Bull Strategy During the Market's Pressure Period

2008/1/15 15:09:40

I've said repeatedly that the market has entered a pressure period. First, there's the policy sensitivity window. Second, technically there are corresponding heavy resistance zones ahead. More importantly, aside from the big players, after sectors have basically completed one rotation, many stocks have entered a relative adjustment period. For the bulls, there's indeed quite a bit of pressure right now.

Generally speaking, when encountering this kind of situation, there are two approaches: First, take one big plunge—turn pressure into momentum, drive out the uncommitted, trade space for time, and accelerate the end of the adjustment. Second, oscillate up and down here, grinding away, letting volume gradually shrink, trading time for space, ultimately accumulating new upward energy.

Regardless of which scenario plays out, from the perspective of this ID's theory, both involve expanding into a 30-minute hub, then seeking a breakout. The 5462-point level—I've repeatedly emphasized—has consistently failed to hold effectively. The bulls still have a lot of work to do.

Put bluntly, it would be best if some moderate negative news came along right now—that would be the greatest gift for the bulls. Otherwise, with the current news environment being too calm, it actually creates an unfavorable psychological implication. As for which adjustment method the market ultimately adopts, it's not hard to tell from the 30-minute consolidation dynamics. Generally speaking, if volume can shrink, it's the second approach; otherwise, one shouldn't rule out one or two days that remind everyone of the glittering lows.

The rhythm for individual stocks has been discussed before. Generally, stocks that have broken above the 6124-point or May 30th highs will undergo corresponding adjustments. If they can hold, there will be a second wave. Many stocks are currently in this state, waiting for the market's overall adjustment to end.

As long as there's even a sliver of opportunity, the bulls will probe upward to flirt with the heavy resistance at 5600 points. But there will be no shortage of back-and-forth—patience is required to reap the rewards.

Signing off for now. See you.