A Few Casual Remarks on the Market and Individual Stocks
2007/3/14 8:58:13
Appendix:
Last night the traitors' daddy had a big drop, and the traitors got all excited and wanted to fly their daddy's flag at half-mast, hence today's price action. Originally, the market needed to oscillate anyway, and today's bearish candle pulled by the traitors for their family still falls within the oscillation range around the new hub. As long as no third-type buy or sell point appears, this oscillation will continue. The question now is: does the Chinese stock market have to wince at every mess from the traitors' uncles and aunts-in-law? Therefore, media dedicated to the anti-traitor cause is absolutely necessary.
Busy. Didn't post after the close yesterday, so a few supplementary words this morning. The market's medium-term situation is a question of daily and weekly hubs. A knife doesn't cut both ways — if this is a daily hub and we go straight up from here, then we enter the divergence segment. If we keep oscillating here and form a weekly hub, then the expected subsequent rally has even more impressive magnitude. But regardless of what kind of hub it is, the first wave of the bull market is far from over.
On individual stocks: from New Year's onward, I've been exiting large-cap component stocks and strongly backing second- and third-tier stocks. Before and after the Spring Festival, I emphasized low-priced third-tier stocks even more. Currently, there are basically no non-ST third-tier stocks below 4 yuan. Previously I said to launch the most brutal offensive on stocks around 5 yuan, and soon there'll be no targets left for the offensive. The third-tier stock run has entered a stage worth reflecting on. Apart from those genuinely backed by themes and earnings, they've entered a short-term pressure phase. You can hold and wait for sell points but there's no need to chase higher — especially those with terrible fundamentals. After the third-tier stocks level up, other stocks will show their value. Large-cap stock activation still needs a catalyst. Asset injection and other themes, and the military sector emphasized earlier, will continue to harbor medium-term opportunities. Agriculture, environmental protection, technology and similar themes will see their value gradually unearthed.
Now I want to particularly highlight a new sector: newly listed small-cap stocks in the Shenzhen SME board, typically with around 20 million in free float and 60 million total shares. Even in a bear market, these stocks wouldn't have problems; in a bull market, they have even greater medium-term opportunities. Looking back at all SME board stocks, which one didn't eventually yield handsome profits when entered during the listing phase? Therefore, for medium-term capital, pay more attention to these — it's far more worthwhile than chasing the tail end of the third-tier stock rally now. For specific entry timing, just read the charts.
Appendix:
Last night the traitors' daddy had a big drop, and the traitors got all excited and wanted to fly their daddy's flag at half-mast, hence today's price action. Originally, the market needed to oscillate anyway, and today's bearish candle pulled by the traitors for their family still falls within the oscillation range around the new hub. As long as no third-type buy or sell point appears, this oscillation will continue. The question now is: does the Chinese stock market have to wince at every mess from the traitors' uncles and aunts-in-law? Therefore, media dedicated to the anti-traitor cause is absolutely necessary.
I already discussed individual stocks this morning. The current problem is that third-tier stocks have diminishing potential. You can't push all third-tier stocks higher than second-tier stocks — that would be chaos. The market's biggest issue now is that sectors need to rotate. Some second-tier stocks with enormous medium-term potential will be the main targets. Like the ones mentioned this morning. Second-tier stocks also include some with generous bonus/rights-issue plans — these are routinely traded around earnings season.
The pocket-sized SME board stocks deserve medium-term attention. There are only two types of movements: one is oscillating near the opening price to form a hub and then going up; the other is going down. The ones that go down actually have more potential — the downside is just two waves, and once daily chart divergence appears, it's a medium-term bull stock. Just look at the previous SME board stocks and you'll understand. For those that break upward, you can enter at the oscillation low of the hub, swing-trade back and forth until a third-type buy point appears, then you can hold for a longer stretch. Once an SME board stock produces a third-type buy point from the post-opening hub, the subsequent rally is always considerable. If you don't understand, study some that have already played out, and you'll get a general grasp of how to handle new listings.
On fundamentals: interest rate hikes only have psychological impact — once they materialize, it's fine. The bigger pressure comes from some issues related to the foreign exchange investment corporation, but this is still within the absorption capacity of at most a weekly-level hub.
Replies
缠中说禅 2007/3/14 15:25:28
On fundamentals: interest rate hikes only have psychological impact — once they materialize, it's fine. The bigger pressure comes from some issues related to the foreign exchange investment corporation, but this is still within the absorption capacity of at most a weekly-level hub.
缠中说禅 2007/3/14 15:30:18
[Anonymous] 白玉兰
2007-03-14 15:25:36
000998 is the agriculture leader, but why is it so lifeless?
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There's some earnings pressure, but it's not a big deal. 938 has the same issue, so don't get too aggressive.
缠中说禅 2007/3/14 15:31:54
[Anonymous] guess
2007-03-14 15:27:49
Thanks to the blogger, I bought 002120 today. Felt calm after buying, but it suddenly spiked at the close. Not sure why.
