Teaching You to Trade Stocks 22: Stuffing 800 Million Grains of Rice into 5 Market Makers' Bellies
2007/1/11 15:10:32
Today let's talk about something that's not exactly idle chatter but not exactly not. Having discussed so many buy points, for small capital, when they appear you just follow and buy. But for large capital, the specifics are more complicated, because when a large sum of money enters the market without wanting to become a market maker, that requires very sophisticated techniques. Below is a dream this ID had — take it as dream talk. If there happen to be any real-world correspondences, that's purely coincidental, and this ID bears no legal responsibility.
On December 20, suddenly enough rice for 800 million farmers to each have a bite fell from the sky, and then this game was played — stuffing these 800 million grains of rice into the bellies of 5 creatures called market makers: stuffing them alive. First, you can't shove all 800 million in at once. 100 million was kept as reserves — meaning if any market maker misbehaves and tries to cause trouble, you strike back. This portion of rice can't be fixed in any one market maker's belly; it must flow daily among all 5 market makers' bellies. Sometimes it might become 150 million, sometimes it might shrink to 50 million — it all depends on the market situation. Of course, this is all secondary. The premise is that the other 700 million has already been stuffed into the 5 market makers' bellies.
Now, these gigolos all love their medicine, so to deal with them, you naturally need to first possess the medicine. This medicine happened to present a classic third-type buy point, and on the monthly chart, a classic rounded bottom was about to complete. Looking at the tall cliff above the rounded bottom, with precise whispers of wind precisely swaying by the ear, what was there to fear? Just go for the kill. First drive it to the edge of the rounded bottom. Then the fierce action began, body fluids flying everywhere. Got the guy inside all excited, with stuff gushing out constantly. This ID used a large spittoon to catch it. Two days later, that fellow got scared — feeling a bit like he might die from exhaustion. But those creatures called "funds" around him, smelling the body fluids, got all excited, swarming in, rubbing up and down constantly. Then he got erect again, and that erection went straight to the edge of the monthly rounded bottom — what a sexy rounded bottom.
The second one — five fingers pinching a foreign object. Such a wretched stock code truly deserved to be made someone's gigolo. He cheapened himself claiming capability, while whispers of wind blew by: "We don't just want to be partially made a gigolo, we want the whole thing to come up for everyone to have their way with." Such a degraded creature, still waving a third-type buy point — wasn't it born to be beaten? So he got beaten. The first day, a light touch — not much body fluid. This market maker was quite stingy — frigid? The second day, a gentle breakout, a bit more fluid. The following two days, wild up-down gyrations intraday, but still not much fluid. Ran into a menopausal one. Generally, with this type, you can't use brute force. Dodge aside, let him flaunt his market maker dignity, then use a straw, slowly sucking while walking downward. After breaking below a certain round number, that fellow was sucked dry of energy and couldn't go lower. This ID suddenly brandished a gleaming blade in a chip-grabbing posture. That stingy fellow flew up faster than a duck in fright. To deal with this kind of miser — menopausal types — the approach is mainly sucking, with occasional terror tactics. These misers generally think their story is extremely bullish, afraid of losing their cheap chips, so one scare and they fly faster than a duck. For this type, you need to work his short-term trades every day — if he dumps hard, prop him up dead; if he rallies hard, hide on the side first, then strike when the moment's right, making him suffer. For this kind of market maker, you need to attack constantly like a mosquito, and also herd him upward like herding ducks.
