1. Horizontal fluctuations of over six months
2. The fluctuation range during the consolidation period is within 30%
3. Accumulated turnover rate of 40% in 8 trading weeks
4. The weekly candlestick pattern is a combination of two positive and one negative, a large positive line, or a morning star
Since 1997, there have been market trends and dark horses every year, but there are very few investors who can truly ride the dark horses in a timely manner, such as Meilin Shares, Magang Shares, Hasselbao, and Lianghua Industrial. Although they have caused a sensation in the market, very few investors can intervene in a timely manner. In the midst of a major market trend, there were many individual stocks that did not rise but instead fell. For example, Sichuan Changhong, which was favored by many investors, did not perform well in the market at the beginning of 2000, while Shanghai Pudong Development Bank did not rise but fell, which greatly disappointed many investors.
How to capture the clues of the main force's activities in the market and how to interpret the password has become a hot topic for market investors. This article attempts to explore the technical conditions for the emergence of dark horses by starting with the most common consolidation phenomenon in the market.The Importance of Time and Space
1. The Meaning of Time
According to observations, for the vast majority of individual stocks, their most explosive upward trend often lasts for 30 trading days before reaching the top, while the time for consolidation and downward adjustment is often more than six months, such as the stocks listed in Table 1.
Due to the ratio of consolidation time to individual stock rise time being as high as 4:1, the absolute length of time is enough to consume the patience of ordinary investors, and the small horizontal range makes the vast majority of investors suffer from chasing gains and selling losses during the horizontal period. And once the stock is sold, it is discovered that the original "plague stock" has instantly become a dark horse that attracts widespread attention. In the past few years, there has been a fierce competition between bull and bear in China's stock market. If we look at the operational characteristics of individual stocks, this feature does exist. Meanwhile, it can be observed from the above table that there is a time lag in the upward phase of individual stocks, which provides investors with more investment opportunities but also increases the difficulty of individual stock operations.
On the other hand, from the market trend of China's stock market in recent years, there has been almost an annual market trend, but it is rare for the market to maintain for more than 3 months (13 weeks) without adjustment. The Dow Theory states that the volatility of an index can explain and reflect most of the market's behavior. When the market rises, the number of rising stocks increases significantly, and the same goes for market adjustments. From actual market observations, the majority of individual stock fluctuations do indeed maintain a certain level of synchronicity with the overall market. But a more meaningful phenomenon is that some individual stocks do not keep pace with the overall market trend, and their trends have some commonalities. Studying the commonalities of these stocks can help us achieve returns beyond the market, which is also the purpose of our exploration of this phenomenon.
It is not difficult to see from the above that the consolidation time of individual stocks tends to be longer and longer. For example, before its launch in 1996, Dongda Ape experienced about five months of consolidation; in 1998, Oriental Pearl TV Tower completed seven months of consolidation before its rise; and before its launch in May 1999, Rocket shares experienced 21 months of consolidation and bottoming out. The current glory is obvious to all. Therefore, from a temporal perspective, consolidation should be defined as horizontal fluctuations of more than six months.2. The concept of space can be divided into two categories: absolute space and relative space.
Absolute space refers to the magnitude of the absolute value of stock price movement. Absolute space has the following meanings:
Firstly, the upward potential of a stock is infinite, while the limit of its downward potential is zero. This is meaningless for us to study the trend of individual stocks.
Secondly, there is room for the actual movement of stock prices in the market. From the perspective of the development trajectory of the stock market, with the maturity of the market, the phenomenon of simultaneous rise and fall has become extremely rare, and individual stock prices are gradually dominating the overall market, making it significantly more difficult to operate. Firstly, the polarization of individual stock prices has intensified. For the first time in this year's market, there have been individual stocks priced above 100 yuan, but overall, the majority of individual stocks have fluctuated between 2.5-70 yuan. Secondly, from the perspective of the starting price of individual stocks, as a dark horse among low-priced stocks, Ma Gang shares had a starting price of 2.5-3.0 yuan, while high priced stocks such as Qingniao Tianqiao had a starting price of 20-22 yuan. The starting price range of individual stocks is basically between 2.5-23 yuan.
Thirdly, in terms of circulating market value, there are few startups with a circulating market value of over 1.5 billion yuan. For example, Meilin Shares had a circulating market value of approximately 1 billion yuan at the time of launch, Magang Shares had a circulating market value of 1.5 billion yuan at the time of launch, Qingniao Tianqiao had a circulating market value of 1.45 billion yuan, and Haihong Holdings had a circulating market value of 1.54 billion yuan, basically below 1.5 billion yuan.
