Governor Zhou's Embarrassment

2007/5/8 8:56:50

This is destined to be an ungrateful article, and even the title has problems — things that would be embarrassing or should be embarrassing for ordinary people might be precisely what Governor Zhou finds most worth flaunting. Of course, it should be noted that writing such an article is not because Governor Zhou bared his heart to various foreign central bankers during the May Day holiday, "worrying about the accumulation of bubbles in China's stock market" — that's nothing special, purely discussing the matter at hand, which is still better than blowing off steam. What further needs to be pointed out is that the embarrassment here doesn't involve the time when Governor Zhou was still Chairman Zhou, when amid stock market chaos it entered a four-year great bear market, and particularly has nothing to do with how after Chairman Zhou became Chairman Shang, the stock market suddenly transformed dramatically into a great bull market. Governor Zhou is such a distinguished figure — how could he be embarrassed by such trivial matters?

Indeed, what major event could possibly embarrass such a distinguished figure as Governor Zhou? I'm increasingly feeling this title is too wrong — Governor Zhou has nothing to be embarrassed about. He's as unembarrassable as the debt-to-equity swaps were unremarkable, as unembarrassable as the banks not being sold off cheaply. Even if a huge pile of bills were issued, the US dollar assets still remain disproportionately over-allocated at high ratios, deposit reserve requirements continue to add to liabilities, swinging the interest rate hike club against Sino-US interest rate differentials, letting the unsound interest rate system continue eating American hamburgers, and so on and so forth — what does any of this have to do with Governor Zhou? The People's Bank of China has never had strong independence anyway, so we shouldn't be too demanding. China's economy is doing so well that many things that should be done — even if they're not done — it's no big deal.

The People's Bank is just a ministerial-level unit. Not being a coward is already pretty good — dreaming of being like Greenspan is completely out of the question. But this can't constitute a reason for embarrassment either — it's always been this way. It seems this ID is about to start sympathizing with Governor Zhou. Since that's the case, this ID will correct the error: like a debt-to-equity swap announcement that banks weren't sold off cheaply, the title of this article is hereby changed to "Governor Zhou's Utter Lack of Embarrassment."

Appendix:

Today's market movement could have been predicted with one's toes, but there's still no need for prediction. The actual movement that emerged wasn't as strong as it appeared, because the market merely produced a strong equilibrium market. This kind of high-volume equilibrium market following a large gap means that in the coming days, the gap below will be a lingering concern for the market's short-term, and market oscillation will be unavoidable.

Of course, what we're discussing here is very short-term movement. Generally, for the short term, continue watching the 5-day moving average; for the medium term, watch the 5-week moving average — if they're not broken, just hold. For those pursuing higher precision in technical analysis, you can watch for divergence that appears on subsequent short-term movements to trade, rather than predicting whether the market will actually fill the gap. As always, don't wait until it drops to look for sell points, or wait until it rises to look for buy points — by then it's too late. Regarding the medium-term trend of the market and the significance of specific price levels, looking at everyone out there right now, nobody can figure out what the market is actually doing from a purely technical standpoint. This ID has already written an article, but for certain special reasons, it cannot be published now. When the time is right, this ID will publish it.

There's nothing to say about individual stocks, and specific stocks should determine entry and exit based on their own trends. Many stocks that are stronger than the broader market will surge significantly even if the market fills the gap. When operating individual stocks, pay close attention: for those whose technical skills aren't strong enough, even for short-term trading, just watch the 5-day moving average — if it's not broken, hold it. Don't habitually jump around, otherwise when the market oscillates, you'll get slapped on both sides. Also, maintain a good mindset: if you sold too early or sold the wrong thing, there's no need to chase and buy high. Wait for a short-term buy point to re-enter — that's not too late. During market oscillation, such buy points aren't hard to find.

Replies

缠中说禅 2007/5/8 8:59:21

I'll append the commentary to the appendix after market close and answer questions.

See you at 3:30 PM. Heading out first.

