Deep Analysis of the Timing for a Secondary Market Rebound

Rebounds are not random pulses but the result of resonance across five major dimensions: policies, funds, valuations, technology, and sentiment. In highly volatile markets, accurately grasping the timing of a rebound requires understanding macro cycles, micro validation skills, and establishing a practical framework of “left-side positioning and right-side confirmation.” This article dissects the formation mechanism of rebounds from five core dimensions, combines market characteristics in 2026, and provides actionable timing judgments and operational strategies.

### 1. Policy Bottom: The Signal to Start Rebound, Not an Entry Signal

Policy bottoms are the primary driving force behind secondary market rebounds, but not all policies can trigger effective rebounds. The key lies in the triple validation of “strength, sustainability, and market recognition.”

Core criteria for judging a policy bottom: First, liquidity easing signals, such as reserve requirement ratio (RRR) cuts, interest rate cuts, MLF rollover, and deposit rate reductions, directly improve market capital supply; in October 2025, the central bank’s 0.5 percentage point RRR cut released over 800 billion yuan of long-term funds, becoming the trigger for this round of A-share rebound. Second, special policies for equity markets, such as lowering transaction costs (stamp duty, transfer fees), tightening share reduction rules, slowing IPO pace, and national team involvement (ETF accumulation, state-owned enterprise buybacks), directly enhance attractiveness of equity assets; early 2026, regulatory restrictions on major shareholders’ “full-scale reduction,” combined with state-owned enterprise buyback funds exceeding 50 billion yuan, quickly reversed pessimistic market expectations. Third, industrial and domestic demand expansion policies, such as equipment upgrade subsidies, old-for-new consumer goods, and new energy vehicle subsidies, directly boost corporate profits; the policies implemented in the first year of the “14th Five-Year Plan” saw industrial robot orders expected to grow over 30% YoY in 2026, becoming a core catalyst for high-end manufacturing rebounds.

Relationship between policy bottom and market bottom: Policy bottoms usually lead market bottoms by 1-3 months, during which the process involves “policy announcement → market testing → secondary bottom → stabilization and rebound.” After the policy bottom was established in October 2024, the A-share market bottomed only in December 2024, with the Shanghai Composite Index dropping from 3,050 to 2,885 points, mainly due to investor doubts about policy effects and concentrated chip selling. To determine whether the policy bottom transforms into a market bottom, focus on the pace of policy implementation and economic data validation: when policies shift from “statement” to “actual monetary input,” and data such as PMI, retail sales, and industrial profits show marginal improvement, the market bottom is highly likely to form.

### 2. Funds: Volume is the “Mirror of the Demon,” Continuous Inflows Are the True Opportunity

Funds are the lifeblood of the market. The essence of a rebound is incremental capital entering the market, causing supply-demand imbalance. A rebound without volume support is “water with no source,” while a healthy volume structure is the core guarantee of sustainability.

Core dimensions for fund analysis: First, total liquidity, with M2 growth rate and social financing (social loans) as key indicators. When M2 growth remains above GDP + CPI growth and social financing exceeds expectations, liquidity is ample, significantly increasing rebound probability; in January 2026, M2 YoY growth was 10.8%, and social financing exceeded 4.5 trillion yuan, providing a solid capital foundation. Second, institutional fund movements, such as mutual fund positions, northbound capital flows, and insurance fund equity allocations, are critical; when mutual fund positions are below 75%, there is room for increased holdings, enhancing rebound resilience; northbound funds, considered “smart money,” with continuous net inflows (over 30 billion yuan per month), are important signals; early 2026, northbound capital had three consecutive weeks of net inflows exceeding 20 billion yuan, precisely deploying in core sectors like finance and AI hardware. Third, resident funds entering the market: in a low-interest-rate environment, “moving” savings is an important incremental source. With about 50-70 trillion yuan in fixed deposits maturing in 2026, an optimistic estimate suggests 13%-20% may flow into equities, adding roughly 3.5 trillion yuan; additionally, every 1 percentage point increase in insurance fund equity allocation can release over 370 billion yuan, becoming a key driver of the rebound.

Volume resonance judgment standards: a healthy rebound must be accompanied by stepwise volume increases rather than pulse-like surges. First, when breaking key levels (such as the annual moving average or previous consolidation zones), trading volume should increase gradually, reaching new levels upon breaking the annual line and even larger upon surpassing previous platforms, indicating sustained capital inflow rather than short-term speculation. Second, after breakthroughs, volume should remain high, with bullish (positive) volume exceeding bearish (negative) volume, indicating dominance by bulls; corrections are more likely to be shakeouts rather than distributions. Third, continuous three-day trading volume exceeding one trillion yuan, with sector trading showing “blue chips leading and growth stocks supporting,” such as in January 2026 when daily turnover exceeded 1 trillion for five consecutive days, with significant increases in securities and AI sectors, pushing the index above 3,500 points.

### 3. Valuation Bottom: The Core of Safety Margins, Oversold Conditions as the “Catalyst” for Rebound

Valuation provides the safety margin for a rebound. Low valuation combined with expectations of fundamental improvement forms the “golden combination” for a rebound. During market panic, high-quality assets are often undervalued, creating “valuation valleys” that offer ample space for rebound.

