1. The meaning of volume
First, explain the degree of activity of individual stocks and the degree of recognition of current stock prices. The movement of individual stocks generally undergoes a circling-active-rising-circling process, as the second stage of the stock price movement, which is commonly referred to as the phase of stock activation, which is the process of active trading volume. When a stock is in the bottom dormant period, its market performance is not active, and the trading volume at this stage is low. The rise in stock prices will inevitably lead to an increase in profitable orders and settlements, and the gap between longs and shorts has increased. Accordingly, further rises in stock prices need more energy support, and active trading volume is an objective reflection of this phenomenon. The greater the disagreement between the long and short sides in the recognition of stock prices, the greater the trading volume. Theoretically, the position where the long and short sides have the biggest difference on the stock price should be at the top of the box in the consolidation area. From the actual situation of the stock price operation, the heavy volume near the top of the box does have certain reference significance for the breakthrough of the stock price.
Second, the activity of trading volume is also related to the explosive strength of individual stocks after the breakthrough, indicating the inherent strength of the market. The higher the turnover rate, the more investors will participate. Once the market breaks through in a certain direction, the huge long-short divergence caused by the victory of one side makes the market one-sided and forces the other side to join in. This combined force is enough to make the market produce Huge waves. For example, Fujian Shuangling's weekly turnover rate was as high as 38% during the end of the cabinet consolidation in mid-December 1999, and the subsequent outbreak was strong, and the market is obvious to all. In contrast, the turnover rate for a period of time has greater operational significance than the turnover rate for a week. As the way of building positions has been gradually eliminated with the development of the market, the turnover rate for a period of time can better reflect the trend of the main force. Statistics show that the cumulative turnover rate of active stocks in the past two months in 1996 can reach 130%, and if a stock can reach a turnover rate of 90%, it can be said to be very active. The activity level of individual stocks has shown a significant decline, which has certain guiding significance for us to judge the active stocks in the market in the future.
The statistical results show that when the cumulative turnover rate for a period of time reaches more than 40%, individual stocks enter the critical state before the breakthrough, which provides a good early signal for us to grasp the market opportunity. We have noticed that the main capital involved in individual stocks has a high cost. This feature makes it impossible for the main force to maintain a long-term low consolidation after controlling the market. The cumulative turnover rate is a good description of the situation. Estimate whether the market has entered a critical state. For example, Maanshan Iron and Steel Co., Ltd., on March 16, 2000, a single day of heavy volume, the day's turnover rate was as high as 21%, the week's turnover rate reached 38%, and the recent February turnover rate reached 98%, which is rare in recent years. In a short period of time, such a huge turnover rate occurred in a stock that is not sought after by the market. What else can it explain besides showing that there is a large amount of money in silently building a position? At the same time, by observing the weekly K-line chart of the stock, we can find that the stock has a clear process of heavy volume. On the weekly chart, the trading volume has shown a steady advancing trend. After a period of high consolidation, the breakthrough is logical.
In addition, the volume trend before heavy volume also has certain reference significance. Compared with the period of moderate heavy volume before Maanshan Iron & Steel, Tianjin Port had a single-day turnover rate of 15.6% at the beginning of October 1998, but there was no one before the heavy volume. The gentle process, (in fact, before the stock volume increased, the trading volume has been showing a characteristic of shrinking), which makes the stock trend very suspicious.
Third, the degree of activity of a stock reflects whether the main force entering the stock is a new main force or an old main force, and the strength of the main force helps to judge the degree of control of the main force. This is actually a supplementary description of the stock price consolidation from the perspective of trading volume. Generally, when the new main force intervenes, the trading volume will be relatively active due to the long intervening control process. Once it enters the control phase, the main force cannot tolerate other investors following the bank, and will not hover around its cost area for a long time, and will quickly Pull up, this will produce the first wave of rising market, that is, the market is out of the cost zone in nature. The main feature of the period is that it is not far from the long-term bottom area, which is the low consolidation discussed earlier. Once out of the cost zone, the stock price will have an intermediate adjustment. At this time, the adjustment may be mainly in the sideways. The final result is that after the intermediate consolidation, the stock price continues to rise, that is, the overall trend shows a zigzag pattern, or, The main wave rising stage in wave theory is the true reflection of this stage. It should be pointed out that, compared with the consolidation in the bottom area, the volume of the consolidation phase after leaving the cost area will be relatively small, but it also meets the consolidation defined by us. This consolidation is generally done by the old main force, and the subsequent stock price The upside depends on factors such as the strength of the first wave of market increases.