缠中说禅 2007/5/8 15:28:53

Today's market movement could have been predicted with one's toes, but there's still no need for prediction. The actual movement that emerged wasn't as strong as it appeared, because the market merely produced a strong equilibrium market. This kind of high-volume equilibrium market following a large gap means that in the coming days, the gap below will be a lingering concern for the market's short-term, and market oscillation will be unavoidable.

Of course, what we're discussing here is very short-term movement. Generally, for the short term, continue watching the 5-day moving average; for the medium term, watch the 5-week moving average — if they're not broken, just hold. For those pursuing higher precision in technical analysis, you can watch for divergence that appears on subsequent short-term movements to trade, rather than predicting whether the market will actually fill the gap. As always, don't wait until it drops to look for sell points, or wait until it rises to look for buy points — by then it's too late. Regarding the medium-term trend of the market and the significance of specific price levels, looking at everyone out there right now, nobody can figure out what the market is actually doing from a purely technical standpoint. This ID has already written an article, but for certain special reasons, it cannot be published now. When the time is right, this ID will publish it.

There's nothing to say about individual stocks, and specific stocks should determine entry and exit based on their own trends. Many stocks that are stronger than the broader market will surge significantly even if the market fills the gap. When operating individual stocks, pay close attention: for those whose technical skills aren't strong enough, even for short-term trading, just watch the 5-day moving average — if it's not broken, hold it. Don't habitually jump around, otherwise when the market oscillates, you'll get slapped on both sides. Also, maintain a good mindset: if you sold too early or sold the wrong thing, there's no need to chase and buy high. Wait for a short-term buy point to re-enter — that's not too late. During market oscillation, such buy points aren't hard to find.

缠中说禅 2007/5/8 15:36:35
Two Tigers

2007-05-08 15:03:37
Fairy Sister! 999 — this ecstasy pill isn't going to wash out again after just two days of euphoria, is it?!
999, you really make me happy and sad at the same time!

--
Why not trade short-term? Before May Day, this ID actually gave a hint — this ID said it had doubled. Did you think this ID was showing off? This ID's stocks love to do washouts at those 1x, 2x, Nx positions. Look at 777, 416 — which one wasn't like this? If you want things fast, why not buy the VC stock this ID mentioned? Everyone here should know about it — it's been hitting daily limit-up recently too. As for 999, we're now waiting for the news to become clear, then trading halt. Short-term traders have no need to pay attention to it at all; for medium-term, there's absolutely no problem.

缠中说禅 2007/5/8 15:42:47
[Anonymous] 睬猜枚妹

2007-05-08 09:08:47
The article is eye-catching and well-written! But it will also attract resentment! For our sake, please don't be too aggressive, miss! The tallest tree in the forest catches the most wind. Learn to protect yourself!

=
Thank you, but no need to worry. If one doesn't even have the courage and capability to critique a ministerial-level official, this ID might as well shut down this blog.

缠中说禅 2007/5/8 15:47:23
[Anonymous] 木匠

2007-05-08 15:43:38
Hello Chan master. I've been studying the theory for so long, but I just can't figure it out — always making mistakes.

==
You should first trade less, because a single 5-day moving average is enough to make you better than many so-called experts — just hold. Then use a small amount of capital for actual trading, but the prerequisite is having a fairly solid grasp of the theory. After each trade, you must review how you analyzed it and what you thought — you must do post-market reviews, and even write them down. For things you don't understand, you must ask people — and they must be specific questions. This is an activity pursuing precision; naturally it's not something you can handle by just flapping your lips.

缠中说禅 2007/5/8 15:49:34
Two Tigers

2007-05-08 15:46:15
I always develop an attachment to stocks that I shouldn't have. I deserve to be scolded by Fairy Sister.

999's pattern every time is to nearly hit the daily limit at the open, then adjust afterward. I never learn my lesson!!!
For VC I only bought 938. I still have Guanzi, Longping, and Shanda in hand

=
VC is 600635, mentioned when it was just over 5 yuan — it's a 20% shareholder of China's largest VC. Now forget about it — it's already gone up so much, no need to chase.

