It's time to discuss the signals from the top.

At the end of January, when the market was in a state of despair, everyone was shouting that the big A market was collapsing, breaking through 2600, seeing 2400, and even 2000 points.

At that time, we were studying some signals before the market bottomed out.

It included market sentiment, panic mentality, valuation bottom, and the most realistic one, the transfer of chips.

We watched the national team buy and buy, but the market was still falling, and the valuation was getting lower and lower. Rationality would be overwhelmed by sentiment, leading to wrong decisions.

Advertisement

Not only did we watch the opportunity slip away at the bottom, but there were also those who cut their losses and handed over cheap chips at the bottom.

Not having money to reposition is one thing, and cutting losses and leaving the market is another.

The market bottoming out is actually a group of people cutting out at the bottom.

The bottom that the capital really wants to hit must be a large number of cheap chips that are handed over.

So, panic, despair, and emotional selling, none can be missing.If the bottom of the market is about acquiring cheap chips, then the top of the market is about distributing high-priced chips as much as possible, distributing them to those who are greedy.

The principle is actually the same, with no difference at all.

Every time at the top, the events that happen are actually the same.

First, market sentiment is high, and trading volume rises.

Most tops are characterized by an increase in volume, and there is almost no reduction in volume.

The increase in volume here is not necessarily a particularly large amount, or a record amount.

The volume at many peaks is not particularly large, but it will definitely be larger than the usual trading volume.

Because the outflow of funds must have traces, and the increase in volume is the most standard one.

Many times, funds will gamble at high positions, go up and fall, and then release a huge volume.

This is the most obvious signal of the divergence of funds at high positions, and it is also a standard signal for seeing the top.The volume increase of a bullish candlestick cannot determine whether the top is approaching, but if it is a bearish candlestick with increased volume, one must be particularly vigilant.

The increased volume of a bearish candlestick implies that the bulls are collapsing, with no resistance, and the bears are rampant and massively fleeing.

Volume increase is a sign of high emotion, but it is also a harbinger of danger, especially in the latter half of an uptrend.

Secondly, continuous uptrends lead to a situation where short positions are covered and turned into long positions.

Before the market reaches its peak, there is often a period of continuous uptrend, which is inevitable.

Before the top arrives, there must be a period of substantial uptrend.

Otherwise, many funds will not act until they see the opportunity.

Therefore, the market will definitely have an intense period of short-covering.

One bullish candlestick is not enough, then two, and if still not enough, three.

The market continuously sets new short-term highs, creating a breakthrough momentum, and funds will inevitably be tempted to enter.After all, with such a favorable market environment, even if one comes in for a short-term profit, it is still profitable.

Some original bears will turn into bulls and enter the market to look for opportunities.

Once the short-to-long reversal occurs, it means that there is capital to push the wave forward, which will accelerate the rise of the market.

It is equivalent to the original air force entering the market, becoming incremental capital, and driving the market to further breakthroughs.

Third, there is a continuous stream of good news, with various promotions of the bull market.

There is also a clear signal at the top, that is, the bull market is coming.

When the word "bull market" appears frequently, it is time to adjust.

The so-called good news is usually not some real good news, but some verbal good news.

For example, the stock market outside is soaring, such as the northbound funds buying crazily, such as some economic data is not bad.

The real good news is the good news of industry policy, system reform, and a large amount of capital being guided into the market.Without money, only the good news of slogans is basically creating an atmosphere for taking over the plate.

Nowadays is the era of self-media, a large number of people in order to attract attention and traffic, to promote the theory of the bull market.

Retail investors only believe when they see it, so when the market rises, they immediately believe it.

The more such discourse, the more people who take over the plate, the closer the market is to the top.

Moreover, those who promote the bull market often let everyone continue to replenish their positions after the top appears, actively optimistic, leading to being trapped on the mountain top.

Fourth, the hot spots roll quickly, and the ground is full of "gold".

The market has a trump card to trap people, called rapid rotation.

When you find that every day is a different sector taking turns to rise, and you don't know which one to chase, the risk is particularly great.

The reason why the top can be smoothly shipped is that one stock after another has trapped a batch of funds.

Chasing high is to be slaughtered, and when you chase again and get slaughtered again, it is the time when the top appears.It seems that there is gold everywhere, but the sustainability of the rise is starting to be discounted.

The faster the rotation, the closer it is to the peak, because there is no main line, and the market has "given up."

The main line is a kind of group hug market, which will not quickly differentiate and collapse, while rotation is a kind of market that traps people.

When some unknown hot spots and sectors start to move, it is necessary to be particularly vigilant that the end of the market may be very close.

Fifth, the positions of retail investors have surged, and funds have exhausted their ammunition.

Every high point is like this, with a large number of retail investors holding positions and funds being fully invested.

To put it bluntly, there are no more people to take over, so the top has been completed.

Like the curse of the fund's position, whenever it reaches more than 90%, it is necessary to pay special attention, and if it exceeds 95%, it is almost a solid top.

Not all main funds can sell their goods to retail investors, after all, the power of retail investors is very limited.

Some large-cap companies, the final top is taken over by public funds.Don't blame the public mutual funds for taking over the positions; they buy stocks based on sectors and the status of individual stocks, without paying much attention to the price of the stocks themselves.

In other words, once they identify a so-called good company, they will keep buying it, regardless of whether it's cheap or expensive, which naturally increases the attribute of taking over positions.

As for retail investors, a single bullish day can change their entire perspective.

Especially when the market peak is reached through a series of consecutive bullish days, the emotions and mindset are simply unstoppable.

When the market is extremely hot, retail investors often go all-in, waiting for a surge, without realizing that the risk has already arrived.

When everyone around is happily holding their stocks and waiting for them to rise, it's the time to build the top.

Funds are not willing to fight a protracted war, and if no one is willing to take over the positions, they will definitely have to sell off and run away.

Now you should understand why in March and April, the market has been fluctuating around 3050 for a long time, because it couldn't unload the positions, and the market sentiment was not enough.

You should also understand why near 3200, the market will build a phased top, because the sentiment is in place, the positions are full, and if you don't leave, no one will take over the positions.The market is not simply about doing the opposite of what retail investors do.

Instead, the market itself is a game of strategy, a game of chips, a game of human nature, and everything is inevitable.

Capital is like a harvester, only the methods and approaches differ.

It is not only in the stock market, but also in any market with investment characteristics, it is exactly the same.

Therefore, there is no need to be frustrated about losing money in the stock market. The outcome is that most people will lose money, and changing places may not necessarily lead to a different result.

This world is cruel, and only by broadening one's knowledge, increasing cognition, and accumulating experience can one improve the odds of successful investment.