Wishing you good fortune in the Year of the Dragon, but will the stock market also be auspicious in the Year of the Dragon? I'll give a response after enjoying the holiday - this is why I didn't post anything in January. I wanted everyone to forget about 2011 and celebrate the New Year first. In the past, I often published annual operational strategies ahead of time, but with the heavily scarred year of 2011, I didn't want to add salt to everyone's wounds. Today is the fourth day of the New Year, and we still have a few more days to consider how the 2012 stock market will perform and what we should do. Still one sentence: Chanel watches for men and women, practice is the sole criterion for testing truth, let reality speak. The post I made at the beginning of 2011 predicted that the stock index would bearish for three years, and 2011 has already provided an answer. 2012 will be another test. And I still believe that the closing of 2012 will not be optimistic. 2012 will be a year of stabilization through fluctuations. Fluctuations mean that in 2012, there will be a high point close to 2400 points, which will still be a rebound trend, and it will be the best opportunity to exit; the low point in 2012 will be around 2132 points, and there will be a low point near 1849 points, which will still be in the state of the third wave of the yearly line. Stabilization means that 2012 will close with a small negative line or a cross star on the yearly line. Therefore, 2012 will be a year of selling high and buying low. Above 2300 points will be the opportunity to sell stocks in batches, while below 1950 points will be the opportunity to buy stocks in batches. Personally, I estimate that there will be two significant rebound trends, the first one from before the holiday to after the holiday, reaching around 2350 points; and another one from May to June, reaching close to 2400 points or slightly higher. The low point will test 2132 points after the post-holiday rebound fails, or if the mid-year rebound fails, there will be a large decline entering the lower box of the bear market trend.
In January's market, although the resource sector saw a strong rise, it was clearly a politically-driven economic situation unique to China. At the same time, some stocks experienced cliff-like plunges. This indicates that in 2012, both opportunities and risks for individual stocks will be significant. Some stocks may never reach new lows even if the stock index breaks 2000 points, but some stocks may halve again even if the stock index doesn't break 2132 points.
In 2012, under the condition of mastering technical and fundamental analysis, perhaps we also need to learn how to identify wolves in sheep's clothing among some stocks, so as to avoid falling prey to them. There are so many Chinese listed companies being delisted in the U.S. stock market due to fake financial statements. If they dare to falsify data abroad, then here domestically it goes without saying. With the upcoming release of annual reports, it's necessary to distinguish between genuine and fraudulent companies among individual stocks. Profits come from waiting, while losses come from cutting too soon.
Overall, 2012 will be a year where risks outweigh opportunities, and major opportunities will come after breaking 2000 points. There will be 30-50% opportunities in sectors and individual stocks, focusing on individual stocks. For medium to long-term operators, it's necessary to wait for a few years, especially for stocks with potential, patience in holding without cutting losses is needed. Believe in the truth that the path may be winding, but the monetary future is bright. The second large cycle of China's stock market should start a five-wave uptrend after 2013.