The IPO-Breaking Competition Vents Market Emotions

2008/3/27 15:17:41

Today's market action was already explained very clearly yesterday — it's a replay of the previous time when 580989 launched from 0.4, which also triggered a breakdown in the broader market, and this time is identical. You can compare it with the previous price action — whether the subsequent moves continue to mirror each other is a question very worth watching.

If price action continues to mirror the previous pattern, then after a momentum-driven dip, the market would return to the pre-breakdown platform. The 3424-point level, given the 3% confirmation buffer, means we cannot yet say this level has been effectively broken. Of course, if this level does break, then the next truly effective level below is 2500. Remember when this ID set the oscillation range down to 2500 and some people thought this ID was exaggerating? Now it appears not the slightest bit exaggerated.

In fact, current market sentiment has already become distorted. Because of regulators' inaction, the market can only vent its emotions through a competition to break IPO issue prices. This is actually an extremely dangerous situation. The credibility of the regulators is heading toward bankruptcy amid this emotional venting — how it will be repaired afterward, only heaven knows.

The market is now responding to the regulators' logic with its own logic: since regulators' inaction leaves refinancing without rules, the market is killing the market's own financing function entirely. If this situation isn't contained, this farce could very well evolve to where newly listed stocks break their issue price the moment they debut, causing the market to completely lose its basic function. Once such a scenario materializes, is 2500 really so surprising?

Of course, as market participants, no one wants the various market parties to continue in such a confrontational manner — this only damages the market itself. But the ball is in the regulators' court. If they don't act, the market can only respond this way.

Due to the market's center of gravity shifting downward, the price levels for the low-priced stocks we need to watch also need to shift lower. But the principle is the same: low price, themes, and most importantly — they must be traded back and forth.

As for the broken-IPO price trend created by the break-issue-price movement, from a pure speculation standpoint, it will contain certain market opportunities. However, this requires a relatively high level of trading skill and policy sensitivity — those who lack these skills don't necessarily need to pay attention.

580989 — as stated very clearly yesterday, the short-term hub around 0.7 is the key. Today after spiking up, it immediately pulled back 30% to this hub, demonstrating the hub's tremendous power, and also proving that this upward thrust is merely a hub — a consolidation type. The subsequent fluctuation depends on the third-type buy/sell point issue of this hub.

Note: 580989 is the last wave of this sucker-trapping rally — ordinary people must absolutely stay away.

Signing off, goodbye.