagreement is very large. It is often said that there are different opinions on why stocks rise. This round of rise is a typical representative, and the growth of blue-chip stocks is generally backward. Many stocks often have “no reason” to rise.

    In this bull market, investors are generally fearful and suspicious. Once the decline is likely to have a more violent correction on the day, this has been repeatedly confirmed and repeated in history. For example, the GEM 2014/12/12, 2015/03/06, 2015/03/26, 2015/04/15, 2015/05/28 all showed a larger level of adjustment, down 4.94%, 3.25%, 3.91%. , 4.58% and 5.40%.

    We have counted the bull market from 2014/07/23 to 2015/06/24. For the Shanghai Composite Index and the GEM, there is a phenomenon that the stock market often says “the bull market is long and yin”, which is not contradictory in mathematics. . The distribution of index yields in the bull market will change, the data will shift to the right, and the mean and median will rise. At the same time, the variance becomes larger and the tail risk is intensified, especially the tail risk on the left. From the following figure, the difference in the distribution of the rate of return between the bull market and the general market can be clearly found.

    The average earnings in the bull market have increased, but the chances of the plunge have not decreased, and may even be more than the skyrocketing. This is the A-share "bull market in panic", while fearing to go empty, while fearing chasing high, the more the more panic, the more down Someone sold. If IV is used to characterize market panic, the continued increase in the implied volatility (IV) in the A-share bull market is a proof.

    In summary, we believe that the plunge of the GEM today may be only one of the characteristics of the bull market, and the market as a whole is still healthy.

    2, risk tips

    This report is based on historical data and historical experience is not equal to future stock trends. Trade issues, economic data are not up to expectations, funding is tightening, and regulatory tightening may affect recent market conditions. The content of this article is for reference only.

    Remarks: This article only counts the change between the closing price and the change, and does not count the negative line in the candlestick in the strict sense (draw by the high and low).

    Hot searchBull market

    Editor in charge: Zhou Zhuang RF12883

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