The third one has the same code pattern as the first. This gigolo is rather delicate, a classic Jiangzhe school type — unpleasant at first sight. It's just that people kept telling this ID he was going to be wholly transformed into a gigolo and had this story and that story, like those hostesses at a certain type of establishment insisting this ID patronize him. This ID remembered consuming him years ago, and suddenly felt a wave of nostalgia — let's see if the flavor after all these years is still the same as before. So, I started making my move at a minor-level third-type buy point. This was a bit like a one-night stand — knowing full well this could only be a fling, but wanting precisely that passion, that unconventional allure. The first day, no move. For a Jiangzhe type, being too rough is bad — first kill him with your gaze. The second day, to show that old feelings hadn't faded, I entered his code as a buy order. The order swept through several price levels — bang — his code appeared in the transaction records. The Jiangzhe type was startled, wriggled twice, then started placing sell orders above. This ID gently swept him a few more times. Suddenly, this ID placed a 9999-lot buy order below. For his slender frame, 9999 was already eye-catching enough. The Jiangzhe type paused, was about to react, when suddenly that buy order vanished. A fleeting glimpse, but it had already left a pink mark on the Jiangzhe type's soft body: this gigolo belongs to this ID. A feeling of being molested rippled through the Jiangzhe type's body, and he began to writhe, twisting his body downward. This ID swept along the trajectory of his body, and indeed there was some fluid. The next day, the Jiangzhe type hadn't awakened from the indignation of being molested and continued twisting downward. This ID's sweeping got faster and faster. The Jiangzhe type probably suddenly realized that continuing like this risked being sucked dry. A few trades near market close pulled him back up. From the third day, amid constant friction, the gigolo began to stand erect. The Jiangzhe type, being a Jiangzhe type, just lacked any real bull strength — the end-of-day game continued daily. Suddenly one day, he too tried the suppression-and-intimidation game. A Jiangzhe type — a man like water — putting on a threatening front was truly too comical. For the first two days, this ID just watched the show without intervening. On the third day, struck fiercely with a severe warning: mess around again with intimidation and you're dead. The Jiangzhe type is indeed a timid soul — encountering someone even more ferocious, he could only become gentle. A man like water, once gentle, starts to stand erect — truly disgusting. With this type, you can't bite like a mosquito all day long — you must deliver a sudden, vicious blow at the right moment. He'll then, in fright, carry his momentum in the corresponding direction. Generally, this kind of gigolo is somewhat slow in reactions, fated to draw charts that are always back-and-forth, lingering endlessly.
The fourth one has an almost identical code to the Jiangzhe type — the only difference being one is in Shenzhen and one in Shanghai. Whether a Shanghai-based Shandong man had picked up the scent of Shanghai effeminate men was no longer a question for this ID after the first day of testing. For gigolos, the best way to resolve questions is action — truth comes from doing. The first day's fluid was considerable — lots of floating chips. The two big-volume bars about a dozen trading days earlier hinted that this man, if not a virgin, hadn't been a gigolo for long. Even better — abundant floating chips mean murky waters, and hiding some rice in murky waters is a piece of cake. The rice was hidden both quickly and abundantly. The feeling of fighting in chaos was really great, like an NP game — who's afraid of whom? Generally, for large capital, a chaotic brawl is the most fun. I remember years ago, one time we drove a gigolo from 7-something yuan to N-times that, only pausing for a breath in the 20s. Four players in a wild melee while others drifted in and out around the edges — what a blast. NP is still the best.
The last one, though only a digit different from the Jiangzhe type in code, has a vastly different personality. A classic mountain man — honest and simple, lacking passion but very steady, like a servant. Just casually tucked away the rice with no trouble. Why patronize him? For no reason other than his code being one digit off from the Jiangzhe type, while the Shandong man differs by one in the front — easy to remember. Also, the hub on the weekly chart strongly beckoned the trend upward. This kind of honest, simple type might not offer big surprises, but he puts your mind at ease. In any combination, you must include one such honest, simple gigolo. If anything unusual happens with other stocks, immediately liquidating this one to send reinforcements is always doable — this ensures nothing can go terribly wrong. In the market, safety comes first. And for the overall safety of capital, the ability to quickly liquidate a certain portion is paramount.