Fourth, since the circulation of individual stocks and total share capital are not the same, in order to facilitate inspection, the turnover rate index can be used to compare the activity levels of individual stocks. It should be pointed out that the single-day turnover rate of individual stocks is not as meaningful as the cumulative exchange over a period of time. The reference value of hands is great. Heavy volume during the week is a signal for the start of individual stocks. For example, the turnover rate of Maanshan Iron & Steel Co., Ltd. reached 38% in the week of March 17, and the turnover rate in the previous week was 12.8%. The trading volume of the current week was three times that of the previous week. It can be said that the stock has increased rapidly, and the stock has been consolidating in the form of moderate heavy volume since February. The main feature of the consolidation phase is that heavy volume does not rise. Once it enters the heavy volume and pulls out the K line above the Zhongyang line, the conditions for the big dark horse have basically been bred mature.
2. K line combination
When a stock meets the conditions of time, space, and energy, it indicates that the market is already in a delicate state of equilibrium, and the K-line chart can point us to which of the long and short sides this balance tends to, and point out the direction of the breakthrough. At the beginning of a big bull stock, its trend in all aspects must be perfect. However, individual stocks that failed to become big bull stocks have their own shortcomings in the trend pattern. Looking at the trend of individual stocks from multiple aspects, relatively speaking, the K-line is inherently highly sensitive to the market, which makes it of high practical guidance value. Applying a candlestick chart can help us determine the short-term timing of the stock price breakthrough. Different from investors in the market, we still use weekly K-line charts to investigate the trend of individual stocks before the breakthrough. The results are as follows.
The inspection of this table gave us an interesting result. The statistics of the big bull stocks in recent years show that before the stocks break through the platform, the K-line in the past two weeks often appears two yang and one yin, big yang line, and morning star. Equal patterns, the frequency of occurrence, and the concentration of patterns that appear, form a huge contrast with the unpredictable daily chart. This also allows us to simplify the K-line chart from one aspect. As long as we master these commonly used K-lines, we can greatly increase the probability of investment success and enable us to obtain greater returns in a shorter period of time.
For example, at the beginning of this year’s Big Black Horse Lianghua Industrial Co., Ltd. was launched in February, it initially constructed a bottom structure in the form of a morning star, and then consolidated the bottom with two positive and negative K lines, and the trading volume consolidated at the stock price. The sharp enlargement at the end of the period indicated the timing of the share price breakthrough in time and laid the foundation for a good investment return in a short period of time.
At the same time, the relative position of the above K-line combination occurring in the consolidation area also has a preliminary indication of whether the stock price breaks through. In fact, this is also a supplement to the high volume breakthrough in the consolidation area. Generally, the consolidation zone of a stock before the rise has already revealed the clues of a breakthrough. But in the subtle state before the breakthrough, this signal is difficult to detect by the market. According to a large number of chart observations, in fact, when the K-line combination occurs above the median line of the consolidation area and within the box, the K-line combination has pointed out the direction of the market in advance, which can be the distance between the heavy position and the top of the box. Mutual reference, mutual confirmation. The stock price can deceive, but the volume is difficult to deceive. The stock price movement that is not supported by the volume is an empty price movement, and the stocks with enlarged volume but not the stock price can only be the main force of lowering prices. The combination of K-line chart and trading volume gives us a deeper understanding of the good combination of volume and price.
Summarizing the above analysis, we can make a mathematical model to describe the characteristic relationship between time and space, energy, and price when the dark horse is born.
First, the stocks have not risen much in the past year, preferably within 60%.
Second, the volatility range in the past six months has been within 30%. Compared with the volatility of the broader market, within 70% of the volatility of the market, the smaller the volatility, the stronger the breakthrough.
Third, when it breaks, the stock price is closer to the top of the box.
Fourth, in the box consolidation before the breakthrough, there is a weekly K line to cooperate.
Fifth, the coordination of volume helps to improve the accuracy of breakthroughs. Calculating the cumulative turnover rate for a period of time is conducive to grasping the market timing.