Stock Market Center - Accurately Capture

Author: Xu Zicheng / Country: Mainland China
Publisher:
Publish Date: 2006-08-01
Features:
1. When discussing the "Strong Reversal" in the "March Theory," one cannot mention the Shanghai-listed company Guangdi Information (600637), because whether in terms of structural form or cycle, it is simply too perfect, fully aligning with the concept of "Strong Reversal."
The stock price of Guangdi Information began to rise steadily from February 9, 1999. As shown at point A in Figure 2-4, it broke through its 60-day moving average a few days later. After breaking through the 60-day moving average, the volume below the stock price also showed a significant surge, and the "strong upward movement" of price and volume growth began. When this "strong upward movement" rose to a certain height, the stock price of Guangdi Information also formed a volume contraction and decline at the corresponding high point. However, this decline was not deep, only slightly breaking below its 60-day moving average on April 28 of the same year, as shown at point B in Figure 2-4. Subsequently, after a slight rebound, it entered a narrow-range consolidation above and below the 60-day moving average. Such a narrow-range consolidation, moving up and down around the 60-day moving average, clearly indicates strong support.
This narrow-range consolidation of Guangdi Information persisted until May 19 of the same year, when it formed a second upward breakout in the form of price and volume growth. The "strong upward movement" period of Guangdi Information lasted from February 9, 1999, to May 19 of the same year, a duration of over three months—how perfectly aligned with the time cycle of the "March Theory"!
Looking back at the specific stock price movements of Guangdi Information during this period, it first broke through its 60-day moving average, followed by the "strong upward movement," then a volume contraction and decline, which was strongly supported by the 60-day moving average during the decline. After sufficient consolidation, it finally formed an upward breakout in the form of price and volume growth at the 60-day moving average. From all of this, we can confirm that the stock price movement of Guangdi Information has formed a "Strong Reversal." We can buy the stock on the day of the breakout or the next day.
As you can see, after the "Strong Reversal" formed in the stock price movement of Guangdi Information, it surged upward in consecutive limit-up sessions, as shown in Figure 2-5.
Of course, during the "strong upward movement" period of Guangdi Information's stock price, it also formed a "Grass Belly" pattern. Using the knowledge of "Golden Angle, Silver Edge, Grass Belly" from The Thirteen Moves of Riding a Horse, we could also ride this black horse.
However, it is worth mentioning that the "Strong Reversal" in the "March Theory" and the "Grass Belly" are two entirely different concepts. Although the probability of them appearing simultaneously in specific stock price movements is very high, the "Grass Belly" can be related to the 60-day moving average, or it may not be. In contrast, the "Strong Reversal" in the "March Theory" must be related to the 60-day moving average; otherwise, it would not be called the "March Theory."
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