This ID's dream talk here naturally carries risks. The most direct one is that insiders see it, get angry, and wash the market furiously. This — this ID truly isn't afraid. Precisely because there's no fear, the dream talk continues. You'd all best treat this as lies — don't take it seriously. Regarding large capital that doesn't want to become a market maker yet wants high capital utilization, there are naturally many methods — this is just one of them. Generally speaking, this kind of ambush is relatively safe to execute at a major low-level third-type buy point. First, the first-type buy point isn't suitable — if you go in first, everyone's watching you, looking for opportunities to eat you. Where would you even hide? Second-type buy points work, but typically gentler methods are used — slowly and gradually. Third-type buy point entry has a somewhat forceful feel to it, requiring certain skills — otherwise you'll be devoured without even knowing how you died. But the safety here lies in: first, high time utilization. The third-type buy point is like an arrow already on the string. Your sudden forced entry, unless the opponent is especially powerful, the capital they're using has no time constraints, and the story they're working isn't urgent — only then would they stay to wrestle with you, turning it into a war of attrition. Masters excel precisely in having a thorough feel for the personality of the market maker at the table, prescribing the right medicine for the right ailment, and having thorough knowledge of the ambush target. This way, falling into a war of attrition can be avoided — both sides just sitting there wearing each other down. Of course, even a standoff isn't really scary — just keep working short-term trades to bring costs down, outlasting the opponent through sheer exhaustion. The prerequisite for this is that capital must be absolutely free, with no time constraints. Self-owned capital with no interest pressure is the safest guarantee for an ambush. An ambush must carefully control volume — the most failed ambush is one where you ambush yourself into becoming the market maker. Why strike at low-level third-type buy points? At this position, the market maker already holds substantial inventory, with costs still nearby. If they aggressively suppress prices and you have the strength to hold at lower levels, unless that gigolo is in financial trouble, it's impossible for them to dump all their holdings to you at a loss. If it really comes to that, just accept the gift. For third-type buy point ambushes, capital strength is very important — the key is being able to withstand sudden directional suppression. This is also why it must only be at low levels — you can't be too far from the market maker's cost basis. There are many more particularly important operational details, which can be discussed later.
Replies
缠中说禅 2007/1/11 15:35:04
This ID has to go west to discuss some TV drama business. The first season of that drama just aired on CCTV1, and now it's season two. This ID has zero interest, but since a friend asked, I have to go listen. What this ID despises most is when business people talk about how much you invest and how much you earn. I'll probably have to listen to a pile of that tonight.
Please leave your questions, I'll come back tonight. But it might be a bit late.
缠中说禅 2007/1/11 21:22:01
[Anonymous] 新年好
2007-01-11 18:44:06
Miss Chan, I didn't follow you last year and got absolutely wrecked. This year I'm definitely following you. I don't care about buy points anymore — I followed you into those Shandong stocks. I know you've always been against this, but the buy points already passed, so I can't be too picky.
==
You need to stand on your own. Depending on others is a bad habit.
缠中说禅 2007/1/11 21:30:16
Xiao Ming
2007-01-11 21:19:52
Chan MM, I have a question that's been troubling me for a long time — please answer me!
For a long time I've been trying to catch the fattest part of a rally, but so far I've got nothing — I've even lost money! Please tell me, is there a technical method to identify it?
Take 600428 as an example. Looking at the daily K-line chart's massive rally since 12/27 — is there a way to catch it?
===
First ask yourself — have you studied the previous 20-plus lessons? If you've studied them and still ask this kind of question?
缠中说禅 2007/1/11 21:31:54
[Anonymous] 面甲
2007-01-11 21:27:55
Sis, aren't you afraid of playing the market makers to death? If they're all dead, who's going to make markets?
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Market makers exist to be played to death. Aren't there enough market makers dying in the market every year?
缠中说禅 2007/1/11 21:37:12
[Anonymous] 无知
2007-01-11 21:30:00
Miss Chan, here's a Q&A between you and a student yesterday:
- ICBC's daily-level adjustment requires 3 consecutive trend segments on the 30-minute chart (decline-rally-decline) to complete one "Chán Zhōng Shuō Chán hub," and it's currently in the second segment phase;
==
You could see it that way. Later when we discuss the alternation principle of hub formations within trends, you'll understand why this adjustment was so abrupt. It's very simple — the previous hub formation was a platform. We'll discuss this later.
