In the past two days, the market turnover has shrunk to 600 billion.

This volume indicates that the market is not far from the bottom.

The estimated extreme volume may shrink to between 500-550 billion, and it is not ruled out that extreme conditions may fall below 500 billion.

This is the energy cycle, and when the volume is exhausted, the market turning point is coming.

If we look at the cycle according to the wave theory, there is no more than ten trading days of adjustment left.

That is, within two weeks, the market will form a short-term bottom structure and launch a structural rebound.

This round of the downtrend started from January 30, 2023, and has already lasted for 224 trading days, and the most recent trading cycle is 233 trading days.

The most recent adjustment started on November 21, and has been going on for 25 trading days, with the most recent trading cycle being 34 trading days.

The two just resonate at the point of 233 trading days.

The previous important time cycle was August 25, which was the 144-day trading cycle, and there was a change in the market (due to stamp duty), but in the end, it changed downward.The market shift this time around at 233, which unfolded around the 2900 level, has a much higher probability of forming a bottom structure than the 144 shift.

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The market game in the last two weeks will revolve around the final panic chips before the shift.

In other words, where do the bloody chips come from, and how are they collected?

Let's first look at where the chips come from, and then see what will happen in the market.

1. Public fund selling.

Why would there be public fund selling at the bottom, shouldn't they be buying?

But the actual situation is just the opposite.

There are far more retail investors redeeming funds at the bottom than subscribing to funds.

This leads to funds being passively redeemed for some stocks to prepare money for the investors.

Why there is always a phenomenon of white horse sacrifice at the bottom, it is the trampling event caused by the passive redemption of funds.This is the fund trading system, which provides feedback under market sentiment and also returns a lot of cheap chips to the market at a low position.

2. The forced liquidation of private equity funds.

In addition to the passive redemption of public funds, private equity funds can also be subject to forced liquidation.

Most private equity funds have a liquidation line of 0.8, which means they need to liquidate when the decline reaches 20%.

Private equity funds issued at 3300-3400, if the operation is not good, it is normal to have a 20% loss.

At this stage, a lot of money deliberately short sells the stocks that private equity holds heavily, making them directly spit out the chips with blood.

Some individual stocks have a flash crash, which is the masterpiece of private equity funds.

It is also a trampling caused by the rules, leading to the emergence of chips with blood. Many large funds cut the meat to stop the loss, not all are subjective intentions, but passive liquidation.

3. Desperate retail investors stop loss.

The stop loss of retail investors must be carried with emotions.As 3300 starts looking at 3200, then 3100, down to 3000, to 2900, and then to new lows,

after repeatedly breaking expectations, retail investors will feel that the bottom is far away, rather than being more willing to persist.

So, under the atmosphere of market despair, there must be a large area of retail investors to stop losses, and even cancel accounts.

Because they will think that the market is hopeless, a market that is a complete scam, so they will stop losses.

There are also some people who always want to stop losses after getting out of the trap, and they will also cut the flesh on the floor because they can't stand the market's slow fall.

This is a relief of emotions and is the most normal behavior.

There are always some retail investors who have to cut the flesh on the floor, but in fact, the proportion is not high, and the funds do not rely on this part of the retail investors to feed themselves, but the first two relatively larger stop-loss funds.

4, Other funds leave the market.

Finally, there are some other funds that will also leave the market in the slow fall of the market.

For example, some leveraged funds, because the cost of funds is very high, and when the slow fall of the market cannot see the bottom, they will also stop losses and leave the market.Even some funds that enter the market with loans will prioritize cutting losses under the market's continuous decline.

There are some funds that also have a liquidation line.

At the bottom of the index, these funds will also be forced to close positions to ensure the relative safety of the principal.

How the end of the market's decline will ultimately unfold, we can make a simple analysis based on historical situations.

History is always strikingly similar, because behind every bottoming is human nature.

So, every time the bottom is reached, the big logic and big rules are roughly the same, it's such a process.

1. The market's volume contraction.

The market's volume contraction is a necessary process for seeing a big bottom.

The volume contraction here does not mean that the volume needs to be reduced on the day of the bottom, but there must be a process of capital volume contraction lying flat.Volume represents the divergence between bulls and bears, and the bottom itself is an indication of reduced divergence, which is when it appears.

The market's trading volume typically needs to decrease by at least 30-40% before it can be considered a sign of a bottom, and the amount of capital involved in the game must be significantly reduced to leave enough room for an increase in volume during a rebound.

2. The catch-up decline of hot spots.

Before the market reaches its bottom, there must be a catch-up decline in hot spots.

Before a major bottom emerges, almost no individual stocks are spared.

This is a historical law, where capital will eventually lead to a situation where more kills more, forcing out the profitable stock chips.

Because when there are bargains everywhere, capital does not need to speculate on speculative stocks for risk avoidance, but will instead flood into even cheaper stocks.

Since there are cheap options available, why not buy them? Who would still be willing to take over those that are high up?

3. The catch-up decline of heavyweights.

Before the market reaches its bottom, there will be a catch-up decline among the heavyweights.The term "weight" here can also be understood as "big white horse" or "blue chip stocks."

The reasons have already been mentioned in the previous text, which are due to the passive reduction and liquidation of public and private funds.

The situation of weight compensation and decline almost happens at the end of each round of decline. If the main force wants to grab the bloody chips, it must allow the weight to compensate and decline, in order to kill out high-quality chips.

Investors with low risk preference can take advantage of the decline to pick up some weight stocks, which have a high safety factor and good returns.

4. The outbreak of the rebound.

Finally, it is the outbreak of the rebound, the medium line of the bottom.

The bottom is confirmed, there will definitely be an outbreak of a Yang line.

The reason for this is that the market's emotions will yearn for a release.

The decline is very grinding, at the same time, it also makes the bottom-fishing funds hesitate.

So the entry point of this part of the funds must be the appearance of the bottom Yang line, and the main funds enter the bottom in groups.The rebound and breakout is the end of a bearish trend, with both volume and price rising in a bullish candle, signifying the end of the index's short-term trend.

The bottom does not actually need any policies; what it needs is a time cycle. True bottoming is mostly formed naturally.

This time cycle is already very close.

However, the selling pressure at the end and the despair given by the market is very great, and the actual situation will be very harsh.

The closer it gets to the final moment, the more cautious one must be, and never fall before the dawn.

Please note that the translation provided is a direct interpretation of the original text. The metaphorical language used in the original text, such as "rebound and breakout" and "fall before the dawn," has been retained to maintain the original meaning and tone.