We define relative space as the relative price range of a stock price in its historical trend, which is the key issue we want to study. Unlike absolute space, relative space provides a mathematical abstraction of the movement of stock prices, summarizing the movement of individual stocks from a mathematical perspective. It takes the relative ratio between stock prices as the research object, and establishes mathematical models to convert individual stocks with different absolute price levels into abstract patterns of relative percentage values that can be compared with each other. Under this unified model, discover the movement patterns of individual stocks and provide effective recommendations for investment decisions
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We have noticed that Lianghua Industry, Jiangsu Crafts, Mount Taishan Tourism and other big dark horses have gone through a long-term bottom horizontal stage before starting this year. For example, Meilin shares experienced a consolidation period of 6 months before the start of the bottom, while Mount Taishan tourism did not thrive for 2 years before the surge. It can be said that the consolidation at the bottom is like a vast flat source, and it is its boundless vastness that creates majestic mountains and rivers.
Due to the large distribution range of individual stock prices, it is difficult to describe the consolidation from an absolute spatial perspective, and it is not conducive to establishing abstract numerical models. Therefore, from the perspective of relative space, we define consolidation as a box with a fluctuation amplitude of less than 30% and a duration of more than six months on the weekly K-line chart.
It can be observed that there is a certain relationship between the magnitude of consolidation and the explosive power after breaking through consolidation. In 1996, the consolidation rate of Dongda Apai was 21%, and this year Lianghua Industrial's consolidation rate was 17%. The smallest consolidation rate was achieved by Jiangsu Craft, with a consolidation rate of only 12%. Its explosive strength is relatively strong
http://www.gupiaozhidao.com ）In the mid-level market after the breakthrough at that time, the increase was over 150%. In contrast, Rocket Corporation's consolidation rate was 33%, with a breakthrough increase of 100% in the May 19th market of 1999. That is to say, the increase in consolidation has consumed the explosive energy after the breakthrough. This is like a spring, the tighter it contracts, the stronger it bounces up.
At the same time, comparing the trend of the overall market during the same period, it can be found that the market has fluctuated for more than half a year. For example, in the second half of 1996, the market volatility reached 67%, and in the second half of 1999, the market volatility was 32%. However, the volatility of stocks such as Dongda Apai, Jiangsu Craft, and Lianghua Industrial was much smaller than that of the overall market during the same period, which also reflects the strong ability of the main capital to control the market from one aspect. The so-called 'how long is horizontal and how high is vertical' is an excellent portrayal of this phenomenon.
From the perspective of the relative space of consolidation, consolidation can be divided into two categories: high-level consolidation and low-level consolidation.
High level consolidation refers to the consolidation of a stock at a high level after it has more than doubled in price within one year. Even if this consolidation breaks through, the upward potential is relatively limited. Generally, there are few stocks that can maintain an absolute increase of more than twice a year without adjustment. For example, in the May 19th market of 1999, Jiaotong University Nanyang saw a surge of over 200% and maintained a high horizontal trend in the second half of the year. Although it still performed well in this year's market, the significant increase in the previous year's market released too much bullish energy, restricting its further upward momentum in the short term, with a rise of only 50%. At the same time, the ability to continue the upward trend after high-level consolidation is also related to the size of the circulating stock. For example, Shenneng Corporation also experienced high-level consolidation in the second half of 1999, but due to its doubled increase in the first half of the year and large circulating stock, it is difficult to open up further upward space during high-level consolidation.
Low level consolidation refers to the area where consolidation occurs not exceeding 60% of the low level within one year. Like Jiangsu Craft, after more than half a year of consolidation, its breakthrough price is only 23% away from the lowest point in 2 and a half years, which can be described as a retaliatory rise after being suppressed. From the perspective of the inherent movement pattern of stock prices, due to the significant fluctuations in stock prices within a year, there are relatively few long-term profit opportunities, and the overall market cost is relatively close. The pressure on stock prices at the beginning of the launch is also relatively small, which is conducive to the main force driving up the stock price at a lower cost. This is also a typical case of the interaction between time and space.
Although the birth of a dark horse cannot be separated from a long-term sideways trend at the bottom, not all stocks with long-term sideways trends can become dark horses. The stocks that can truly rise are actually a very small part of them. The statistical results show that from September 1997 to May 2000, almost all stocks experienced a consolidation period, but only 23% of the total number of stocks were able to break through the consolidation and rise sharply. Generally, before launching a dark horse, it is necessary to meet the trading volume requirements. Only after a large number of turnover at the bottom can sufficient conditions be created for the birth of the dark horse.
