What happened
During the Aug 24-28 trading week, the market first moved lower and tested support, then rebounded with fluctuations; most major indices closed the week higher.
The Zheshang Securities strategy report noted a second bottom-test with rotational rebounds, while telecom and electric new-energy segments pulled back. Turnover in Shanghai and Shenzhen fell from the prior week, stock-index futures were mostly at discounts, margin balances ticked up, and stock ETFs saw net inflows.
Why it matters
The key signal is that market support has now been 'tested out,' suggesting the two-week 'retreat one' phase may be complete. That shifts the near-term backdrop from falling to range-bound with a gradually rising center, allowing the medium-term rebound to continue without a sharp reversal.
With medium-term rebound targets not yet reached, Zheshang argues that short-term pullbacks do not damage the broader trend and may actually create opportunities. This framing implies corrections should be treated as chances to add exposure rather than reasons to panic.
Key facts
Most indices rose this week after an initial pullback tested the market's support.
Zheshang believes the 'retreat one' phase of the last two weeks may be over, with the market likely to consolidate and grind higher.
Levels cited include Shanghai Composite's weekly low of 3850 as short-term support with medium-term targets around 4000 and the 0.618 retracement; ChiNext and STAR 50 have medium-term targets at 0.5-0.618 retracements of their prior declines.
What to watch next
Whether the identified support levels hold during the next 'retreat one' dip, especially 3850 on the Shanghai Composite, ChiNext's support near its August low, and STAR 50's retest of 1549.
How sectors rotate: Zheshang suggests dip-buying in securities and Hang Seng Tech as their step-backs complete, caution on innovative drugs after recent gains, and attention to real estate and agriculture-related names amid policy headlines and El Niño effects.
Progress toward medium-term targets, including the 4000 mark and Fibonacci retracement levels, as the rebound advances in a step-by-step manner.