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Currently, the adjustment is still ongoing, but there isn't much room for further decline.
Last week, the market surged then pulled back again. Behind this are both market sentiment factors and technical adjustments—simply put, the market prefers a steady, slow bull rather than wild swings. We can only follow the rhythm.
From the weekly chart perspective, the bullish pattern remains unchanged, with the moving averages still in a healthy bullish alignment. The weekly K-line is now in a retracement phase after breaking out. As long as it doesn't fall below 4034, it's considered a normal correction. The upward-shifting 5-week moving average next week will serve as a strong support.
What about the daily chart? The recent adjustment starting from 4190 has formed a small to medium-sized consolidation zone. There are two possible scenarios—if the index makes a new low but without accelerating downward, it would be a typical ABC correction structure; if the C wave's strength is weaker than A, a rebound condition will emerge.
So, next week, don't be too nervous about further dips. As long as there are no signs of intensified decline, you can look for opportunities to buy on dips. Of course, there's another approach—if the index breaks above and stabilizes above the 5-day moving average, it could attempt to retest the previous high of 4190. Be prepared with two contingency plans in advance.
On the sector side, AI applications and commercial aerospace continued to decline last week due to various factors. A technical rebound is likely next week. But be cautious—these sectors often only confirm the trend with a rebound after breaking key intraday support levels and making new lows. Whether the correction has truly ended depends on whether the neckline resistance can hold. In trading, focus on those stocks that are resilient and haven't broken their technical patterns.
In the long term, the trends in AI applications and commercial aerospace are far from over; 2026 remains a key focus for the market. Semiconductor and its sub-sectors are also worth allocation, as they present long-term, confirmed opportunities.