Confidence Crisis Triggers Bulls Killing Bulls

2008/3/13 15:18:28

I've repeatedly emphasized that this is now a confidence problem. Under a confidence crisis, today triggered bulls killing bulls—4000 points turned out to be made of paper. However, the afternoon's positive news about 3G sent China Unicom surging rapidly toward the daily limit, preventing the market from closing too ugly.

Of course, once this bulls-killing-bulls pattern emerges, it means the short-term bottom will gradually approach. Without bulls killing bulls, no bottom will appear—the market is just that cruel. Every round of rally, even a rebound, requires some broken arms and legs as collateral damage.

However, the current fundamentals are extremely delicate: First, the Ping An matter remains unresolved—this is a major landmine. Second, if the Two Sessions end without anything special, it will trigger a new crisis of confidence. Third, the current state of the regulatory authorities and the economy makes large capital too afraid to truly commit.

Therefore, there will be short-term rebounds, but genuine medium-term stabilization still requires much more to come together.

Right now, some stocks do have new capital entering. For example, those new IPOs trading not far from their issue prices are already receiving attention from new capital. Additionally, whether 3G themes can become a new hotspot has some significance for the short-term market.

Operationally, the principle remains the same: after entering, if you see upward momentum faltering, you must decisively exit—no lingering attachment. As for those who lack this skill, this ID has consistently offered the best alternative: sit on the sidelines.

On the medium-term front, technically the biggest opportunity is the powerful rebound after the 30-minute downtrend from 6124 points completes, but due to the chaotic fundamentals, the manner in which this final completion occurs may be quite complex. Currently, the last 5-minute decline has still not formed—everything remains at the 1-minute level. Technically, this implies: First, only a 30-minute consolidation divergence can form for now; or second, there may be even larger declines ahead taking the form of this 5-minute level.

As for which scenario plays out, let the market decide for itself.

Signing off for now. See you.