缠中说禅 2007/5/8 15:53:30
[Anonymous] 过客

2007-05-08 15:47:53
Chan sister, I just want to ask, why is 938 rising so sluggishly? The others that should have doubled have doubled, those that needed washing have been washed — why is this one showing no movement? Has Chan sister forgotten about it?

==
Wasn't this question answered long ago? In the first phase, tech stocks aren't the lead actors. But for capital the size of this ID's, it's impossible to wait until the second phase to build positions. Different capital sizes naturally mean different operations.

缠中说禅 2007/5/8 15:56:39
[Anonymous] 大鱼小鱼落鱼盘

2007-05-08 15:49:36
Is 778 a VC stock?
Chan master: I trade medium-term. Can I still buy 778 now? Thank you, Chan master.

==
For this question, when it was around 10 yuan recently, someone also asked. This ID's answer was: do you know its shareholder background? Now, this ID's answer remains the same, but I don't recommend buying at this level — this stock is almost at 2x already.

缠中说禅 2007/5/8 16:00:04
[Anonymous] 大鱼小鱼落鱼盘

2007-05-08 15:54:22
938 and 778 were both mentioned later by Chan master — stocks that haven't doubled yet.

Waiting to buy 778 when the market pulls back should be fine, right?

==
778 was among the first batch of five — it's nearly at 200% already, but medium-term it still has potential. Just don't chase the highs.

Actually, this ID really doesn't want to answer these kinds of questions. Like 778 — it started from 5 yuan. Now you're asking whether this ID would buy it? How do you expect this ID to answer? This ID doesn't need anyone to carry the sedan chair. The only answer remains: do you know its shareholder background?

缠中说禅 2007/5/8 16:09:57
[Anonymous] 袖手旁观

2007-05-08 15:59:30
Hello Chan MM.

I have a question about small-level divergence turning into large-level trend movements. After a small-to-large transition, there's a lot more uncertainty.
Suppose a daily-level divergence has already occurred, and the trend is in the process of pulling back to the last daily hub after the divergence. Could the pullback segment be disrupted by a small-to-large transition, causing a reversal before it even reaches the last daily hub?

According to the divergence law, this shouldn't happen because it would violate the large-level divergence. However, the pullback segment of a large-level divergence takes a relatively long time — could changes occur during this period? Setting aside probability for now, considering only the pure theoretical possibility.

==

After the level expansion, operate according to hub oscillation. Additionally, for particularly long pullback processes, there theoretically exists the possibility of the theory becoming invalid. For example, a yearly-level divergence pullback might encounter regime changes, complete changes in trading rules, etc. midway — this changes the premises upon which the theory holds, so of course it's possible to produce an incomplete pullback. But this isn't the theory's problem, because the theory's conclusions hold only when the theory's premises hold. So the only thing one needs to concern oneself with is whether the premises of the theory have changed — if unchanged, the pullback will definitely happen.

缠中说禅 2007/5/8 16:13:15
[Anonymous] 微

2007-05-08 16:00:29
Let me ask a fairly basic question: does "breaking the 5-day moving average" mean the day's low touches the 5-day line, or the day's high is below the 5-day line?

==
Breaking the 5-day moving average and such are all commonly used imprecise methods. By the usual understanding, generally if it can't be pulled back above within 3 days, it's a genuine break below. But by the time such confirmation comes, you're usually quite far from the actual high. So this isn't the ultimate method — you still need to put in the hard work and master this ID's theory thoroughly. That's the most thorough and precise approach.

缠中说禅 2007/5/8 16:14:25
[Anonymous] 职业潜水员

2007-05-08 16:06:44

Hey awesome Chan master, when will tech stocks start moving?

===
The era of tech stocks comes in the second phase of the bull market — this was already said last year. Currently, the first phase of the bull market is still underway.

缠中说禅 2007/5/8 16:16:11
Si Pu

2007-05-08 16:11:48
My impression of Governor Zhou — I originally only said he was no good as CSRC chairman. After reading your articles, it seems he's no good as central bank governor either.

But thinking about it now, controlling the SHARP ratio valve yourself yet still maintaining such a large position in US dollar assets — that's a bit foolish.

