The Adjustment That Had to Come — Necessary and Timely
2007/8/1 15:33:01
Regarding this week's K-line, this ID already made it clear last week — the hope was for the second scenario with an upper shadow. Otherwise, being too eager for quick gains would only harm the eventual market trend. Today's adjustment has already begun to reveal an initial small bearish candle with a long upper shadow. For the remaining two days, the key lies in the determination of the third wave of buyers to go long. A strong recovery upward could still produce the third scenario — a medium bullish weekly candle — but such a move would indeed be somewhat impatient. In any case, this ID would absolutely never make such a move. This ID has said it long ago: oscillation, for this ID, is merely an opportunity for a short-term sell-first-buy-later spread trade. Waiting here for the 5-day moving average to catch up is more prudent.
Technically, today's low did not break below the connecting line of the previous two highs, so the adjustment remains within a reasonable range. That line is around 4260 points, and the 10-day moving average is currently also at that level. Therefore, whether this line is effectively broken is an important indicator of the strength or weakness of the market's adjustment. Once it is effectively broken, the gap left by last week's K-line will face a test. For the third wave of buyers, this line is their lifeline. Of course, for the first two waves, it doesn't really matter — let's just watch the third wave perform.
On the upside, since today broke below the 5-day moving average, if the subsequent rebound fails to get back above the 5-day line, then the market adjustment will intensify. If it can get back above, then the market will once again challenge 4500 points. Even if it can break through 4500, it would be best to oscillate back and forth. Otherwise, it will trigger the major fundamental instability factor in early-to-mid August mentioned yesterday. As this ID said yesterday: don't be greedy for quick gains — protect the market itself.
On the larger technical picture, the divergence segment on the daily chart still holds. Those who entered with the first wave like this ID absolutely must not add positions at this level. Instead, use the sell-first-buy-later spread strategy to lower costs through oscillation. If the market truly cannot break through 4500 points and forms a bull trap, then when it crashes, it'll be even more satisfying. Everyone, go take a good look — the people now clamoring that the market will surge to so-and-so many points, were they not the same people screaming at 3600 points that it would fall below so-and-so many points? Markets are the result of combined forces, working out step by step. Predictions are all just hype — executing according to the correct strategy is everything.
For those who can understand line segments, hubs, and trend types, this kind of market is the easiest to operate in. Note: the rhythm must be sell-first-buy-later. Don't fear selling wrong — if the market truly breaks through 4500 points, many mid-to-low-priced stocks will launch significantly, so are you worried about not finding good stocks to buy? Don't panic-sell, don't chase rallies — follow the buy and sell points. Everyone, look at today's high — it was triggered by a 15-minute level divergence, and the nested intervals within were extremely perfect and worth careful study. Since the 60-minute chart has not yet entered the divergence segment, we cannot say the daily divergence segment has been pinpointed. It can only be seen as triggered by a 15-minute sell point. This week, watch for sell points at the 15-minute level and above — this was already reminded last week. If you didn't understand, please keep studying diligently.
Tonight, the lesson on line segment classification will be posted.
Signing off for now, see you later.