3780 Points, the Short-Term Lifeline.
2008/3/21 15:29:38
Too many phone calls, running late. Apologies.
The post I published yesterday morning at 11 AM already gave all of you the most ample hints. As is my well-known technical convention, anything within a 3% range can be considered as having effectively touched the target level. The target this ID gave was 3424 points, and yesterday's low was already within its 3% range, so even if it rallied right from there, it would already be technically perfectly valid. And yesterday, this ID described the technical nature of the morning's action as an "intimidation-style washout." That hint was clear enough — if you didn't react, there's nothing more this ID can do.
Now, of course one cannot say the market has no possibility of retesting the bottom again, but at least one foot of the market bottom has touched ground. The only question now is whether this bottom stands on one leg, two legs, or even multiple legs. And what determines all of this is 3780 points — this is the upper edge of the new bottom fractal on the 60-minute chart. As long as this level holds, at minimum on the 60-minute chart an upward stroke will extend, which means this rebound is a single-leg bottom.
Technically, the 30-minute MACD just got blocked at the zero axis. Therefore, as long as 3780 points can hold early next week, the zero axis will be broken through, which will in turn drive the 60-minute MACD to charge toward the zero axis, corresponding to another upward push in the trend.
Of course, if 3780 points can't hold, the 30-minute MACD will form a pattern of being blocked at the zero axis and falling back again, which naturally corresponds to another bottom retest. So from this angle as well, the importance of 3780 points is even more evident.
Since a bottom fractal has already appeared on the daily chart, with the upper edge at 3941 points, that level is the key to determining whether the magnitude of the rebound can expand. Once that level holds firmly, returning to the previous 60-minute type-3-to-4 quasi-hub won't be a problem.
On the individual stock front, it's still the same few sectors this ID has been pointing out all along in rotation. The recent strengthening of small-to-mid steel stocks is due to restructuring expectations — further proof that mining restructuring themes is an effective long-term approach. Currently, small-cap and low-priced stocks still have the advantage. Look — with the same theme, Swan outperforms Guodian. Why? Simply because the float is smaller. Guodian has over 3 billion shares outstanding; naturally, it takes more effort and more time to move.
Some bored people keep going on about "322." That's worth less than duck fart. Are the great people of mainland China supposed to look at some fishing village's face just because they're electing a village chief? Their brains must be waterlogged.
This ID has a word of advice for those Hong Kong, Taiwan, and Macau people: you have a few more years left to consider yourselves somebody. Once that time passes, you'll be nothing. Stop always thinking that mainland China owes you something. The leverage you use for your demands and posturing is becoming less and less valuable. When the day comes that you realize an unstoppable economic powerhouse's melting force, it'll be too late for regrets.
Those who refuse to take the offered face will end up losing even their underwear.
Rather than watching the boring drama of 322, you might as well read this ID's seven-character regulated verse:
Signing off. Goodbye.
The Southeast
Chán Zhōng Shuō Chán
Ten thousand miles southeast, the sea floats to the sky,
One crack in the golden vessel for a hundred and five years.
Unburied, the blood of dragons and fish across all ages,
Resurrected, mirages of clams in dawn and dusk's haze.
The rise and fall of China and foreign lands — humbly following Tang's great ones,
In wind and rain, gray and sallow, longing for Zheng's wise men.
A billion souls in the divine land, rousing themselves anew,
Plucking up Kunlun to cast and fill the roaring waves.