Today's stock market essentially met the expectations of this author, why is that? Because, against the backdrop of a significant drop in the U.S. stock market, when the A-shares opened today, they indeed exhibited the so-called gap-down opening trend. Indeed, today is a day of mixed feelings.

All three major A-share indices uniformly gap-down opened, but the situation is somewhat different. The ChiNext and Shenzhen Component Index had already filled the gap from the gap-down opening during the day's trading, with the Shanghai Composite Index being the exception.

This is because, after the morning session closed, the gap in the Shanghai Composite Index still existed. Moreover, the gap in the Shanghai Composite Index is at 2768 points, which is a very noticeable gap. Even to this point, the decline in the Shanghai Composite Index is still somewhat greater than that of the ChiNext.

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So, the question arises, why didn't the Shanghai Composite Index exhibit a trend to repair the gap?

In fact, the main reason is that the banking sector as a whole has lost momentum. As of the time of writing, the banking sector index has already fallen by more than 1.4%. Under such circumstances, can the Shanghai Composite Index perform well?

Therefore, this leads to the Shanghai Composite Index appearing relatively weak during the trading session. More critically, the decline in the banking sector has been quite significant recently. Data shows that in just nine trading days, the banking sector index has already fallen by more than 8%.

What does the loss of momentum in this sector imply for the market?

Generally speaking, the significance represented by this sector is different. When this sector rises, it usually indicates that market funds are beginning to stabilize. However, the recent weakness of this sector implies that the market's willingness to stabilize is not high.

This is the greatest risk.

In fact, in the author's view, the significance of stabilizing the index is not substantial; it merely delays the downward trend. The market will naturally fall to its destined level. It might be better to let the index fall to the bottom, which could actually reduce some time costs.When have you ever seen stability funds trigger the emergence of a bull market? The market has its own trends, and the role of stability funds is merely to prevent widespread panic. The operation of the index naturally has its own inherent rules.

Looking at the current situation, will the Shanghai Composite Index really break below 2700 points?

There is such a possibility, but even if it does break, it doesn't have much significance because this level is already quite low, and there are two important factors, at least in the author's view, that are quite significant.

On one hand, I don't know if you've noticed a phenomenon, which is that the current lines are all very dispersed, with basically no intersections between the lines, and the divergence between the lines, or between the lines and the index, is too large.

At the same time, these lines are all clearly arranged in a downward bearish pattern. What does this mean?

Actually, it's quite simple; this means that the market's cost structure is very inconsistent. When the lines are dispersed and the market's divergence is too large, the market will undergo a correction, which is a consolidating trend to narrow the divergence.

Under such circumstances, the market may have two possibilities: either to balance the market's costs with a medium-term horizontal trend or to raise short-term costs through a short-term lift, thereby promoting the convergence of the lines and the reduction of divergence.

Regardless of which of the above methods is used for correction, it is beneficial to the A-share market. At least, in the short term, A-shares should indeed stabilize. Of course, this is also the most optimistic view because there will definitely be a reversal, but it is unknown at what level it will start.

Therefore, this is the most difficult point in the stock market.

You know the lines are too dispersed, you also know the divergence is too large, and you also know that the market's costs are inconsistent, but you just don't know when this phenomenon will be corrected, so you can only wait for the signal to appear.On the other hand, the formation of the gap also introduces a certain degree of uncertainty to the stock market that follows. Generally, gaps are meant to be filled, and this is especially true when they occur amidst a sharp drop in the U.S. stock market that leads to a subsequent decline in the Asia-Pacific markets. Therefore, the gap is more likely to be closed.

It's just a matter of time.

Thus, although the A-share market was indeed a source of mixed emotions during the early trading session today, and there was even a possibility of further falling below the 2,700 point mark, the market should now be due for some corrective action at this level. Otherwise, it would become stagnant.