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As long as the movement hasn't shown a change at the hub level, there's nothing worth getting startled about.
缠中说禅 2007/3/14 15:33:43
[Anonymous] 转帖一下
2007-03-14 15:32:16
Can I repost your Analects excerpts? Credited of course, ok?
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Sure.
缠中说禅 2007/3/14 15:35:11
[Anonymous] 白玉兰
2007-03-14 15:27:13
My two Shandong guys have been performing well recently. Thanks, little sister!
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It's just that the broader market isn't cooperating too well, so if the market takes a particularly ugly turn, they'll still correct.
缠中说禅 2007/3/14 15:39:57
[Anonymous] ED男猿
2007-03-14 15:32:18
Also, boss, regarding the position of the third buy point on the daily hub, I'm a bit confused. Mainly two aspects:
1: Because it's consolidation, and with the decomposition theorem, I can't be certain if the three 5-minute trend types have completed.
2: If I then look for divergence at the 1-minute level, under the uncertainty of the previous point, it feels forced.
Please enlighten me, boss.
=
For the three segments A, B, C — you can compare consolidation divergence between A and C. Inside C, you can look at sub-level divergence. Combining the two makes it very simple.
缠中说禅 2007/3/14 15:42:19
[Anonymous] 风云
2007-03-14 15:34:42
Hello OP,
Question: For a new stock, should the first hub's first segment count from the second segment? For example, if a new stock goes up for several days after listing and then drops, its hub should be down-up-down; if it drops immediately after listing, it should be up-down-up — is this correct?
=
Just treat the opening-to-gap-up move like any situation with a gap.
缠中说禅 2007/3/14 15:44:39
[Anonymous] Little Bird
2007-03-14 15:21:02
This "new stocks" doesn't include sub-new stocks, right?
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Any that haven't been deflowered can wait for the opportunity to be deflowered.
缠中说禅 2007/3/14 15:49:51
bird
2007-03-14 15:41:45
Question:
What does second-tier and third-tier stocks mean?
What's the relationship with component stocks, large-caps, small-caps???
Thanks!
=
There's actually no strict distinction. Generally, it's based on earnings and price. Penny stocks, loss-making stocks, stocks priced below the average share price — these are generally third-tier. You'll know after spending enough time in the stock market. It's just a conventional concept.
缠中说禅 2007/3/14 15:56:23
[Anonymous] 大盘
2007-03-14 15:41:05
Hello blogger:
I still have some questions about the position of the third buy point, mainly in two areas:
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For example, after a standard daily downtrend completes, followed by a reversal forming the first daily hub — if then a 30-minute move departs from the hub and returns, and then departs again, and the 30-minute pullback low doesn't break the daily hub's high — does that count as a third buy?
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After an uptrend forms two daily hubs, a 30-minute move departs the second hub and then the 30-minute pullback low doesn't fall below the second hub's high — is that a third buy?
Thanks
==
Any case where a sub-level departure followed by a sub-level pullback that doesn't return to the hub counts. However, if it's the 4th or 5th hub in a continuously extending uptrend, the third buy point resulting in hub expansion is virtually 100% certain. Whether a trending rally rather than a larger hub can emerge after the third buy point, and how to determine this — that's the key, and will be discussed later.
缠中说禅 2007/3/14 15:57:34
4 o'clock — sorry, have a meeting. Heading out first, goodbye.
缠中说禅 2007/3/14 15:18:22
Last night the traitors' daddy had a big drop, and the traitors got all excited and wanted to fly their daddy's flag at half-mast, hence today's price action. Originally, the market needed to oscillate anyway, and today's bearish candle pulled by the traitors for their family still falls within the oscillation range around the new hub. As long as no third-type buy or sell point appears, this oscillation will continue.
I already discussed individual stocks this morning. The current problem is that third-tier stocks have diminishing potential. You can't push all third-tier stocks higher than second-tier stocks — that would be chaos. The market's biggest issue now is that sectors need to rotate. Some second-tier stocks with enormous medium-term potential will be the main targets. Like the ones mentioned this morning. Second-tier stocks also include some with generous bonus/rights-issue plans — these are routinely traded around earnings season.
The pocket-sized SME board stocks deserve medium-term attention. There are only two types of movements: one is oscillating near the opening price to form a hub and then going up; the other is going down. The ones that go down actually have more potential — the downside is just two waves, and once daily chart divergence appears, it's a medium-term bull stock. Just look at the previous SME board stocks and you'll understand. For those that break upward, you can enter at the oscillation low of the hub, swing-trade back and forth until a third-type buy point appears, then you can hold for a longer stretch. Once an SME board stock produces a third-type buy point from the post-opening hub, the subsequent rally is always considerable. If you don't understand, study some that have already played out, and you'll get a general grasp of how to handle new listings.