And SHARP interest rates are practically telling foreign speculative capital: come mess with me.

Let's chat when you have time.

==

He's very fond of classical music — that's what makes it hard for this ID to go after him.

缠中说禅 2007/5/8 16:17:59
Si Pu

2007-05-08 16:11:48
My impression of Governor Zhou — I originally only said he was no good as CSRC chairman. After reading your articles, it seems he's no good as central bank governor either.

But thinking about it now, controlling the SHARP ratio valve yourself yet still maintaining such a large position in US dollar assets — that's a bit foolish.

And SHARP interest rates are practically telling foreign speculative capital: come mess with me.

Let's chat when you have time.

==

He's very fond of classical music — that's what makes it hard for this ID to go after him. Also, anything with URLs will be automatically deleted by Sina once detected, so please do some processing and use symbols as substitutes.

缠中说禅 2007/5/8 16:23:41
[Anonymous] 万年青

2007-05-08 16:17:16 During the May Day holiday, I spent three days reading Chan MM's articles, starting from the latest ones, reading carefully. I haven't missed a single comment by Chan MM, though the first 5 pages remain unfinished. Although I only vaguely understand, I've gained some knowledge. I'm a newbie — please look after me. Chan MM, 000997 showed a 5-minute level divergence today, and I sold part of my position. This is my 1st time putting Chan MM's theory into action — was it correct? I await Chan MM's guidance.

=

The key is you need to figure out which segment is being compared with which segment in terms of strength. Since you didn't write the specifics, this ID doesn't know if you truly understood. Also, the key isn't being able to judge correctly once or twice — it's about gradually forming a rhythm. Sell, then buy back at the next buy point, then sell again at the sell point. According to your operating level, keep doing this continuously, and you'll develop a sense of rhythm. That's how you can continuously extract value. The road ahead is still long — be mentally prepared to face many difficult points.

缠中说禅 2007/5/8 16:29:02
Guo Er

2007-05-08 16:22:03
Sigh, my operations have been a total mess lately. I keep swapping into more and more stocks — the rhythm is completely chaotic. Today it became 8 stocks, yet my capital is just a tiny amount.
Chan MM, how can I reset my rhythm? If I sell all my stocks tomorrow and then find buy points according to proper rhythm, would that work?
Chan MM, could you name a stock we can operate on right now, so we newcomers can practice our rhythm? You always say the previous stocks have gone up too much, so we have no idea which stocks to act on now.

==

This problem has been mentioned many times in the lessons. To some degree this is a serious bad habit — you must force yourself to reduce the number of stocks. For small capital, you must concentrate. Generally speaking, for capital under a million yuan, more than 5 stocks is too many.

缠中说禅 2007/5/8 16:33:44
[Anonymous] 袖手旁观

2007-05-08 16:23:08
"The medium-term trend of the market and the significance of specific price levels — looking at everyone now, no one can figure out what the market is doing from a purely technical standpoint. This ID has already written an article, but for some special reasons, it can't be published now. When the time comes, this ID will publish it."

————————————————————

Going further back, even the daily-level divergence segment would be disrupted — the implications of that would be enormous.

==

Preventing divergence from appearing here was always one of this ID's scenarios. Many people reading so-called Elliott Wave theory were shouting "Wave 5" after the 3000 breakout, but why can't it be Wave 3 of Wave 3 right now?

缠中说禅 2007/5/8 16:36:13
Two Tigers

2007-05-08 16:32:19
Fairy Sister, no matter how much I study Chan Theory, I'm always confused. My current approach is: I can't bear to sell the stocks I originally bought at low prices, so now I basically use a fixed portion of my capital to trade the spread, constantly buying and selling. I'm basically fully invested every day. The money from selling goes to buy stocks I already hold that are pulling back that day (all stocks recommended by you, sister).

==
That approach works too — use part of the funds for practice. But you still must truly learn the technique well. No matter how difficult it is, you must master it — that's the real skill.