Core valuation indicators: First, overall market valuation, such as the CSI 300’s forward PE ratio below 12x and the CSI 500 below 20x, generally below their historical valuation centers, indicating safety margins; in Q3 2025, the CSI 300’s forward PE was about 14x, not at extreme lows but combined with profit improvement expectations, forming a rebound basis. Second, sector valuation differentiation, focusing on “high-growth, low-valuation” sectors, such as AI computing power, semiconductor equipment, with expected earnings growth over 50% but PE ratios only 25-30x, significantly below historical averages, becoming the main rebound theme. Third, the price-to-net asset value (P/B) and dividend yield: over 300 A-shares trading below net asset value or with dividend yields over 5% (e.g., banks, utilities) show clear market bottom features; by the end of 2025, the average dividend yield of banks reached 5.8%, attracting long-term capital and acting as a “ballast” for the rebound.

Opportunity identification in oversold rebounds: oversold conditions are key catalysts. The deeper the decline and the longer the correction, the greater the rebound elasticity. To identify oversold rebound targets, three conditions must be met: first, the correction amplitude—stock prices falling more than 40% from previous highs, significantly exceeding the market decline; second, the correction duration—lasting over six months, with sufficient chip turnover and release of trapped positions; third, no deterioration in fundamentals—company performance remains stable, cash flow healthy, and declines not caused by fundamental collapse. For example, early 2026, some AI application companies experienced over 50% retracement due to prior hype, but their earnings growth outlook remained unchanged, making them core oversold rebound targets.

### 4. Technical Analysis: The “Signal Flares” of Rebound, Multi-Indicator Resonance Confirming Entry Timing

Technical analysis is a “visual tool” for timing rebounds. Through price patterns, moving averages, volume-price relationships, and other indicators, it can precisely capture the initiation and confirmation signals, avoiding “buying at the halfway point.”

Core technical signals: First, bottom formations such as “W bottom,” “head and shoulders bottom,” or “arc bottom,” with breakouts after formation being key entry signals; in December 2025, the Shanghai Composite Index formed a “W bottom,” with the right bottom higher than the left, and a volume surge upon breaking the neckline (around 3,200 points), confirming the rebound start. Second, moving average crossovers: short-term averages (5-day, 10-day) crossing above medium- and long-term averages (20-day, 60-day) forming a “golden cross,” with multiple moving averages aligned bullishly, indicating trend strengthening; in January 2026, the 5-day moving average crossed above the 10-day and 20-day, followed by the 60-day turning upward, supporting continued rebound. Third, divergence recovery: when the index hits new lows but volume does not, or when the index declines but momentum indicators like MACD show bullish divergence, these are early warning signs; in November 2025, the A-share market showed “new lows, shrinking volume, MACD bullish divergence,” signaling an upcoming rebound. Fourth, key support levels stabilizing, such as previous lows, round-number levels, or the annual moving average, with effective support (e.g., sideways consolidation with decreasing volume or quick rebounds) confirming support; in January 2026, the index held at 3,300 points (the lower boundary of previous consolidation), with volume decreasing for three days and then surging upon rebound, confirming support.

Prioritization of technical signals: trend signals > pattern signals > volume-price signals > momentum signals. In practice, multi-indicator resonance provides higher confidence, e.g., “W bottom breakout + moving average golden cross + volume surge” occurring simultaneously, making the rebound more certain; relying on a single indicator (e.g., only a golden cross) is less reliable and should be approached cautiously.

### 5. Sentiment Bottom: The “Last Mile” of Rebound, Opportunities After Extreme Panic

Market sentiment acts as an “amplifier” for rebounds. Extreme panic often breeds significant opportunities, while excessive optimism may signal a top. Sentiment bottoms usually lag behind policy and valuation bottoms, serving as the “final confirmation” of a rebound.

Core indicators for sentiment bottoms: First, panic indices such as the VIX (or the “CSI 300 Volatility Index” for A-shares). When the VIX exceeds 30 and remains above for over a week, the market is in extreme panic, with rebound probabilities over 80%; in December 2025, the A-share volatility index briefly exceeded 35, followed by market stabilization and rebound. Second, investor positioning: when retail and institutional holdings are at historic lows, market selling pressure is released, creating room for rebound; by late 2025, retail holdings averaged below 30%, and mutual fund equity positions around 72%, both at historic lows, providing ample “adding-on” capacity. Third, market sentiment indicators such as “advancing vs. declining stocks,” “limit-up vs. limit-down stocks,” and “margin financing and securities lending balances”: when the ratio of advancing to declining stocks stays below 0.3, limit-down stocks exceed 50, and margin balances decline for three consecutive weeks, sentiment is at a bottom, and a rebound is imminent; in November 2025, the market experienced “advancing/declining ratio 0.25, 80 limit-down stocks, and margin balances falling for four weeks,” followed by a rebound exceeding 200 points. Fourth, media and public opinion: when mainstream media shift from “bearish” to “neutral” or even “bullish,” or when market discussion shifts from “risks” to “opportunities,” sentiment bottoms are gradually forming; early 2026, mainstream media extensively reported on “domestic demand expansion policies” and “residents moving savings,” boosting market sentiment from pessimism to optimism.

