5209 Points: Textbook Oscillation

2007/12/25 15:16:24

Nothing to say today—everything was said yesterday. Today was simply a textbook-perfect oscillation around 5209 points, churning out a 1-minute hub. That's all there is to it. The center of this hub is at 5210 points—one point off from 5209. That's the only imperfection.

Generally speaking, for this kind of adjustment, the key is the 5-day moving average. As long as it holds, the adjustment won't escalate to a higher level. (Thought exercise: Why the 5-day MA and not some other MA? This ID's theory can provide a very reasonable explanation—please provide one.)

Operationally, those with skill and quick hands can use this oscillation for switching stocks and playing spreads. Those without skill should just open their mouths wide, put on a fascinated expression, and watch as the back-and-forth unfolds.

The subsequent development boils down to three scenarios: Worst case—the oscillation produces a third-type sell point here, leading to a larger daily downward stroke correction. Middle case—the oscillation expands the 1-minute level into a 5-minute level, creating a larger hub. Best case—a third-type buy point emerges. But since there have already been two hubs, even without divergence afterward, it's time to be cautious. The more likely scenario is divergence appearing, followed by a pullback to form an even larger hub.

From the analysis above, aside from the strongest version of the third scenario—where no divergence occurs and 1-minute hubs keep moving up—all other scenarios will ultimately produce at least a larger-level hub. So hub oscillation operations become even more important.

For hub oscillation, besides playing spreads, the best strategy for retail investors is constant stock rotation. Of course, this requires you to have a particularly strong sense of sector rotation rhythm, because during mid-rally oscillations, individual stock action is inevitable—especially in thematic or small-to-mid-cap names. Dump at oscillation highs the stocks with less short-term profit potential; buy at oscillation lows the ones with more short-term profit potential—that's how you maximize efficiency.

How do you judge whether a stock has short-term profit potential? There's no need to ask such questions. Is a stock that just had a top divergence more promising, or one that just started its first hub upshift? Is a stock that just entered a major resistance zone more promising, or one that just confirmed breaking free of a resistance zone? You can explore other cases yourself. In the end, the chart tells you everything.

Signing off, goodbye.