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There is no bull market in 2024.

There is no bull market in 2024.

There is no bull market in 2024.

I repeat this important statement three times.

I'm not sure why so many people are discussing that 2024 is the new starting point for a bull market; perhaps their definition of a bull market is rather superficial.

A real bull market must have a good profit effect. Although not all stocks rise across the board, the indices should soar together.

But looking at the current five months of 2024, the notion of indices soaring together is simply nonsense.

Apart from the Shanghai Composite Index's annual line being up, all other major indices are down.

Among them, the Science and Technology Innovation Board 50 has fallen by 15%, and the North China Stock Exchange 50 has fallen by more than 25%.

Under these circumstances, can it be associated with a bull market?The coordination among major indices is extremely poor, with no hint of a bull market at all.

Many people are curious as to why a bull market must see all major indices rising in unison.

This is because indices are not individual stocks; they won't be dragged down by the poor performance of a single listed company, causing the entire index to bear.

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Such poor coordination among indices only indicates that many sectors and directions have not truly bottomed out, so there certainly isn't a bull market.

Our current indices, strictly speaking, are five broad-based indices.

The Shanghai Composite Index, the Shenzhen Component Index, the ChiNext Index, the STAR 50 Index, and the Beijing Stock Exchange 50 Index.

Under the influence of certain external forces, the weekly line of the Shanghai Composite Index has already begun to show an upward trend.

However, the Shenzhen and ChiNext indices are just starting to flatten, showing no signs of a bottom reversal, and it can be said that the direction of the trend is still difficult to discern.

As for the STAR 50 and the Beijing Stock Exchange 50, they are still in a downward channel, and the overall trend is far from over.It can only be said that the current market conditions are very structured.

There are many reasons for this structure. First, the rationality of valuations is not coordinated. Starting from the underlying logic of the market, the valuations are not particularly well-coordinated either. The valuation of the Shanghai Composite Index is the lowest, and the ChiNext board is also at a relatively low historical level, but it is not particularly cheap. The Science and Technology Innovation Board cannot be said to be high above, but in terms of price-to-earnings ratio, the valuation is not cheap.

There are many factors leading to the lack of coordination in valuations, with performance issues being the first to be considered. The real bottom of the market is when the valuations of all major indices and sectors are extremely low. As it stands, the overall market valuation is not coordinated; it is just that the valuations of blue-chip stocks are relatively low.

This creates a contradiction, a valuation issue that is neither cheap nor expensive.When several other indices with high valuations have fully corrected, the true market bottom will naturally emerge.

Secondly, the lack of capital inflow leads to market segmentation.

One of the reasons for market segmentation is the scarcity of funds.

The current market trend is more inclined towards a "herding" trend, rather than a widespread rise in individual stocks.

The "herding" trend depends on where the capital is concentrated and how much capital is involved in the herd.

If the capital volume is large enough, it can create a mini-bull market like that of 2020-2021, with a significant amount of funds flocking to blue-chip stocks.

Unfortunately, the market does not have that much additional capital at present, and there are fewer directions for capital to herd together.

Some high dividend directions are the main force of the herd, as well as the blue-chip stock direction.

Small-cap stocks are still subject to speculative trading by retail investors around themes, without any real herding.

Apart from the low-altitude economy, there have been no significant market themes this year; they are all very small themes that cannot attract a large amount of capital to form a herd.The market with insufficient increments can already be very difficult to maintain the facade of the Shanghai Stock Exchange.

Thirdly, there is a divergence in performance expectations, and there is a significant difference between sectors.

The performance expectations of the sectors are another underlying logic for the bull market.

We do not necessarily require performance to rise sharply, which is not realistic.

However, it is not possible for performance to decline continuously while stock prices rise continuously, which is likely to violate market rules.

Especially from the perspective of the index, at least the performance expectations should not be too poor.

But looking from the perspective of the first quarter report, the performance of the Science and Technology Innovation Board is indeed somewhat disappointing, with most net profits declining.

When R&D costs remain high, market sales are not pulling, and there is a significant internal roll, the performance expectations of these small tickets are relatively pessimistic.

Compared with the very stable blue-chip stocks, these small sectors have formed a significant difference.

Including various industries, when the macroeconomic fundamentals cannot resonate, many industries are also on the decline.Only when the market experiences an overall performance trough can a unified recovery expectation emerge across all major industries. In other words, the worst-case scenario must be released to achieve a consistent performance outlook.

This is similar to the performance trough caused by certain factors in 2020, which led to a large-scale performance recovery wave in 2021.

Fourthly, the bottom chips are not unified.

Building a bottom requires a period of consolidation, and V-shaped bottoms in the market are actually quite rare.

This time, the index rose too quickly after falling to 2635, returning to 3000 points in just a few trading days.

This has resulted in many bottom chips not being released.

Especially the chips of the Growth Enterprise Market and the Science and Technology Innovation Board, which have not been fully consolidated in the short term.

The best way to collect chips is actually through a volume contraction and a gradual decline, rather than this violent V-shaped recovery.

If the bottom chips can be well consolidated, the foundation for a major bull market is established.

Otherwise, the market will continue to experience bottom oscillations until most of the chips settle down.Based on the current situation, apart from the Shanghai Composite Index, other indices still need to go through a prolonged period of fluctuation to achieve the unification of market shares.

Fifthly, the expectations for a bull market are not consistent.

Lastly, let me mention the most important point, which is the expectation of a bull market across various indices.

This expectation mainly concerns the potential for price increase.

The Shanghai Composite Index, during each round of rise, has the smallest space for increase because of its large market capitalization.

Previously, the index with the largest increase in space was the ChiNext Index, and before that, there was actually the SME board index.

So in the future, the corresponding index should be the STAR Market Index.

That is to say, the space for the STAR Market is actually the largest.

However, having a large space does not mean that the top is high enough, but rather it implies that the bottom is low enough.

Assuming the high point of the STAR 50 is expected to be at 2000 points, then if the bottom is at 800 points, the space would only be 2.5 times, but if the bottom is at 500 points, the space would be 4 times.Therefore, despite the limited expected space, the Shanghai Composite Index is showing a trend of building a bottom ahead of time.

On the other hand, small indices such as the Science and Technology Innovation Board 50 (STAR 50) and the Beijing Stock Exchange 50 (BSE 50), in order to achieve the expected space, are still falling incessantly, longing to smash a deeper bottom.

Before each bull market, that is, before a great bear market, it is these sectors with large spaces that are smashed through the bottom.

To put it bluntly, a real bull market is one where all major indices rise together, not one where capital only gathers in one direction.

Such a bull market often has to go through a long enough bear market to be baptized before it is presented to us.

The year 2024 is the year for building the bottom, and the bull market will come at the earliest in early 2025.