Chapter 134 Market, rising amidst hesitation
The home appliance sector, which had been performing strongly in the early stages, also saw a correction, with Midea Group falling 3.55% and Haier falling 2.6%.
The market trend seems to be a little subtle.
Wednesday, July 20, 2016.
The Shanghai Composite Index opened low at 3034.71 points and closed at 3027 points, down 8.7 points, and closed with a small negative line. The trading volume further shrank to 171.4 billion yuan.
Since breaking through 3000 points, the market has seen five consecutive declines on shrinking volume. Looking at this trend, many investors can't help but worry. Is 3000 points really the iron ceiling? Is there no way it can be broken through?
It took a few more days to adjust.
Wednesday, July 27, 2016.
The Shanghai Composite Index plummeted 1.91% after a sharp drop, breaking through 3,000 points and closing at 2,992 points. The volume was incredibly high, with a turnover of 316.8 billion yuan, 1.7 times the previous day's 185.4 billion yuan!
Panic began to spread in the market, and many investors laughed and said, "Look, the Shanghai Composite Index seems to have rickets. It kneels down as soon as it touches 3,000 points, like a woman..."
A post was pushed to the front page of the Taoguba forum: "After five consecutive declines, the market plummeted and a huge adjustment is imminent!"
The content looks very informative:
The market plummeted today, with a huge trading volume of 316.8 billion, and broke 3,000 points again. As an old investor, I would like to express my views, and I'm sorry to make you laugh.
On the news:
1. Britain's exit from the EU has caused a huge shock in the global financial market. The US election and the Federal Reserve's interest rate hike are getting closer and closer, and the global news is bearish.
2. If the investment in MSCI fails, there will be no more incremental funds. The RMB will continue to depreciate and capital will flow out, which may drag down A-shares.
3. The mid-year lifting of restrictions on targeted share issuances and the pressure on major shareholders to reduce their holdings have further dragged down A-shares.
Technically:
1. The Shanghai Composite Index failed to reach 3,000 points for the third time this year. Today's trading volume was extremely high, indicating that funds in the market were fleeing frantically and the market was not optimistic about the future of the A-share market.
2. From the technical point of view, since 5178 points last year, there have been three major waves, with the bottoms of 2850 points in August last year, 2638 points in January this year, and 2781 points in May this year. The high points have gradually declined from 5178-3684-3089, and the low points have gradually risen from 2850-2638-2781.
Over the past six months, the Shanghai Composite Index has fluctuated narrowly between 2700 and 3100 points. This adjustment started from 3069 points. Theoretically, the lowest point should be around 2800 points. Now it is at 2900 points, which is still 100 points away. Please be mentally prepared!
The post was written by a person named "Stock Market Crash Bear". It was well-organized and contained very detailed data, attracting the attention of countless stock investors who cheered!
“Thank you for your selfless contribution!”
"Master, the volume observation and pattern analysis are really a wake-up call. It would be even better if you attached a picture!"
“It shouldn’t rise, and it plummeted. The market outlook isn’t good!”
After only half a day of replying, there were already more than ten pages, hundreds of people replied, and thousands of people browsed.
In the trading room, Zhao Xinyue looked at the hot post, then checked her own account. Worry grew in her heart. She looked up at Li Feng and asked, "Li Feng, take a look at this post. Do you think what he said makes sense? Should we sell some stocks first?"
Li Feng turned around, read the post carefully, and said affirmatively: "It's really well written."
"What's good about it?"
"Fortunately, it truly reflects the psychology of stock investors at this stage."
"What does this mean?" Not far away, Lin Menghan frowned and looked over.
Li Feng pointed at the post and continued, "Markets emerge in despair, develop amid hesitation, and end in madness. You see, during the 'circuit breaker crash' in January, the market emerged in despair and slowly climbed to around 3,000. At this point, many people began to hesitate, and the divergence between bulls and bears began."
"Many people believe that the market is already quite high at this point, and that many strong stocks have already risen by 50% or even more than 80%, so it's time for a correction. Those who are afraid of a fall want to lock in their profits, while those who are afraid of high prices are afraid to enter the market. This leads to this kind of hesitation, a balanced and volatile situation where prices don't rise when they should, and don't fall when they should."
"It's a very healthy and normal trend. At this point, those who want to get off the train can get off, and those who want to get on can get on. Only after sufficient turnover of long and short positions can the market move in a healthier direction."
"The reason his post received so many views and became a hot topic is because it resonates with the psychology of current stock investors. Times make heroes! It's like in a bull market, bullish posts are the most popular, while in a bear market, bearish posts are the most popular. It's the same principle."
