During trading hours, stock prices often experience a surge, such as sideways consolidation regardless of the rise or fall of the index, with relatively large up and down orders, and then suddenly buying a large amount of money at a certain moment, causing the stock price to rise sharply. How to analyze this phenomenon?
Firstly, there are main players operating during the trading session. The index fluctuates every day, so the stock price should also move with the index. If it doesn't move, there must be non market orders participating, so the stock price must have been intervened by the main force.
Secondly, the main players are willing to increase their positions. No one can make an accurate judgment on the direction of the index on that day, and the main force is no exception. However, the operational strategy is pre considered, so a decline in the index is definitely expected. And once the index falls, intraday selling will definitely increase, so the main players must be prepared to increase their positions. In other words, the main force at least has funds to use, and it is not at the end of its rope, nor is it fully stocked. As for the amount of short-term funds in the main force, it can be judged from the length of the sideways trading period. The longer the sideways trading period, the more sufficient the funds, while the opposite is difficult to infer.
Once again, short-term gains depend on the height of the surge. Horizontal trading will increase chips, and the main players are at least prepared in this regard. However, since they are not in the period of building positions, the main players are absolutely unwilling to increase their positions. Therefore, the chips added midway are always expected to be deducted as soon as possible, and one of the purposes of pushing up the stock price is to attract the market to buy and follow up, and then deduct the newly added chips. If the stock price surges significantly, then the market's buy orders will definitely not keep up, and this will not reduce the position. In turn, it indicates that the main force must have left the expectation of reducing positions for the future, which shows that the main force has plans to continue to push up the stock price in the short term. If the magnitude of the stock price surge is limited, then the main players' eagerness to reduce positions is undoubtedly evident, and it is doubtful whether the stock price can rise in the future.
Finally, the desires of the main players are also constrained by the market. The main force takes the risk of index decline to maintain the horizontal consolidation of stock prices, at least in preparation for pushing them up. Therefore, sometimes the small surge in stock prices does go against the original intention of the main force, and the only explanation is excessive selling during the trading session. When the main force's next chips exceed their original expectations during a sideways period, they will shake their confidence, and then take advantage of the rebound of the intraday index to make a surge, and then give up on boosting the stock price or even reduce positions in reverse. Sometimes, due to excessive market selling or significant index declines, the main force may even give up on horizontal consolidation.
When we encounter a sideways trend followed by a surge, we can analyze the magnitude of the increase and the trend of the index during the same period, in order to determine our operational strategy.
