First Declaration of Medium-Term Short Selling After the 3600-Point Man Jiang Hong
2007/10/8 21:46:52
In early July, below 3600 points, this ID solemnly declared the intention to go long, refusing to allow the market to run down to 2000 points in the manner of traitors. Why? Because any trend breaking below 3100 points would destroy the hub-ascending pattern that had been building for over two years.
Today, this ID begins to announce that the long position and holding program starting from 3600 points will begin to terminate. This ID will begin selectively initiating a medium-term short-selling program. Here, the reasoning is explained.
One: The grand pattern of a long-term bull market has not changed, but a long-term bull market does not preclude medium-term corrections along the way. Previously, all the timing for corrections never fully aligned, but now, this timing has gradually matured.
Two: The post in this blog that clearly flagged policy risk was "The Punishment of Impulse: Funds Will Become the Hand That Destroys the Market 2007-08-27 20:45:41." The reason was simple: at that time, certain potentially explosive events were developing. It happened to be around the 5200-point level. In a flash, a major upheaval was defused. The subtleties of that moment — many people probably caught wind of them later.
Three: But at that time, conditions for shorting were not yet ripe. The key issue was a lack of coordination on the policy front, and technically and capital-wise, things couldn't turn around immediately. In particular, there wasn't sufficient downside room. Therefore, the oscillation over the following month never actually exceeded a 6% range. This was a process of stabilization and transition, so that capital wouldn't be caught off-guard like during May 30th.
Four: Currently, the policy front is no longer about just one aspect or one person. It can be asserted that not only policies targeting the stock market itself, but also those targeting the economy, will introduce even stricter measures. The previous moderate stance is very likely to tighten further. As for stock-market-specific policies, this ID once hoped the market would self-regulate rather than be forced by externally imposed policies, but this too may have become irreversible. Therefore, policy pressure has gradually matured. If August 28th was merely a leaf heralding autumn, then in the foreseeable future, autumn need not be predicted — it's right before our eyes.
Five: Technical and capital loosening has begun to occur. At this point, some appropriate guidance could trigger effective reactions. The market is about combined forces, but combined forces start from component forces. If the component force at 3600 points once worked, then a new script also needs to begin rehearsal.
Six: The only thing currently not cooperating is that the pullback room is still insufficient. If the market had already broken through 6100 points, that would be even better. Because for this pullback, this ID does not wish to destroy the hub-ascending pattern from 2005. Therefore, this medium-term top assault will adopt a pattern of repeated tormenting and luring the enemy deeper, rather than a one-shot finish like at 3600 points.
Seven: This ID once said that if the 3/4 line were quickly broken through, the assault would begin. Later, because the market kept consolidating after pulling back to 5000 points, it was said that anything below 6100 points not being quickly broken through could be tolerated. But now it appears the room left by policy is becoming less and less, and today was the first day breaking through the 3/4 line, already beginning to reach this ID's minimum target for the rally starting from 3600. For any pullback, this ID has absolutely no regrets. As for whether it can reach 6100 points — this ID no longer has that concern.
Eight: This ID is simply stating one's own operations — there is no guiding significance whatsoever. Just like the long position at 3600 points, followed by holding all the way. Now, this ID is simply preparing to change the medium-term operating strategy — nothing major. This ID could be wrong, but this ID has said it, so it will be done.
Nine: This ID remains firmly optimistic about the long-term trend. It's just that for this medium-term correction manufactured by policy, capital, and technicals, this ID also hopes to play another round like the 3600-point episode. That's all.
Ten: The risk of shorting is much smaller than going long at 3600 points. The top, like the bottom at 3600, is the product of combined forces, but it also starts with a component force. This ID will once again serve as that component force.
Eleven: Don't think shorting means dumping — that's the most foolish method. The essence of shorting is making the bulls slaughter each other. Therefore, when shorting begins, one often needs to be even more bullish than the bulls.
Twelve: A bottom isn't formed in one day, and neither is a top. All construction is about approaching the resonance point of capital, technicals, and policy. Then, everything crumbles silently, like those falling yellow leaves, one by one.
缠中说禅 2007/10/8 23:45:55
Not looking good — I entered 600788 during today's call auction. This title reminds me of something the blogger once wrote: "The day I stop trading stocks, you'd all better watch out."