The Bubble Phase of the Component Stock Rally Officially Begins
2007/8/6 15:58:43
Just as this ID wrote "Man Jiang Hong" during the 3600-point assault, and wrote China Shall Have Its Zenith Day; Ten Thousand Nations in Ceremonial Robes Dance the Nine Shao at the start of the general offensive that broke through 3000 — in hindsight, the timing of both was quite apt. In that March 19 article, this ID declared: "It is laughable to discuss stock market bubbles before total market capitalization exceeds GDP. The first stage of this rally will not end until China's total stock market capitalization exceeds its GDP." Now, this target has been achieved — China's total stock market capitalization has reached GDP level. This ID very clearly pointed out in that article that the first phase "mainly manifests in component stocks led by heavyweight stocks." But on a day like today, this ID must announce: the bubble phase of the component stock rally officially begins.
GDP is the hub around which total stock market capitalization oscillates. The preceding rise was a recovery rally — recovering back to this hub level. Starting from today, we enter the bubble phase of moving away from this hub. Generally speaking, a bubble phase rally will gradually move toward total frenzy — even the biggest elephants can dance a minuet, and the crazed surge will spread like a plague. This phase can be very brief or last a considerable time. It can move 30% away from the hub or 300% away, but the final result is always the same — a drop back to the hub level.
All those currently enjoying the ride on the sedan chair like this ID should first be intellectually clear about the nature of this rally. But don't panic — being able to enjoy the bubble in peace, and kicking it apart at the very last moment, is precisely the fine art of speculation. Enjoy well, make good use of it, don't waste the efforts of the crazed sedan bearers.
Generally during such a bubble phase, this ID's principle is simply to sit on the sedan chair and do nothing. This ID holds large positions in China-prefix large-cap stocks — basically every "China Something" component stock. This was specifically mentioned during the 3600-point period. When this bubble rally reaches its climax, these will all be excellent seed candidates for popping the bubble. The rest are the original dozen or so zero-cost stocks, positioned as so-called second- and third-tier allocations. Some of these will actually be followed long-term, because in the second phase's growth stock rally, some will become seed players. This ID's positions are all built with a 20-year horizon. For some stocks, this ID absolutely intends to hold them for over 20 years.
For short-term moves, looking at the chart below makes everything clear. The line segment formed by strokes 8-9, and the upward-trending movement formed by the line segment of strokes 6-7 below — of course this trend can continue extending until a new 1-minute hub forms, but the prerequisite is that the subsequent upward push doesn't form a quasi-divergence. Otherwise, at least a 1-minute level hub oscillation will form at the current position. Whether divergence occurs is the focus for the next couple of days. Once divergence forms, a major oscillation is inevitable.
On individual stocks, the charge of component stocks will continue, but the rally in second- and third-tier stocks will gradually heat up. Today's biggest problem is that the third-wave participants' promotional ability over the weekend was too weak — truly a rabble — lacking resources in other areas, so the rate at which duped fourth-wave participants are entering hasn't reached the expected level. Therefore, watch how the third-wave participants perform in their hyping over the next few days. If fourth-wave participants enter too slowly, the market will inevitably diverge and oscillate. Currently, overseas markets are in a bloodbath — if they stabilize in the next couple of days, it would be the biggest boost for third- and fourth-wave participants. So let's wait and see.
Homework: When analyzing quasi-divergence within line segments, is it more convenient to use MACD on the 1-minute chart or the 5-minute chart for auxiliary judgment?
This ID was planning to use heavy rain as an excuse to skip debauchery tonight, but it turns out the area I'm heading to had no rain, and the rain in my area has also lightened. Looks like there's no escape. Signing off first. See you later.
Replies
缠中说禅 2007/8/6 16:45:32
Everyone please note: this ID is currently online via mobile phone in a car. What you're seeing now is not the correct version. Sina has a delay on modified versions. Some netizens above are correct — the original strokes 8-9 do not constitute a single stroke.
缠中说禅 2007/8/6 16:16:39
There's an issue with the comment template. If you can't see it, please be patient. This ID isn't very familiar with computers.
In the future, if you can't see new posts right away, go to the "All Articles" section — you'll find them faster there.
Signing off first. See you later.