"Then, when will this balance be broken?" Lin Menghan asked.
"We need an opportunity," Li Feng pondered. "After a brief period of volatility here and a turnover of long and short positions, it's very likely to break out in August. By then, the soaring performance will directly shatter the short sellers' fantasies and call them onto the bulls' train, heading upwards!"
"Why does the stock price go up when the performance is good?" Zhao Xinyue also looked over, but the question she asked seemed simple, but it was not simple.
After hearing this question, Li Feng thought about it seriously and said with a smile: "Because you are a human, not a monkey."
"You're looking for a fight!" Zhao Xinyue raised her fist and hit him without mercy.
Li Feng dodged with a smile and explained: "I'm not joking, please listen to my explanation."
"Tell me, I want to see what you can say. What kind of person or monkey can be connected with stock trading?" Zhao Xinyue obviously didn't believe it.
"Listen to me, because we are human, we have the same aesthetic standards, just like everyone's definition of beauty: big eyes, double eyelids, long legs, thin waist, and a graceful figure."
"It's the same with stock trading. People naturally prefer stocks in booming industries with skyrocketing performance. So, after the market fluctuates here and there, it will continue to develop in its existing direction. Beautiful women with excellent performance will be favored by more people and their prices will continue to rise. Those with poor performance will return to dust."
"This is human nature, this is the common value of mankind. You can't call a pile of shit gold, and you can't treat a piece of gold as worthless."
Li Feng continued.
"Then why do some stocks, which are very rubbish, extremely rubbish, skyrocket?" Zhao Xinyue began to argue.
Li Feng thought about it and said with a sly smile:
"Although everyone likes beautiful women, they are rare and scarce after all. However, people's demand for them is rigid and diversified. Therefore, at this time, there are many prostitutes who put on heavy makeup and go out to solicit customers. If someone can't resist the temptation, they will definitely suffer a great loss. After all, you can't guarantee that everyone is healthy."
"Bah, what are you thinking about? So mean!" Zhao Xinyue spat and blushed.
"Hahaha, I'm talking about stock trading. If you don't believe me, ask Menghan."
"I don't believe you," Zhao Xinyue glanced back at Lin Menghan, only to find that she was still lost in thought. She couldn't help but laugh and said, "Menghan, you really believed his nonsense. He never tells the truth. He fooled you, and then fooled me, and you've got us both confused."
Finally, Zhao Xinyue rolled her eyes and continued, "Since the market is fluctuating and everyone is hesitant, how about I sell some stocks, lock in profits, and buy them back in two months?"
"Selling stocks?"
Li Feng didn't know what was going on in her mind and couldn't help but tease her, "Xinyue, why are you being so clever again? I told you to ride on the ox's back and walk steadily, but you insisted on getting off to rest. If you really sell it, be careful that you will never be able to get on this car again. After all, you are not the driver of this car."
"I'm not selling all of them," Zhao Xinyue muttered. "I'll just sell 200 shares. I still have 300. If it drops, I won't feel bad. If it rises, I'll be happy because I have a position."
Li Feng listened to his muttering and knew that her mentality of holding shares had become a little shaky. In this kind of situation, no matter what others said, it would not work. Only by experiencing it personally once, or even twice, could one understand it firsthand and persist.
It’s like stock trading. Only after experiencing one or even two rounds of bull and bear markets can a stock investor truly mature, because only in this way can he fully respect and fear the market in a bear market; and fully understand and utilize the market in a bull market, thereby realizing wealth appreciation.
"Sell it." Li Feng supported.
"Then I'll really sell it." Zhao Xinyue began to hesitate again.
"If you want to sell it, then sell it. Otherwise you won't be able to sleep well at night."
"Oh, I will sell it, Menghan, will you sell it?" Zhao Xinyue suddenly thought of Lin Menghan.
Lin Menghan shook her head and said, "I sold it. I don't know what to buy, so I'll just hold on to it for now. I believe the value of Kweichow Moutai is far higher than the stock price, and it will continue to rise in the future."
"Oh, then I sold it—"
"Oh—you should sell it quickly!"
Thursday, July 28, 2016.
Zhao Xinyue hesitated again and sold 200 shares of Kweichow Moutai at a transaction price of 318 yuan. Compared with the cost price of 190 yuan, she made a full profit of 228 yuan per share. The total profit from 200 shares was 45,600 yuan. If converted into salary, this would be enough for her to work for more than four years!
Looking at the red numbers in the account, Zhao Xinyue's eyes turned into crescents.
"Don't giggle—" Li Feng looked at her useless look and said, "We have the title deed for our house, so it's time to renovate it. Let's go to the building materials market and shop for a while."
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