===
For ICBC's 3 consecutive 30-minute trend segments, why can't the preceding rally count as the first segment? I still can't figure out where to start counting sub-level trend segments for a hub!! Because the entire chart is continuous. Thank you.
===
You still haven't figured out the foundational issues. First get the basic concepts clear. Trends are decomposed into combinations of three trend types at each level — how can you include a previous trend type's segment in the next one?
If you truly can't understand these somewhat abstract concepts, then just remember: a pullback's three sub-levels are down, up, down; a rally's are up, down, up.
This isn't perfectly rigorous, but if you don't want to understand the rigorous version, it'll do.
缠中说禅 2007/1/11 21:42:34
[Anonymous] 外科医生
2007-01-11 21:34:20
May I ask Miss Chan, how can you tell from the market data that there's so-called market maker control?
Also, the market maker in Luzhou Tianhua is so slow — push one day, rest one day, a real slog.
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Long-term and short-term market makers naturally differ. Long-term market makers in the early push phase basically won't post any big bullish candles, especially with channel-style ascents. Once the upper channel is broken, a correction will occur.
Short-term market makers are fast, basically three segments — one push, a pause, another push, then done. For larger capital, following short-term market makers is impractical. Only a small portion of capital can participate. Especially now with increasingly collective operations, short-term market making will become increasingly rare.
缠中说禅 2007/1/11 21:51:09
[Anonymous] 老小孩
2007-01-11 21:40:18
580004 has been rising lately, then suddenly two big bearish candles appeared — is this a reversal or divergence? I'm confused. Please teach me, teacher — what will happen next?
====
Upward divergence is observed during the rise — after dropping that much, what's there to discuss about divergence? If your capital is small, especially with warrants, there's no need to look at overly long timeframes. For instance, this time the divergence on the 15-minute chart above 3.5 yuan is so obvious — why not exit?
Please remember: the best is of course selling precisely, but if you can't, better to be early — never be late.
Also, if your technical skills aren't up to par, try to avoid warrants close to expiration.
Patronize virgins — don't patronize menopausal men.
缠中说禅 2007/1/11 22:07:34
[Anonymous] 在路上
2007-01-11 21:47:55
May I ask Miss Chan:
- For the second stock, is the hub's ZG at 4.65 on 10/16? (daily chart)
- The third one, the Jiangzhe stock, seems like you entered it while it was still inside the hub? (daily chart)
- For the fourth one, the breakout before 12/20 returned to the hub. Didn't you say that touching the hub might form a larger-level hub? I think the trend might be a bit weaker — like 600428 that I entered, it touched the hub too, but it's actually doing okay.
- The fifth one seems to have also touched the hub.
Please explain when you have time, Miss Chan.
===
I'll answer just one: the Shandong man. This ID entered at a third-type buy point on the weekly-level hub. That weekly hub is an extension pattern — on the chart it's a standard triangle. Generally, when hub extensions are convergent, they'll form a triangle. This will be discussed later.
Research the rest yourself.
缠中说禅 2007/1/11 22:13:59
Sorry, that wretched TV drama wasted a lot of my time tonight. It's too late now, signing off.
Goodbye.
A reminder: after studying, go find stocks yourself. There are opportunities everywhere in low-priced stocks right now, and many methods can be put to use.
Another reminder: the most effective third-type buy points are those generated by the very bottom hub, because even if it evolves into a larger hub, it's no big deal.
And when a second or more hub appears on the daily chart, don't bother using third-type buy points anymore. At that time, you can use lower-level first-type buy points to find the low points of hub oscillations. Especially the low point of the second probe — for example, 600428 discussed above. This buying method is more effective in such situations.
Regarding the selection of buying methods, this will all be discussed later.
Note the logic here: first, buying methods must be absolutely safe. On the basis of absolute safety, select the more effective one.
缠中说禅 2007/1/11 22:19:56
A final thought exercise: does every hub necessarily have a third-type buy point above it?
If not, please provide examples and explain what this implies.
