Sudden drop, how to respond next week?

On Friday morning, the market was still peaceful with slight fluctuations and no significant movements. After the opening in the afternoon, there was a sudden plunge, with major indices turning red one after another. The decline yesterday afternoon was high-volume, likely due to funds fearing the impact of international situations over the weekend and choosing to hedge early. How should ordinary investors respond in this situation? [Taogu Ba]

Technically, the overall trend remains upward, but in the short term, influenced by international affairs, the market struggles to gain consensus, fluctuating between gains and losses. The rapid change in sentiment is even faster than flipping through a book, which has definitely created pressure on the market in the short term.

We can look at recent market trends: resource and oil stocks rose, while technology and other sectors declined; conversely, when tech stocks rose, oil stocks fell. This creates a clear seesaw effect, making normal analysis difficult because it is entirely influenced by the geopolitical situation and market sentiment affecting the overall market.

However, this seesaw effect also indicates that the market has not reached a top. When tensions ease slightly, funds immediately start buying the dip in technology stocks, showing continued confidence in the future. If it were a top, the market would be a free fall, trapping investors at high levels.

In the short term, the only sector with meaningful reference value is securities, as they have historically been a risk indicator for the market. The prolonged poor performance mainly reflects their underperformance. We can consider whether securities might rally once at the bottom, which could lead other sectors to follow and lift the market for a period.

Currently, this sector is at the bottom area and has been stagnant for a while. However, a positive sign is that it is in a bottom divergence state, meaning the probability of an upward rebound is much higher than a downward one. As long as it moves slightly next week, the index may not rise much, but many individual stocks could bottom out and rebound.

Overall, the main trend remains unchanged, but in the short term, influenced by international affairs, the market has a strong wait-and-see sentiment. More funds are in a cautious stance because, besides gold, which is soaring, there are no better investment channels. The stock market remains the only option. Once the geopolitical situation eases, the market could restart at any time.