3919 Points Continues to Torment You

2007/7/10 15:43:11

Today's pullback arrived as expected—this was already mentioned yesterday. This kind of pullback is needed by both bulls and bears, so you could say it was universally desired. Today, the exceptional earnings from financial stocks triggered the index to momentarily break through 3919 points, but this has not changed the powerful resistance at that level.

Now the disagreement between this ID and the traitor-invaders is whether the head-and-shoulders bottom below the 3919-point neckline can form. So the real battle is still ahead. Of course, what pattern ultimately forms isn't that important—it all comes down to an effective breakout above the 3919-point neckline. If that can't be achieved, everything else is meaningless.

For retail investors, this ID has repeatedly emphasized: you only need to know how to fight a guerrilla war. Watch the trajectory drawn by the market's ultimate resultant force, operate according to the timeframe you've set for yourself, and even if this ID ultimately loses, you have no reason to accompany this ID into defeat. Sell when you should sell, buy when you should buy—base decisions on the chart, not on anything else.

Regarding individual stock selection, from a purely technical perspective, one approach is stocks that have already dropped around 50%, are near their annual or at least semi-annual moving average, with obvious new capital entering—mid-to-low-priced stocks with themes and potential. The other approach is ultra-strong stocks, but these have the risk of catching-up declines once the market reverses, so the technical requirements are especially high. Right now, for individual stocks, you must adopt a medium-to-long-term position-building mindset. Of course, some short-term theme stocks will continue to perform, but the risks here are much greater than in the first half of the year.

Note: for retail investors, position-building can be entirely dynamic. That is, you can repeatedly trade the same stock to bring your cost basis down. Let me emphasize again—to survive in the market, the key is cost. When stocks are building their bottoms, the oscillations are usually quite large, making them actually quite easy to grasp. Moreover, if the market reverses, some stocks will create bear traps with the momentum of their decline. If you can't do dynamic position-building, you'll suffer the pain of short-term entrapment. So if your technique is decent, you should make yourself dynamic—that's real skill.

Of course, if you have no technique, then analyze the fundamentals thoroughly, research it inside and out, then rely on the power of perseverance—gradually build positions and then hold tough. Sit through the entire prison sentence, and when it's over, you'll be free and rich. Everyone's trading method must be based on their actual situation—never force it.

Let me emphasize one last time: market operations must ultimately come back to yourself. Only when you've improved yourself is it truly the ultimate solution. Never rely on anyone—not even this ID. You can study this ID's theory because it is geometric and invariant; everyone must follow it. But never harbor the thought of relying on this ID. This ID is no philanthropist. In the brutal market, anyone claiming to be a philanthropist can only be a fraud.

The market is fire and blood—there is no warmth or charity. Stop clinging to delusions. As for those swindled by pyramid schemers, that's self-inflicted. The market has no tears for such people—go reflect on your own.

Signing off, goodbye.