Signing off, goodbye.
缠中说禅 2007/1/12 10:08:36
Attention:
Discussing these 5 guys right now is just for the lesson. Medium-term there are no issues, but short-term, with such brazen provocations, the other side will definitely react. Most importantly, all 5 have already gained to some extent in the short term — don't chase highs.
Go find some low-priced ones with third-type buy points yourself — preferably under 5 yuan.
This ID has newly ambushed two stocks after the New Year, both just breaking through their previous highs. One differs from the pharmaceutical's code by one digit in the fourth position. The other is something you'd give as a New Year gift. Both are wrestling at their breakout positions.
Those 5 that have already risen significantly — only consider entering after a pullback.
缠中说禅 2007/1/12 10:13:54
There's also one that was just entered for ambush, related to environmental protection. Over 3 yuan. These last three aren't the same batch of money as the previous five — they're from partial profits taken at highs from ICBC and Bank of China. Suppressing index stocks to play catch-up rallies is the main strategy post-New Year and will continue for a while. ICBC and Bank of China are fine for the medium term — give it some time, when the main forces return, they'll launch again.
缠中说禅 2007/1/12 11:47:04
[Anonymous] 赚到了
2007-01-12 11:00:41
Chan MM, these 5 market makers are now in a tiger-riding dilemma. What do you think they'll do next? If they push up, they're obviously carrying your sedan chair — they can't accept that. If they don't push, they're sitting on a belly full of shares — even more uncomfortable.
==
Which is exactly why I told everyone first thing this morning — don't buy blindly. This ID being so brazenly provocative — with the internet being what it is today, you think the other side can't see this?
This ID speaks openly precisely because there's no fear of the other side knowing. But bystanders buying in now risk being innocent casualties when both sides start fighting.
From these 5 stocks' trends, you can read each market maker's personality. Like the Jiangzhe type — being so openly teased, his reaction is quite intense. The Shandong man — since the positions there are all newly established, he just follows the broad market. Neither side wants to make the first move. As for the honest, simple one — nobody's paying him any attention either, just tracking the broad market.
The pharmaceutical and energy — the pharmaceutical seems to have formed a quiet alliance of mutual understanding, so it's relatively calm. But the energy one is different — see? Today it's been battling up and down. This ID loves live broadcasting.
As for the three newly entered this year, they're all at breakout points, slowly jostling. This ID has plenty of time and patience.
缠中说禅 2007/1/12 11:56:44
[Anonymous] 摄影之友
2007-01-12 11:43:11
Blogger:
I've got nearly a third of my position in that Shandong stock... Now that you've said all this, I suddenly feel uneasy......
===
This kind of stock with multiple players inside is actually the easiest for retail investors to trade. When volume contracts, you can find short-term buy points to enter. When volume suddenly surges, find a position to exit.
Because a sudden volume spike means at least one side has made the first move. Generally in this kind of situation, say with four players, eventually it comes down to at most two. But there are exceptions — like years ago, a Northeast stock this ID played, four players went all the way from 7 yuan to over 40 without stopping. Then they all piled out at once, and it crashed like a waterfall.
For this ID regarding the Shandong man, it's a test of patience — absolutely won't make the first move. Because this ID's capital is self-owned with no interest pressure — why should this ID move first?
缠中说禅 2007/1/12 12:02:09
The broad market's daily hub is in the process of forming. Everyone should remember that on the 9th this ID posed a thought exercise about which segment ICBC was on at the time. Looking back today, you should gain deep insight into the principle that trends must complete themselves. Why? Because the first wave down was too low in level. This is the same situation as Beijing North Star — look at North Star's current trend and you should now understand the principle that trends must complete themselves. Whether ICBC will replicate North Star's pattern — everyone can watch gradually.
Signing off, goodbye.
缠中说禅 2007/1/11 15:18:40
The broad market continues with individual stock catch-up rallies while the index adjusts. Under current conditions, as long as the index doesn't effectively break below 2600, individual stock catch-up rallies will continue wildly. Still low-priced stocks.