The key characteristics and potential risks of the current market.
1. Clear bottom-fishing window and strong rebound: The chart clearly shows that mid-April was indeed a very good time to buy at the bottom, as the long-term index fell to historical lows and then quickly rebounded with the support of huge trading volumes. This indicates a strong consensus in the market regarding the formation of a bottom, with a significant influx of capital.
2. Short-term overheating risk: The rapid rise of both long-term and short-term indices, especially the long-term index entering the 'Hot 1' or even approaching 'Take Profit 2' zone, clearly indicates that the market may be in a state of short-term overbought conditions. Such rapid increases are often difficult to sustain, necessitating caution for a potential pullback.
3. Potential profit-taking pressure: As analyzed, investors who bought at the bottom earlier have now secured considerable unrealized profits. They may choose to take profits at any time, which could exert strong selling pressure on the market. We need to pay attention to capital outflows.
4. Monitor changes in trading volume: In the coming days, besides price indices, trading volume is another indicator that needs close attention. If prices begin to stagnate or even decline, accompanied by a surge in selling volume, the signals for a reversal will become stronger.
5. Beware of 'top escape' signals: If the long-term index continues to rise towards the 'Top Escape 3' zone but the upward momentum weakens, or if there are K-line patterns indicating a surge in selling, these are potential signals of a top formation.
6. Shift in market sentiment: When the market shifts from extreme pessimism (bottom-fishing period) to extreme optimism or even FOMO (Fear Of Missing Out), it often represents the time of greatest risk. The current 'temperature' indicator may reflect this change in sentiment.