Operational strategies for sentiment bottoms: during extreme panic, consider left-side positioning of oversold quality stocks with controlled positions (around 30-50%), avoiding full positions too early; as sentiment begins to warm (e.g., the ratio of advancing/declining stocks rises above 0.5, and limit-up stocks exceed 30), and technical signals confirm, gradually increase positions to 70-80% to seize the main upward wave; when optimism becomes excessive (e.g., retail holdings over 70%, rapid growth in margin financing, media overwhelmingly bullish), be alert to a market top and reduce positions timely to avoid risks.

### 6. Practical Judgment of the 2026 Rebound Timing: Resonance of the Five Dimensions to Capture Structural Opportunities

Considering the market features in 2026, the current stage is one of “policy bottom confirmed, valuation support, improved funds, technical strength, and sentiment recovery,” with rebound still ongoing but with risks of structural divergence.

Core drivers of the 2026 rebound: First, the “14th Five-Year Plan” opening year’s policy dividends are being released intensively, with policies on expanding domestic demand, industrial upgrading, and technological independence continuously implemented, improving corporate profits; second, liquidity easing persists, with the central bank maintaining low interest rates and expectations of RRR and interest rate cuts, providing ample funds; third, the AI industry’s clear trend: under the global AI wave, performance expectations for computing power, models, and applications are strong, making AI a main rebound theme; fourth, accelerated resident savings relocation: in a low-interest environment, fixed deposits maturing are gradually shifting into equities, bringing incremental funds.

Precise timing of the rebound: Short-term (1-3 months), focus on policy windows around the “Two Sessions” (March 2026), with accelerated domestic demand policies and earnings catalysts during the annual report disclosure period (January-April), making the rebound likely to continue, with the Shanghai Composite Index potentially reaching 3,800 points; medium-term (3-6 months), be cautious of Fed policy shocks (e.g., slower-than-expected rate cuts) and domestic economic recovery slowdown, leading to consolidation with structural opportunities; long-term (6-12 months), if economic recovery exceeds expectations and corporate profits continue to improve, the rebound may evolve into a trend reversal, with core themes (AI, high-end manufacturing, consumption recovery) entering a long bull market.

Operational suggestions: Maintain 70-80% positions in the short term, focusing on “policy dividends + earnings improvement” core stocks, such as AI computing (semiconductor equipment, servers), high-end manufacturing (industrial robots, testing equipment), and consumption recovery (home appliances, auto models benefiting from old-for-new). Avoid overhyped stocks with excessive recent gains; adopt a “sell high, buy low” approach during index corrections near key supports (e.g., 3,500 points), and reduce positions after breaking previous highs (e.g., 3,800 points, or the previous peak), keeping positions at 50-70%; long-term, adhere to value investing, focusing on “14th Five-Year Plan” supported sectors like technological independence, green transformation, and consumption upgrades, buying quality stocks on dips and avoiding chasing highs.

### 7. Common Mistakes in Judging Rebound Timing and How to Avoid Them

**Mistake 1: Entering Immediately After Policy Announcements** — A policy bottom does not equal a market bottom. Waiting for confirmation through fund inflows, technical signals, and sentiment resonance is essential to avoid early entry and getting caught in a trap.
**Avoidance:** Observe for 1-2 weeks after policy release; only when trading volume increases, the index stabilizes, and sentiment warms should you consider entering.

**Mistake 2: Only Looking at Valuation Without Trend Analysis** — Low valuation alone is not sufficient for a rebound. It must be combined with trend judgment; low valuation stocks in a downtrend may be in a “valuation trap.”
**Avoidance:** Prioritize stocks with “low valuation + trend turning upward,” avoiding those in a declining trend.

**Mistake 3: Confirming Rebound Solely by Volume Pulses** — Pulse-like volume surges are often short-term hype, not sustained fund inflows, making the rebound unsustainable.
**Avoidance:** Wait for stepwise volume increases and three consecutive days of turnover exceeding 1 trillion yuan to confirm.

**Mistake 4: Full Positioning When Sentiment Warms** — Early-stage sentiment recovery can be volatile; full positions risk top-tailing.
**Avoidance:** Control positions around 50% during initial warming, and only increase to 70-80% after technical confirmation.

### Conclusion

Judging the timing of a secondary market rebound fundamentally involves a comprehensive assessment of the “policy, funds, valuation, technology, and sentiment” dimensions. Relying on a single indicator is unreliable; multi-dimensional resonance is key. In the high-volatility environment of 2026, investors should establish a “left-side positioning and right-side confirmation” practical framework, seizing rebound opportunities driven by policy and industry trends while remaining vigilant against external shocks and internal risks causing oscillations. Remember: a rebound is not the end but the start of a new cycle. Only by坚持价值投资、聚焦核心主线、控制风险仓位，才能在市场波动中精准把握反弹时机，实现长期稳健收益。