In terms of news, the Federal Reserve is going to rescue the market again. The American stock market reacted indifferently, and it goes without saying for the European stock market. This indicates two issues: 1. The economic problems in the United States are becoming increasingly severe and are fermenting. The current intense pressure on China to comply shows that the situation has become extremely serious. Today, there were rumors that Gates would step down as the US Secretary of Defense next year, and Hillary might take over. This suggests that the US government has suspicions of marginalizing Obama; either replacing (Biden will step down) or marginalizing (what does the Secretary of State cum Secretary of Defense have to do with Obama?) is imminent. In 2011, the United States may incite war, either through proxies or direct involvement. 2. The market's understanding of the inherent problems in the U.S. economy is becoming increasingly clear, and they are not buying into the U.S. rescue measures as much. The recent trading patterns have been a bit erratic. In the morning session, both markets opened inexplicably higher, then immediately pulled up greedily, reaching near yesterday's high point before faltering again. Then the entire morning remained weak. The pull was driven by bank stocks led by China Merchants Bank, while the drag came from real estate stocks led by Vanke. Financial and real estate sectors became the main forces in the tug-of-war across the entire market. Previously one-sided players have now become opponents, and this dynamic requires investors to continue observing. Is this a sign that real estate and bank stocks are about to go their separate ways? It's unclear right now, but caution is necessary. Vanke's recent pull-up was also somewhat inexplicable, disrupting an excellent technical adjustment. It was Vanke's drag that ruined a good breakout. Vanke has become a tool for smoothing out the market recently. If the market really wants to break through honestly, either one side of the banking and real estate sectors must lead strongly, or another sector capable of influencing the market must be found, such as steel or the two oil companies. Otherwise, the longer this drags on, the worse it becomes.
In terms of volume, today's morning session was clearly smaller than yesterday's, but the distribution of trading volume was still relatively normal. There was no abnormal increase in volume during declines, nor did it form downward momentum. In the afternoon, the index will likely attempt another upward surge. However, the key remains whether the volume can support the breakthrough and whether the banking and real estate sectors can cooperate. If the upward breakthrough fails again, it may need to test the support of the 10-day line. If it reaches Friday, the difficulty of breaking through at this time point will be greater.
By the time this analysis was written, close to the noon session, the index began to rise. This was the anticipated move scheduled for the end of the morning session, showing the urgency of the bulls. In the afternoon, we will see the determination of the bulls. This is another measure after the morning rally in bank stocks failed to gain market follow-up, pulling the two oil companies instead. Whether this can succeed remains uncertain. In the afternoon, watch the trading volume and the degree of market follow-up, especially whether the 2686 point can increase volume and continue forward stably. This is the core.
In terms of operations, if the early afternoon low buy continues to encounter resistance during a rally, the early afternoon low buy should be dispatched first. If it goes up, you can continue holding. In this market condition, you need to closely monitor the trading floor to do short-term trading well. For medium-term operations, continue to hold stocks as the main strategy.
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Letter: Brother Zhan, hello,
I have always read your great works. I have some doubts about the bullish engulfing pattern mentioned last weekend. My definition is the final engulfing. The reason is simple. First, the volume did not effectively expand. The previous day's decline saw a Shanghai Index volume of over 1100 billion yuan, while the engulfing day had a volume of over 1200 billion yuan. The first bearish engulfing pattern had a volume of over 1300 billion yuan.
Recently, I've read some of your great works, which are very impressive, such as discussing the four-dimensional state of the stock market, etc. From the perspective of the four-dimensional state, the bullish engulfing pattern at the end of last week does not hold. Among the four dimensions, the five-day moving average approaching the ten-day moving average and the lack of volume expansion on that day indicate two missing dimensions, making the four-dimensional state 2:2 balanced. Moreover, the average cost of position change since the peak at 6124 points should be around the six-month moving average. According to common sense, unless the volume expands to over 1800 billion yuan, it is basically impossible to approach this position. Thus, this could be a short-term peak. Given the current capital surface, unless the daily trading volume (Shanghai Index) cannot reach over 1800 billion yuan, it can only be defined as the final engulfing.
From the 60-minute chart, the few small doji stars in the morning session yesterday already formed a top. Although the last hour was a long bullish candle without shadows, it did not break the new high in the morning session yesterday, indicating that the pressure of the doji star still exists. Additionally, the MACD red histogram in the 60-minute chart continued to shorten in the morning session today, so an adjustment is inevitable. If tomorrow opens with a gap and cannot reclaim 2600, I personally believe this is a 60-minute level adjustment.
Personal opinion, please brother comment.
Reader Fengnian
August 10, 2010
Exchange:
First, we must correct the error. The final engulfing pattern has a clear definition in the theory of candlesticks, and we cannot arbitrarily redefine what already exists. This must be corrected; otherwise, learning about candlesticks will become more confusing. In "Gold Game Four," the engulfing pattern refers to a long bearish candlestick in an uptrend that engulfs the body of the preceding bullish candlestick, called a bearish engulfing pattern; conversely, in a downtrend, when a bullish candlestick engulfs the bearish candlestick, it is called a bullish engulfing pattern. The smaller the body of the preceding small candlestick and the larger the body of the following one, the stronger the market influence. The meanings of bullish and bearish engulfing patterns, as well as the trading techniques for using them, are detailed in "Gold Game Four." As for the concept of the final engulfing, it is another idea. In an uptrend, when a stock that has risen significantly suddenly appears with a high-opening and high-closing large bullish candlestick with expanded volume, and the bullish candlestick completely engulfs the bodies of the preceding candlesticks, it may be a top signal, called the final bullish engulfing top. Conversely, in a downtrend with a significant drop, a sudden high-opening but low-closing large bearish candlestick forming an engulfing pattern may indicate a final bearish engulfing bottom. This is the concept of the final engulfing, which should not be misused. From the email, it seems that "Gold Game Four" has not been read thoroughly enough, otherwise, these concepts would not be confused. Bullish and bearish engulfing patterns, or final engulfing patterns, are part of the K-line trading strategies developed over hundreds of years by Homma. We cannot arbitrarily change existing concepts, although innovation is possible, it should not cause confusion in the technical system. Moreover, the above description cannot fully prove this logical relationship, and further consideration is needed.
The mental state of the stock market in "Gold Game Four" originates from Einstein's theory of relativity, proving once again that the world is homologous. There is no essential difference between the stock market and physical space; they are homologous. In "Gold Game Three," I similarly introduced other project judgment analyses and trading processes I previously worked on, which are not elements of stock technical analysis but are interconnected. Many contents in the "Gold Game" series are not traditional stock technical elements, and the fifth book will be even less so. I think these contents are pioneering in stock books. But these are not things I arbitrarily created; they are borrowed from other disciplines.
Additionally, regarding the 60-minute adjustment, I didn't find relevant 60-minute K-lines. Was there any issue with the expression? Time has passed, and comrades can verify themselves.
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