CPI Release Becomes Catalyst for Breakout
2008/2/19 15:16:27
As mentioned yesterday, today had to withstand the test of the CPI release. The market oscillated around the 4575 hub all along. Even after the CPI announcement, nothing changed. In the afternoon it shifted upward, showing a rarely seen strength recently. The last hour was all about PetroChina's performance. The stock filled its gap from the previous days as expected, but since its recent large hub hasn't been effectively broken through, this gap-fill only has oscillation significance and cannot be given too high a technical evaluation for now.
Clearly, today's movement extended the MACD red bars further. The rebound from 4431 has now formed at least a 1-minute trend type, with the first hub around 4575. The question going forward is whether a new hub can form above it—if so, the strength continues. 4672 was the first rebound high. Therefore, the strongest scenario would be a new hub forming at least around that level, or even above it, which would greatly enhance the extensibility of the market's trend.
Of course, from the perspective of this ID's theory, since the upper edge of the bottom fractal range is also at 4672, whether the movement from 4195 ultimately extends into a stroke hinges critically on holding 4672. The most basic condition for a stroke is that there must be non-overlapping portions between top and bottom fractals. The bottom fractal on January 23rd failed to extend into a stroke precisely because it couldn't break through and hold the January 22nd high of 4818, causing the original downward stroke to continue extending, resulting in the subsequent decline.
Therefore, from the most technical perspective, 4672 is a critical level.
However, the biggest short-term issue right now is that sector rotations haven't been ignited. PetroChina can drive a breakout, but it can't spark market enthusiasm. So whether sector-driven momentum can be ignited in the coming days will be key to whether the rally can continue with force.
Heading out. Goodbye.