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Teaching You to Trade Stocks 89: Specific Analysis of the Bardo Phase

2007/11/18 20:14:06

It's been over a week since the last lesson. Although it's a weekend, let me make an exception. I've met several groups of people today, and there's another group coming at 8:30. No choice — having been away this long, it can only be treated as make-up class. So I can only write quickly.

Many people probably think the bardo phase discussed last time is nothing special — it's just a consolidation, no different from any other consolidation. If that's your thinking, there's a big problem.

Whether the bardo phase is handled well relates to the connectivity of your operational rhythm. Many people's operational rhythm is utterly chaotic precisely because they don't understand the bardo phase issue. The bardo phase, although it manifests as hub oscillation, is not just ordinary hub oscillation.

Additionally, pay special attention: precise theory can of course be stated very roughly. For example, everyone knows that the market either goes up, down, or sideways — this is essentially a truism. But the other side of a truism is an axiom. This truism happens to express the essence of the market.

Just as in Euclidean plane geometry, where we say two points determine exactly one straight line — to common sense, this is a truism. But this truism is an axiom, and it precisely reflects the essential characteristics of Euclidean plane geometry. Similarly, the market either goes up, down, or sideways — this precisely reflects the characteristics of the stock markets as they currently exist on Earth. It's entirely possible that on another planet's stock market, a fourth possibility exists, with beings whose thinking employs a completely different classification from ours.

But the more important point is: knowing the axioms means you actually know nothing. This is in fact a major weakness in Chinese thinking. Chinese people like to discuss problems in broad, sweeping terms, and the result is that they end up discussing truisms — axioms, or what you might call products of our collective karma.

But science, especially when it comes to specific operations, renders these broad generalities utterly meaningless. For example, market operations are exactly what they are — not one bit more, not one bit less. So here, one must have rigorous logical thinking habits, and moreover, habits of precise thinking.

We start from axioms, but that doesn't mean we stay at the axiom level. Otherwise, Euclidean geometry would just be five dry axioms — why study anything further? Similarly, in discussing the market, if "it goes up, down, or sideways" is all there is, then there's nothing to research or discuss — just flip a coin.

The existence of the bardo phase lies in the various possibilities of specific developmental forms at different levels. The ultimate selection among these possibilities is not predetermined, but rather the real-time result of market forces. Different possibilities exist here. And these possibilities don't create major difficulties in operations, because they can all be unified as the handling of the bardo process.

For example, after the 1-minute level downward divergence from the 6004-point mark, we entered the bardo phase. First, based on the fundamental theorem of trend decomposition, we know that subsequent market development must be a trend move above the 1-minute level. But a move above the 1-minute level has many possibilities — just as a person after death during the bardo stage also faces multiple possibilities: human, ghost, deity, asura, hell-being, animal, and so on.

Among these possibilities, the most basic principle is: a 5-minute hub must appear first. Because regardless of what level the subsequent trend becomes, as long as it exceeds the 1-minute level, a 5-minute hub must form first. There are absolutely no exceptions. And this 100% inevitable conclusion forms the biggest and 100% accurate fundamental basis for our operations.

After a 1-minute level trend, you can't say it will definitely go down, up, or sideways — all are possible. But you can absolutely say it must ultimately first form a 5-minute hub. This is 100%, and only this ID's theory can clearly provide such an inevitable conclusion.

With this conclusion, all arguments about subsequent market evolution become meaningless. Regardless of what comes next, first handle this 5-minute hub properly — this is the only thing that is both important and has 100% operability and accuracy.

Therefore, in your operations, you must have such a 100% prepared judgment in your mind. And how to operate during 5-minute hub oscillation — that's the simplest kindergarten-level question. If you still don't understand, there are 88 lessons above. Please go study them carefully.

Of course, if you operate at the 5-minute level or above, then this 5-minute hub's bardo process essentially doesn't exist for you — you can completely ignore it.

And once this 5-minute hub is established, it 100% inevitably faces the question of being broken — meaning either extension or a third-type buy/sell point. This is also a super-kindergarten-level question. If you don't understand, go back and study.

Of course, if this hub keeps extending until it becomes a 30-minute hub, then handle the third-type buy/sell point at the 30-minute hub level. And so on by analogy — eventually some level's third-type buy/sell point will end the hub oscillation.

Generally, taking the example where a third-type buy/sell point appears right after the 5-minute hub: the 1-minute trend will have evolved into a 5-minute trend type. Whether it's a consolidation with only one hub or a trend with two hubs — that can be grasped through divergence intensity judgment, which is also a kindergarten-level question.

For instance, right now, if the already-formed 5-minute hub produces a third-type sell point, then even if the goal of common prosperity can't be reached, moderate prosperity is definitely achievable.

From the above, you can see how this ID's theory takes a seemingly complex, directionless hub problem and, through a 100% accurate logical chain, connects it into a simple operational procedure with 100% operational accuracy. And this is merely the lowest-level power of this ID's theory.

Here, it must be stated once more: the concept of consolidation in this ID's theory is not the same as the commonly understood range-bound oscillation. An index falling from 10,000 points to 0 can still be a consolidation, as long as there's only one hub in between. Also, consolidation and hub are not the same concept. If a hub is an apple, then consolidation is an apple tree with only one apple, while a trend is an apple tree that can have two or more up to infinite apples. Would you say an apple and an apple tree are the same concept?

Also, never assume consolidation is necessarily weaker than a trend. Some consolidations have a first segment that slaughters everything in sight, and the second segment, even if its force is less than the first, combined they can exceed a so-called trend. Using the same analogy: does an apple tree with only one apple necessarily have to be shorter than one with 100 apples? Obviously not.

So, those who can't even distinguish between hub, consolidation, and trend — please be humble and go study properly. This ID's theory won't become one bit more accurate because one more person learns it, nor will it become one bit less accurate because one fewer person studies it or one more person opposes it. This is just like the angles of a triangle summing to 180 degrees — as long as it's in a Euclidean plane, whether you believe it or not, it won't become 179 degrees.