In the midst of the market's turbulence, with the recent fluctuations, many investors can't help but wonder: Is the so-called bull market still on? Today, I am here to share my personal speculation.
First of all, I am a technical trader and firmly believe that price encompasses all market information. The market is unpredictable, and what we can do is respond to changes. Therefore, what is said below is merely personal speculation, or the experience and intuition of an old stock trader, and should never be used as a basis for trading.
Based on my personal experience, I firmly believe that we are currently in the early stages of a bull market. Since early February this year, a magnificent bull market has quietly begun. Especially with the recent appearance of this large bearish candle, it did not panic me; instead, it strengthened my judgment about the upcoming big market. I remember having such a strong intuition in the second half of last year, and that feeling is eerily similar to now. The market always nurtures immense opportunities when least expected.
Market development usually goes through three stages. We are currently in the first stage, characterized by a hesitant trend. The three-year bear market has left most investors feeling jittery, like startled birds. Any slight rise will trigger massive selling, leading to extreme fluctuations in the market. Most people are still skeptical about the bull market, so after a few days of small upward movements, a sudden appearance of a large bearish candle is not uncommon.
For truly insightful 'value' investors, this moment is the perfect opportunity to build positions aggressively. Note: This specifically refers to value investors. If you are a technical trader like me, then you should still strictly adhere to your trading system: buy when you should, sell when you should, and do not let baseless ideas influence you.
I am inherently an optimist. The market is uncertain, and while being blindly optimistic, one should not bet everything on it. It's important to have a fallback plan. I am not afraid of making wrong guesses because I set a stop-loss order for capital preservation with every purchase. Even if I misjudge and encounter a major bear market, it won't lead to losses.
During such a big drop, I publish this motivational piece to tell everyone to abandon fear and embrace this great bull market with confidence, riding the waves of the market to harvest their own wealth feast!
That said, is the bull market still on? This is probably the most concerning question for everyone right now.
Let's start with a subjective judgment: The days when 'everyone is a stock god' are completely over. The market will now enter a phase of wide fluctuations, and it will be difficult to break through 3674 points in the short term.
There are three reasons:
Firstly, this 'crazy bull' market is driven by a package of unexpected policy stimuli, a sharp reversal in market expectations, and the fervent emotions of a vast number of investors. As the market evolves, when expectations and emotions are fully digested, it will inevitably return to rationality. At this time, whether the fundamentals can improve will be crucial, as it will be the cornerstone supporting the market's long-term bullish trend. Considering the time lag from policy announcement to effect, the repair of the economic fundamentals and corporate profitability is bound to be long and tortuous. If there are no clear signs of improvement in the subsequent economic data, market confidence will inevitably be undermined again, making it difficult for the market to continue its upward advance.
Secondly, the highest point of this round of market was 3674 points on October 8, with a transaction amount reaching a historical record of 3.5 trillion, truly a 'heavenly volume.' Analyzing from the perspective of volume and price, heavenly volume indicates significant divergence between bulls and bears, and large volumes at a stage high often accompany large funds exiting, as well as the buying funds getting trapped on that day, especially after a period of rising followed by a large bearish candle. According to historical experience, such trends are often a sign of a market peak. Hence the saying, 'heavenly volume见天价.' Further, the funds trapped by the heavenly volume on October 8 will inevitably face huge selling pressure once the market rises near that day's bearish candle, making it difficult for 3674 points to be cleared in the short term. Unless there are larger favorable factors and more abundant funds entering the market, the trapped positions at 3674 points will be hard to digest cleanly in a short time.
Thirdly, although the market has experienced continuous corrections after the National Day holiday, it has not damaged the established upward trend, and the bullish arrangement of moving averages is the best evidence. Once an upward trend is formed, it is difficult to reverse it in the short term, and under this upward trend, every time the market stabilizes after a pullback is a good buying point. Considering the strength of this package of policies, it is indeed rare and exceeds expectations; thus, a sustained improvement in the national economy should be a high-probability event. Therefore, the market's main direction should be primarily upward fluctuations, rather than a unilateral decline.