缠中说禅 2007/5/8 16:43:39
Si Pu

2007-05-08 16:22:09
Chán Zhōng Shuō Chán 2007-05-08 16:16:11
Si Pu

2007-05-08 16:11:48
My impression of Governor Zhou — I originally only said he was no good as CSRC chairman. After reading your articles, it seems he's no good as central bank governor either.

But thinking about it now, controlling the SHARP ratio valve yourself yet still maintaining such a large position in US dollar assets — that's a bit foolish.

And SHARP interest rates are practically telling foreign speculative capital: come mess with me.

Let's chat when you have time.

==

He's very fond of classical music — that's what makes it hard for this ID to go after him.

＝＝＝

I don't get it — do you give everyone who likes classical music a pass?

Also, what's the benefit of liking classical music? All I can do is hum pop songs — can you enlighten me a bit?

=

Among China's high-ranking officials, quite a lot truly love classical music and poetry. That's all I'll say — the rest is neither convenient nor necessary to elaborate on.

缠中说禅 2007/5/8 16:47:15
[Anonymous] Sina User

2007-05-08 16:44:40
Sister, I'd like to ask about 000802 — why is its chart so ugly? I bought at 17.2.

==
After a short-term 1x gain with divergence, it needs to adjust. Medium-term wise, your entry position is definitely fine — short-term you'll just have to endure some shaking.

缠中说禅 2007/5/8 16:49:11
Two Tigers

2007-05-08 16:43:38
Fairy Sister, I printed out your teaching materials and read them no less than 5 times. During Spring Festival, I even hand-copied them once (hehe! the key content). But when I try to apply it to reality, it's a completely different story.
I blame the bad habit I developed in school of not being good at deep study.
However, my family made this assessment of my study of Chan Theory — this is the one and only time in my life that I've ever voluntarily studied hard and researched diligently.

==
You need to solve one difficult point at a time. If you can't even tell hubs apart right now, then of course no amount of studying will help. First get the most fundamental basics completely figured out.

缠中说禅 2007/5/8 16:53:11
[Anonymous] 新学

2007-05-08 16:06:28
Hello blogger! A question for the blogger: For 5-minute level operations, you said: "After a 3rd-type buy point of the hub, hold until a new hub appears and continue hub oscillation operations; don't participate in short-term trades midway." Does this mean that when forming a new 5-minute hub, you must wait for that level's hub to complete before you can do short-term trades, and if it's not complete, no operations should be made?

==
No need to be this mechanical — the specifics are all in the lessons. Let me say it again here: during 5-minute hub migration, the prerequisite is that no 5-minute hub can form — otherwise the migration ends. So after one 1-minute downward movement followed by another 1-minute upward movement, if divergence appears or it fails to make a new high, it means a 5-minute hub will definitely form, so that's when you can exit first.

缠中说禅 2007/5/8 16:55:09
[Anonymous] Sina User

2007-05-08 16:50:33
Hello Chan sister. Is there a lesson on reading the order book? There should be quite a few who want to learn.

==
When learning, you must first establish the big framework — otherwise it's easy to get lost. Details are always tedious and disorienting. These detailed topics will be covered later, but definitely don't let them overshadow the main subject.

缠中说禅 2007/5/8 17:02:17
[Anonymous] Autumn风Autumn雨

2007-05-08 17:00:06
Teacher Chan, can you answer my question? Because this is the only way I can reach you for now, thanks
[Anonymous] Autumn风Autumn雨

2007-05-08 16:05:58
Teacher Chan, would using your drop-consolidation-drop divergence method be unsuitable right now? What I mean is, would the profit rate be lower than your other methods?
Please advise, thank you

==

First determine the level — without determining the level, no conversation can proceed. Please first understand the overall framework of this ID's theory.

缠中说禅 2007/5/8 17:03:36

Sorry, it's 5 o'clock. Lately more and more people want to wine and dine this ID in the evenings — every evening this week is booked, all with people who are hard to turn down. Instilling more capital market awareness in them is actually good for the market too, so this ID has no choice but to make the effort. Can't help it.

Heading out first. New post in the morning. See you.