Teaching You to Trade Stocks 37: Further Differentiation of Divergence
2007/3/16 11:51:32
If the market wants to break free from the current hub, it's basically impossible without the cooperation of financial stocks. But since financial stocks are heavily controlled by a certain type of people, short-term attacks are fine, but a sustained attack is somewhat difficult. However, from a medium-term perspective, financial stocks still hold the same view as this morning — using ICBC as an example, it's a large-level oscillation around 5 yuan, and those who want to crash it will have to pay a price. By the way, the traitor forces in Bank of China are somewhat weaker — BOC has the Olympics concept and slightly better performance. Whether it can be transformed into an anti-traitor weapon and become a breakthrough point still requires great effort. This transformation hasn't been a one or two day affair — BOC's share price has already been consistently higher than ICBC's these past few days, and that's progress. I won't go into the specifics, but in short, the struggle is brutal and complex. You can't charge in bare-chested — you must use the fullest patience to wear down the traitors' strength.
The divergence issue has been discussed many times, but I've found there are still many misunderstandings. Let's use the most typical a+A+b+B+c as an example to clarify some details that are frequently confused.
No trend, no divergence — not every a+A+b+B+c pattern has divergence. When we say there's divergence in a+A+b+B+c, first and foremost, a+A+b+B+c must be a trend. And a trend means A and B must be hubs of the same level; otherwise, it can only be seen as oscillation around the larger hub. For example, if A's level is larger than B's, then a+A+b+B+c = a+A+(b+B+c), and a and (b+B+c) are just small-level fluctuations around hub A. In this case, there is no divergence — at most, only consolidation divergence. Of course, for the last hub B, divergence and consolidation divergence share many similarities, and through the principle of multiple interpretations, b and c can be treated as sub-level fluctuations of B. But multiple interpretations only means multiple perspectives — you can't just have the perspective of treating b and c as sub-level fluctuations of B and forget the perspective that a+A+b+B+c is a trend with A and B at the same level. Multiple interpretations is not ambiguity — it doesn't mean anything goes and any decomposition works. This must be repeatedly emphasized.
Second, c must be of a sub-level, which means c must contain at least one third-type buy/sell point relative to B; otherwise, it can be seen as small-level fluctuation within hub B and can be handled entirely with consolidation divergence. Meanwhile, b can potentially be smaller than sub-level — the strongest case being consecutive gaps, meaning b's level cannot be larger than c's. For example, if b is sub-level and c shows consecutive gaps, even if c hasn't completed and eventually extends to sub-level, the possibility of c being in divergence becomes very small. Even if it is, one must be especially vigilant, as the probability of the weakest type of movement is extremely high.
Furthermore, if a+A+b+B+c is an uptrend, c must make a new high; if a+A+b+B+c is a downtrend, c must make a new low. Otherwise, even if c contains a third-type buy/sell point relative to B, you can use consolidation divergence to analyze the sub-level oscillation around B. Analyzing c's internal structure — since c contains a third-type buy/sell point of B, c must contain at least two sub-level hubs; otherwise, the condition of sub-level departure followed by sub-level pullback not re-entering the hub cannot be met. The most standard and common case is when these two hubs form a sub-level trend relationship, in which case you can continue to apply the a+A+b+B+c framework for sub-level analysis to determine the divergence issue within c's internal sub-level trend structure, forming a nested interval state. This allows for more precise positioning of the subsequent divergence.
I've been too busy lately, so I can't write too long. Let me add a couple of sentences about the current market movement. Honestly, if the market wants to break free from the current hub, it's basically impossible without the cooperation of financial stocks. But since financial stocks are heavily controlled by a certain type of people, short-term attacks are fine, but a sustained attack is somewhat difficult. However, from a medium-term perspective, financial stocks still hold the same view as this morning — using ICBC as an example, it's a large-level oscillation around 5 yuan, and those who want to crash it will have to pay a price. By the way, the traitor forces in Bank of China are somewhat weaker — BOC has the Olympics concept and slightly better performance. Whether it can be transformed into an anti-traitor weapon and become a breakthrough point still requires great effort. This transformation hasn't been a one or two day affair — BOC's share price has already been consistently higher than ICBC's these past few days, and that's progress. I won't go into the specifics, but in short, the struggle is brutal and complex. You can't charge in bare-chested — you must use the fullest patience to wear down the traitors' strength.
As soon as the afternoon session closes, I have to go to the final meeting for the launch of the anti-traitor weapon, so I won't be able to come back. The market trend is simple — before a third-type buy point appears, the oscillation continues. This pattern has repeated many times already, and you should be skilled at handling it by now, so there's no need to say more.
缠中说禅 2007/3/16 11:54:37
The traitors' attempt to use the end of the Two Sessions to suppress the market will continue — this was already mentioned yesterday — so the struggle continues, and the outcome is uncertain. Let's keep up the effort. We have plenty of time anyway. We won't fight head-on, but we won't let any opportunity slip by either.
Signing off, goodbye.