Economic Fundamentals Offer the Chance to Step Down from Macro Control

2008/8/12 15:21:43

The market's movement today was extremely textbook, producing the rebound of the second hub after the breakdown from the 2700-point hub — exactly as described yesterday. Pay attention now — strictly speaking, there are two possible evolutions:

One: The most textbook scenario is a breakdown of this hub, which then splits into two further possibilities. Either divergence forms, producing a larger-level bottom and a larger-level rebound, or divergence doesn't form and the decline continues to create a third hub. Generally, the probability of the latter is no more than 10%. Whether divergence forms can be judged very intuitively with absolutely no possibility of ambiguity or confusion — unless you fundamentally haven't grasped how to identify divergence.

Two: The less textbook scenario is that the third-type buy point of this hub directly expands into a larger-level rebound. This is equivalent to the "c" segment not appearing in the standard downtrend structure of a+A+b+B+c. Anyone who's read the lessons knows that as long as A and B exist, the absence of a or c doesn't change the nature of the decline. Trends versus consolidation depend on the number of hubs — this is the most basic common sense.

Likewise, the probability of this second scenario is also no more than 10%. Following the hub oscillation identification principle, if you can't distinguish between a third-type buy point and a third-type sell point, you simply haven't understood the lessons. Going back to study is the only option.

Understanding the above makes subsequent operations effortless. Of course, individual stocks may differ in rhythm from the index — that's also the most basic common sense. You'll each need to do your own analysis. This ID can't possibly analyze individual stocks — there isn't the time.

Today's CPI showed relatively good data, and oil prices and exchange rates have moved favorably. This gives certain people a ready-made exit ramp. Whether they take it is their business. If they don't — when they're given face and refuse it — then faces are going to get torn. So from a fundamental perspective, conditions for a short-term rebound now exist. But the key for the medium term is still that they need to bow their heads and step down. Otherwise, given face with no acceptance, the only outcome is a complete break.

Nothing more to say. Figure it out for yourselves.