A-shares finally launched a decent counterattack today—with a broad-based rally on increased volume, and the 3,900-point level was breached again. This rally wasn’t just an emotional impulse; there are three clear logical threads behind it.

First, the most direct trigger: Morgan Stanley suddenly raised its target price for Ping An Insurance, specifically highlighting the insurance sector. This move acted like a whistle blow, sending insurance stocks surging and quickly boosting sentiment across the entire market. Brokerage stocks were also eager to join in—after trading sideways for nine sessions, they posted a big bullish candle today, almost fully reversing the sharp drop from two weeks ago.

The change in trading volume is even more worth pondering. This week, total turnover shrank all the way to below 1.6 trillion, and yesterday it even approached 1.5 trillion, with the market in despair. But looking at it another way, turnover has been halved from 3.2 trillion to this level, signaling that the downturn has hit an extreme. When volume shrinks to the limit, it often means chips are fully absorbed—this afternoon, as the indices and individual stocks surged together, volume immediately picked up. The market was still in a low-volume consolidation in the morning, but expanded rapidly in the afternoon. This rhythm suggests the funds never disappeared—they were just waiting for a signal to enter.

The third driver is the difference in expectations. Next week, expectations for a Fed rate cut are heating up, combined with an approaching policy window, so funds started to move in advance on Friday. Plus, with broad declines in stocks and sentiment hitting rock bottom this week, extreme pessimism was bound to reverse—some stocks quietly began to recover in the morning, and with the index unable to fall further, it naturally moved upward.

There are also technical highlights. Today, the main board broke through 3,900 points on strong volume; compared to the previous tentative breakout that retreated to fill the 3,889-point gap, this time feels much more solid. At this pace, the odds are decent that next week the index will challenge and fill the 3,927-point gap.

To be honest, December has been a tough month. Many people were full of confidence from September to November, only to fall into pessimism in December; but that’s often how the market works—when everyone is in despair, opportunities begin to brew. In recent days, as volume kept shrinking and panic spread, a cooler look reveals that shrinking volume itself is a positive sign: chips are consolidating, and sentiment is bottoming.

Today’s broad-based rally on increased volume is, to some extent, a correction of the extreme low volume of the past few days. Insurance and brokerage sectors led the charge, market sentiment recovered across the board, and over 4,000 stocks rose—such a broad rally is indeed rare in the current environment.

Looking ahead, next week’s key will be whether the increased volume can be sustained, and whether the 3,927-point gap can be smoothly filled. If volume continues to expand and sector rotation is orderly, this rebound could have more legs. But if volume shrinks again and the market consolidates, beware the risk of a pullback after a rally.

The core logic remains unchanged: Be cautious when others are greedy, and seek opportunities when others are in despair. The market always swings between extremes, and a turning point often follows extreme sentiment. Today's broad-based rally on high volume may mark the beginning of a recovery from sentiment at its lowest point.