As for the question of whether 'the bull market is still there', I just want to say: A bull market is never something that can be shouted out; it must be walked out. Rather than eagerly waiting for the bull market to arrive and making a fortune, it is better to lower expectations, respect the present, and with a clear understanding of oneself, take solid steps. When the time comes, everything that should come will naturally arrive.
Today, let's talk about how to operate in a bull market.
1. First and foremost, the most important thing is the mindset. It is crucial to quickly shift from a weak mindset to a strong mindset. In a weak market, people are psychologically wary and always afraid of pullbacks, so they will sell at the slightest fluctuation. If this cautious mindset is carried into a bull market, they will inevitably run at the first sign of a rise, missing out on big profits, right? Therefore, shifting to a strong mindset is extremely crucial.
2. The basic operation in a bull market must primarily involve holding stocks. As long as demand is strong, or there is no indication of insufficient demand or a trend reversal, one should not easily sell.
3. Do not guess the top; let the top reveal itself. The top has its own signals and patterns, which I have detailed in the volume-price principles of the 3L class. The formation of a top must align with the characteristics of 'diminished demand and strong supply.' Before reaching this characteristic, there will first be signs of insufficient demand at the top, reflected in volume stagnation, transaction volume lagging, trend reversals, and so on. In summary, without seeing the top pattern, it is very easy to guess the top and exit too early.
4. Do not frequently switch stocks. The most taboo in a bull market is frequently changing stocks. Since it's a bull market, there are opportunities everywhere. Many people are always dissatisfied with their slow pace and chase after the strong stocks they see. However, once you switch, the strong stocks start to adjust or stagnate, and the stocks you sold may start to rise instead. You end up like a bear trying to pick corn, unable to eat any. Ultimately, in a bull market, all sectors rise, yet you are constantly switching and exhausting yourself without outperforming the average. 5. The first stage of a bull market often sees a broad rise; at this time, stock selection is not important; position size is most important. However, once entering the second stage, differentiation will occur, and stock selection becomes very important. Stocks with strong logic and good performance will have better sustainability, while junk stocks tend to revert to where they came from. Therefore, aside from the first stage, attention must still be paid to stock selection and direction.
6. Bull markets often complete adjustments within the day, or in other words, adjustments often involve a sharp drop followed by a quick recovery. This means that if you see sudden drops during the day, followed by a V-shaped rebound, or if you see a long bearish candle that can recover the next day, it indicates that the market is strong, which is consistent with the characteristics of a bull market. Therefore, sharp drops in a bull market are often buying opportunities.
7. In terms of buying points, the buying points in a bull market cannot be too stringent. Since it is a bull market (this is the premise), it indicates that prices will continue to rise. Since they will keep rising, it is difficult to provide comfortable buy points, making it even harder to buy at lower prices. Because prices keep rising, buying at any time is correct. Therefore, being too rigid about buying points in a bull market makes it hard to get on board. Of course, if there is a pullback in the bull market, that is an even better buying opportunity. The premise here is that you can confirm the sustainability of the bull market. Among the various buying points in my system, only in a bull market (strong market) can you buy breakouts, and it is the only environment where chasing up can succeed.
8. When selling in a bull market, try to use right-side selling points; left-side selling points often lead to missed opportunities. In other words, in a bull market, it's best to wait for the top to reveal itself, and then after surpassing the peak, sell when signals of insufficient demand appear on the right side, giving up a bit of profit at the top, so as not to exit too early. Don't always think about selling at the very top; that's impossible. This mentality can negatively affect trading.
9. When the early strong stocks and strong sectors start to stagnate, and the low-priced junk stocks in the back row begin to catch up, the bull market is almost over, or at least requires a medium-term adjustment. The first wave of a bull market is often led by quality stocks that align with policy directions. Once these stocks have risen, the second-tier stocks start to rise, and finally, when the third and fourth-tier stocks all rise, and all sectors rotate, the bull market enters its final stage.
