Two-Year Record Gain Raises the Curtain on Bubble-Mode Survival
2007/8/20 15:48:47
The medium-to-long-term judgment on the broader market is all in this morning's Bubble-Mode Survival After Total Market Cap Surpasses GDP. The last paragraph deserves quoting: "Obviously, the market's most insane state has yet to appear. External factors creating short-term fluctuations actually help accumulate market energy. Before the bubble-creating capacity has been fully unleashed, the market will not ultimately reverse, and the first-stage component stock rally will not end. No longer buying strategically—only holding strategically—while waiting for market insanity and the appearance of the first-stage long-term selling point is the most appropriate strategy under bubble-mode survival conditions." Today, the broader market raised the curtain on bubble-mode survival with a two-year record gain.
As for the market's medium-to-short-term movements, this was already stated explicitly last Friday: "One thing is certain: this week's terrible global performance will trigger forceful intervention by financial authorities worldwide. Therefore, the emergence of a powerful rebound is perfectly normal—whether a bear trap needs to be created beforehand isn't important." Subsequent price action has played out largely as described. In that same article, it was already noted that what matters most is the movement after the rebound—specifically, the effectiveness of relevant policies needs to be watched. Once rescue policies fail, triggering even larger-scale sell-offs in global capital markets is not at all far-fetched.
Returning to the Shanghai Index, from a purely technical perspective, the 8-49 range in the chart below can be viewed as a 30-minute hub, but it can also be seen as follows: for the 5-minute hub of 8-17, after the 1-minute trend of 17-38 showed a 5-minute divergence, a pull-back at least returning into the 5-minute hub of 8-17 was required. Obviously, 49 has broken below 14, perfectly demonstrating this ID's theory. From an ultra-short-term perspective, using the multi-interpretation nature of price action, the subsequent movement can first be viewed as an oscillation of the 5-minute hub of 32-41. For an upward breakout, a third-type buy point must appear; otherwise, despite today's 248-point rise, it remains merely a hub oscillation.
On individual stocks, Friday's analysis was also very clear: "On individual stocks: first-tier component stocks will follow external markets; once external markets stabilize, this will trigger a big rebound. For second and third-tier stocks, the key is watching capital inflows this time, but regardless, individual stock action will become active again." Obviously, today's price action completely aligns with this. Currently, for the rally to continue developing, second and third-tier stocks must be ignited—this is the key to whether subsequent action can deepen. Otherwise, merely pulling first-tier large caps or generating a broad-based uniform rise cannot be sustained.
Additionally, Friday's use of 600139 and 600594 as examples was simply to illustrate the importance of holding stocks. If you have neither the skill for short-term trading nor the patience for holding, how can you possibly defeat the capital market over the long term? Let me give another example—the only China-prefix stock this ID has explicitly mentioned, 600737. In mid-July, when it was at 8 yuan, this ID made it explicitly clear: this stock is equivalent to telling you about 000999 at 6 yuan—it's purely preparing tuition fees for you so you can study in peace. But how many people have been able to hold from 8 yuan to now? Actually, it's only been about one month. If you can't even hold for that long, then you should go do whatever else suits you.
Got things to do today. Signing off, goodbye.
