Market Notes
系列：Fund Strategy

Index funds in a ranging market

Index funds in a range: buy the pullback, earn the swing Valuation low filled, ranging-up begins — stop watching valuation, instead earn the swing return of "pullbacks in the up-stage". Pullback buy point
Figure: In a ranging market the index swings up and down; the strategy shifts from "valuation investing" to "buy the pullback, earn the swing" — step in on dips, not chase highs.

How to invest in index funds during a ranging market?

In a ranging market, once the index’s valuation low has been filled and it re-enters a ranging-up stage, we can no longer invest by valuation logic.

Because the ranging-market logic is not long-term investing but capturing ranging-market swing returns, our strategy is to buy the pullbacks of the ranging-up stage and earn the swing return.

Staggered buy on pullback + deviation sell 20-day MA (reference) buy 1x buy 1.5x buy 2x trim 1/3 trim 1/2 clear Buy: pull back to 20/30/60-day line → 1x / 1.5x / 2x (prereq: above 120-day, MA bullish converging, prior gain <15%) Sell: upward deviation from 20-day MA 5% / 8% / 10% → trim 1/3 / 1/2 / clear
Figure: In the ranging-up, the deeper the pullback (to the 20/30/60-day line) the bigger the buy multiple (1x/1.5x/2x); the larger the upward deviation from the 20-day MA (5%/8%/10%) the harder the trim, until clear.

Buy strategy

Precondition: the index trades above the 120-day MA, the 20/30/60 medium-term MAs show a volume-backed bullish alignment that is converging, and the prior gain does not exceed 15%.

These strict conditions ensure the index is moving from a range into a medium-term strong stage whose strength can persist.

  • (1) When the K-line pulls back to below the 20-day line but above the 60-day line, buy 1x;
  • (2) When it pulls back to below the 30-day line but above the 60-day line, buy 1.5x;
  • (3) When it pulls back to above the 60-day line and above the 120-day line, buy 2x.

Sell strategy

  • (1) When the index K-line’s upward deviation from the 20-day MA exceeds 5%, trim 1/3;
  • (2) When it exceeds 8%, trim 1/2;
  • (3) When it exceeds 10%, clear.

⚠️ This article is a methodological framework for illustration only and does not constitute any investment or trading advice. Markets carry risk; decisions require caution.

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