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The Surface and Substance of Increasingly Severe Capital Divergence

2007/8/27 16:15:38

Now, the market has evolved into a pattern where mutual funds and other regular forces are engaged in a game with hot money and other irregular forces. For mutual funds, since fresh blood keeps flowing in, as long as they stick to their own sectors, even if nothing changes for fifty years, new blood will keep pouring in to build their Great Wall. As for the hot money, quite a few of them missed the boat this time. After May 30th, many hot-money players used the first rebound to stage a grand escape, only to find they'd escaped at the foot of the mountain—looking back, everything had nothing to do with them anymore. This shows that from the hot money's perspective, they are extremely shortsighted compared to mutual funds. Of course, mutual funds are all money from people swindled by the establishment—spending it doesn't hurt. Even buying so-called blue-chip large-caps at 10,000 times P/E ratio, they can concoct countless justifications. Not to mention that many large-cap blue-chips currently have P/E ratios under 50—there's still at least 200 times the hoodwinking space left. So the long-term vision of mutual funds can obviously afford to be fearless.

Hot money doesn't want to carry the sedan chair for mutual funds, so they can only fight independently, attacking so-called concept stocks. But this kind of attack is still effective, because these so-called concept stocks are basically mid-to-low-priced stocks with so-called good grassroots support. Capital market regulation absolutely cannot follow the mass line—once you go down the mass line, junk stocks will inevitably fly everywhere.

All so-called mature markets are divided into two clearly distinct worlds: the blue-chip world dominated by regular forces and the junk world dominated by irregular forces. No need to look far—just look at Hong Kong's market. In capital markets, "One World, One Dream" has always been a joke. Can penny stocks share "One World, One Dream" with HSBC or Cheung Kong? This is the normal state of the world, but China's capital market, having come from the communal pot, still clings to that tedious pretension. There are always people who insist on one-size-fits-all in the capital market, asking: blue chips versus junk—is there really a pedigree?

But this game will eventually change. Those who scavenge through trash, treasure-hunting in garbage heaps, are one group; those self-gratifying with blue chips are another. These two groups will increasingly become completely disconnected from each other—that is the ultimate destination.

Right now, we're halfway there. Those mutual funds don't actually have much blue-blooded aristocratic spirit in their veins, so occasionally mixing in with the garbage heap actually feels more fitting for them. Those irregular forces, who are by nature roadside-inn operators, still sway back and forth pretending to be prized roses. Thus, the market continues to unfold amid this blurred boundary.

Mutual funds don't need to trick people in the secondary market into taking over their positions—instead, publicly and openly, countless people line up and scramble to come in, becoming new load-bearing energy. The logic is actually the same, just transforming the blatant into the sanctimonious. As for the irregular forces, their reputation is destined to stay bad, but they never cared about that stuff anyway. Irregular forces can impose "unspoken rules" on regular forces—such Chinese characteristics will persist for N years. Given this, what is there for the irregulars to complain about?

The so-called capital divergence is actually just a surface phenomenon. The capital caught in the divergence is nothing but second-rate capital. 8228, 2882—aren't they ultimately all the same singular One?

Technically, there's nothing much to say today. Pullback to 5,089 points, that's all. Of course, whether 5,089 can be confirmed with just a one-day pullback is obviously unlikely. But the market can perfectly well attack first and then confirm the pullback on a weekly or similar basis later. Of course, there's no need to predict exactly how the market will move—just follow the chart.

On the chart, the movement starting from point 49 is practically a textbook case. The 1-minute hub from segments 52–55, the line segment departure from 55–58, the pullback from 58–59 that didn't fall back into the hub forming a first-type third buy point at the 1-minute level. After that, only two possibilities: a larger-scale hub, or continued hub migration upward until a new 1-minute hub appears. Obviously, the market chose the latter. Currently, we can tentatively treat this new 1-minute hub as segments 60–63. Therefore, from a short-term perspective, when the 1-minute uptrend starting from point 49 ends is the sole short-term theme. This is quite simple—anyone who has studied this ID's course should know how to handle it, what to wait for, and once that something appears, what to do. (What is that "something"? Consider it an assignment—if you can't even do this, please go repeat the course.)

On individual stocks, some people are quite strange. They can actually have logic like this: for example regarding 600139, their point is that if they hadn't been washed out, there wouldn't be today's performance, so this ID was being malicious, trying to wash them all out. Then these same people start whining again about why this or that hasn't done such and such yet. What these people should really do is go slam their heads against a block of tofu. Do you know that in this ID's course on previously existing technical analysis systems, only the moving average system was discussed? Do you know that this ID said in the course things like "without the kiss there is no climax"? How can there possibly be a unilateral surge before the moving averages converge? 600139's classic pattern of an a+A+b adjustment followed by a one-kiss climax—hasn't this ID covered this in the course? Even today's 600343 and 000600—don't you see the soul-stirring kiss before them? Even for Chalco, which hasn't been listed very long, that kiss around July 20th—was it soul-stirring enough?

Even stranger, some blame this ID for not mentioning Chalco in advance, only starting to talk about it at 30 yuan. Honestly, this ID truly has no interest in discussing any individual stocks. Any stock, even one that surges every day, will still have resentful baggage holders. Moreover, this ID doesn't act as a market maker anymore—saying anything would just create trouble for myself. Do you know why some stocks get shaken out for so long? Actually, I can tell you all clearly: they were shaking out this ID. But those guys are out of their minds—do they really think they can shake this ID out? Their brains have rusted over. But regardless, no matter who does what, technicals come first—everything ultimately shows up on the technical charts. If you can become a master of the kiss, then naturally you'll keep experiencing those soul-stirring moments. What needed to be said has already been said—if even something as intimate as the kiss needs someone else to practice on your behalf, then go buy yourself a block of tofu.

Heading out first. Goodbye.