MACD Red Bars Finally Appear, Awaiting Confirmation

2008/2/18 15:18:26

Last week this ID said the most important thing this week is the MACD red/green bar issue. Today, borrowing some positive news, the red bars have finally been pulled out. But note — this doesn't mean everything is worry-free. What follows is a confirmation process.

Technically, generally after such red bars appear, if the current level can't be held, then a situation where a few red bars come out followed by green bars again will occur. This type of situation often corresponds to a new round of selling, so after these red bars appear, this is exactly the scenario to guard against.

In practical operations it's easy to handle: after the red bars appear, if follow-through energy can't keep up, the likelihood of the above scenario becomes very high. So when the push higher loses steam, you must get out first and observe, because the subsequent reversal could be extremely abrupt.

Technically, the bottom construction has the possibility of a head-and-shoulders bottom. This scenario of red bars quickly turning to green bars again often corresponds to such a pattern. In the best case scenario, it corresponds to a double bottom.

Of course, the above are all imprecise analyses. According to this ID's theory, these analyses don't have much significance. Right now it's a hub oscillation process — this has been said many times. Today didn't constitute a line-segment-level rally, indicating insufficient upward momentum, because the 1-minute hub formed around 4575 today has important technical significance. The subsequent ultra-short-term trend is entirely determined by the ultimate evolution of this hub.

Regarding individual stocks, agriculture, chemicals, Olympics themes, etc. all had performances, but sector sustainability remains an issue. The current problem is that a super-naked-running sector hasn't formed yet, so individual stock moves can only show scattered patterns. To change this situation, market sentiment still needs continuous cultivation. 600795 hit the round number of 20, needing consolidation for turnover. If even the high-distribution sector can't break out, other sectors will have an even harder time.

Whether the MACD red bars can be maintained this week and whether the market can hold firmly above 4575 — this is the most critical technical requirement for the bulls. Tomorrow's CPI is a test. Whether this test can be weathered is the key to meeting these requirements.

Signing off first, see you later.