Market fluctuations, a glance reveals the bloom (Mindset Chapter 11)

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It’s probably because the growth in followers has left me with not enough time, but I still want to plan to spend at least three hours a day focusing and chatting with everyone through your replies, helping followers discover problems and solve problems. So I will reply starting from the first floor in the order of your reply times, clarifying everyone’s questions. If you have questions, please send them as early as possible; of course, I will do my best to努力 to answer all questions.
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If the day before I happened to miss any questions I answered, you can post that question again in the new thread**

Today is the 11th installment of the mindset method: the market’s “three-board” hammer

Emotion AcB system (XI)
Original author: Wild Man Brother Release date: 2023-12-24
This is not trading—it’s human nature, battling again and again! This market has existed for over 30 years. Why does it still have a 99:1 loss ratio? What does that indicate? It indicates that at least your thinking must not follow the crowd. Once you follow the crowd, you become part of the 99%. Only by not following the crowd is there a chance to be in that 1%.
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What is crowd-following thinking? For example, when it comes to fundamentals—doing value investing is crowd behavior. Then I think there are too many companies with fake accounts, so I don’t believe in fundamentals. That’s contrarian thinking. For example, when it comes to short-term trading, everyone likes to spend a lot of time studying themes—that’s crowd behavior. Then I think all themes are fleeting, so there’s no need to spend a lot of time on any single theme. That’s contrarian behavior. We only need to pay attention to how much short-term funds chase whatever theme brings; the changes in the stock price caused by that chase are the core. This behavior is quantification behavior.**
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For the 27 years I’ve been doing, it’s all about quantifying everyone’s emotions.**
Every time I talk about this point, I personally feel a bit anxious, because the “emotion” I’m talking about and the “emotion” you’re talking about aren’t the same. The whole market talks about short-term emotion, and that emotion is an adjective—like strong, very strong. But the “emotion” I quantify is a number, like 6040, 7030, 9010.
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If you can’t steadily make money for years, try learning from another angle.**
Today I won’t talk about individual stocks. I’ll talk about the market: how to use quantification to accurately predict whether the market will rise or fall, and to predict when the market is due for a bottom-fishing opportunity and when it’s time to escape the top.

As of now, the market is outside a structural market, and for ultra-short-term trading, preventing risk isn’t very meaningful, because I can perfectly avoid the market’s risk using just one intraday time-sharing pressure-measuring value. That’s why for a long time I haven’t been willing to spend my energy focusing on the market.
But for medium- and long-term traders, the market is extremely important…
There are three indicators for predicting the market. I call them the market’s three-board hammer
1. Long red/green bars; 2. Intraday line angle; 3. Dynamic-static energy ratio
Long red/green bars reflect long vs. short sentiment, the intraday line angle reflects long vs. short power, and the dynamic-static energy ratio reflects the gap between long and short.
The three-board hammer on the intraday chart is as shown:

Three-board hammer One: Definition of “returning of long red/green bars” (1) The definition of a long green bar returning a longer red bar instead of a green bar is: If the current longest green bar returns into a longer red bar, then the current longest green bar is not a falling green bar—it is a “release.” After the release, it returns to the direction of the rising red bar. The long red bar after the release is the biggest long position of the day, so the red bar returned to is also the biggest intraday red bar of the day, as shown in the figure:

Above: During the decline, a long green bar appears. Then what’s more important is that this long green bar returns a longer red bar (compare carefully the maximum length of the single long green bar and the long red bar). And this returned red bar is the longest from the early session up to the current time. This allows us to infer that the long green bar during the decline is the final release of the bears.
The bears’ final release originates from the fact that after the market accelerates upward early in the day, a relatively concentrated profit-taking wave quickly forms. This kind of short-term bears that arise from profit-taking produces the “reverse ACB” on the intraday path—forming an intraday falling path—creating a short-term downtrend segment, i.e., a short-term trend generated by the reverse ACB (reverse ACB can produce a short-term trend). In the end, this falling path will be concluded by a long green bar. Here it’s because one of the three weaknesses of human nature—fear.
(2) To refine the idea in the previous paragraph: conversely, if it’s not the current longest green bar that returns into a longer red bar, but instead a small green bar returns into a long red bar, then it is still a green bar. Because a small green bar means that after the selling pressure weakens during my decline, the bulls begin to抢反弹 (buy on the dip to rebound). If you don’t fall, I rise—so the bears still exist. After the rebound-buying force ends, it will revert to the original direction and enter a more constrained decline. As shown:

Figure notes: In the figure, we can clearly see that during the decline a long green bar appears, but it does not return a longer red bar right away, which shows that the bears are still present. Next, it shows another small green bar. At this point, it returns a long red bar. This means the bears’ sell pressure is weakening, so the bulls start to抢反弹. After they finish the rebound-buying, it goes back to the original down direction, and the speed of decline becomes even faster—because after the rebound-buying bulls vanish, the bears’ power increases.
By the afternoon, another small green bar returns a long red bar again. It still does not return a longer red bar than the long green bar returning a longer green bar, so it follows the same logic as the small green bar returning a long red bar early in the session. This is also what we often say: bulls are not dead, and the downtrend doesn’t stop—forming an “inverse ACB” again and again.
(3) When a long red bar returns into a longer green bar—it’s still also the same logic. That is: during an up move, a long red bar returning into a longer green bar indicates that the up move is ending. This occurs often in an inverse C point during a decline, rather than a reversal. As shown:

Figure notes: If you can’t predict the direction in the early session, you can observe how the red/green bars change. After the early session shows a long red bar indicating an up move, it then quickly returns a longer green bar. This change means that there is a small bounce with little back-and-forth between long and short. After the bounce, the coefficient of the bears increases, so you get a faster and stronger decline, returning a long green bar. This implies that the early session’s bloom was only apparent—it’s still part of the decline, because the ratio of rise vs. fall is determined by the long/short proportion.
In the afternoon, it appears again: a long red bar returning into a longer green bar, leading again to an accelerated decline. This is also what we often say: bulls are not dead, and the downtrend doesn’t stop. The “bulls” here are the bulls that rebound-buy only a small amount.
Three-board hammer Two: 2. Intraday line angle
Intraday line angle refers to the comparison of changes between long and short power, which creates a key turning-point phenomenon. It is mainly composed of intraday reverse ACB and intraday positive ACB, along with sharp angles and obtuse angles. As shown:

Figure notes: In the figure, we can clearly see that during the rebound process in four declines, the first three times were not sharp angles. In the fourth time, a sharp angle appears. After that sharp angle forms, the whole market produces a bottoming and reversal. So what do sharp angles and obtuse angles mean? First, let’s talk about the obtuse angle. Actually, it’s very similar to a rounded-bottom, but its time period becomes smaller. We know a rounded-bottom occurs because during the decline, the bears exhaust themselves, and then the bulls start to increase, forming a bottom, and finally the price rebounds upward. But the meaning of a sharp angle is absolutely not a rounded-bottom. A sharp angle means that during the decline, when the bears’ power is at its maximum, the bulls suddenly reverse and push upward, producing a rise. Why can the sharp angle cause a sudden upward reversal at the moment when the bears are at their maximum? Because in the sharp angle, the bears’ path is a small-cycle decline, and then during the accelerated release phase, the greatest bear power is produced. Like a down cycle forming, producing a sheep-like effect in the short term: a slow decline, a slow-decline path, and then the final trend’s fast decline ends. So here, only a sharp angle can be used to reverse-verify that the long green bar is a “downward release.”
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If you still don’t understand, I’ll give another example from everyday life:**
1. For example, in the process of a 1-year-old child falling into water, an adult can lift him up in an instant. The falling process and the lifting-up process together form a sharp angle. This is because the adult’s strength is far greater than the weight of a 1-year-old child. In other words, the child’s weight is the bears—very small; the adult’s strength is the bulls—very large. Since the bears are far smaller than the bulls, it forms an instantaneous upward sharp angle. So a sharp angle can also be used to infer the power balance between longs and shorts.
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2. For example, during an adult falling into water, another adult can’t lift him up instantly because his strength isn’t far greater than the weight of the person in the water. So how do you rescue him? He needs to get into the water, find other companions, find the correct posture, and with a few people working together, he can be pulled up. This is a rounded-bottom or an obtuse angle.**
Looking at the figure, the ACB formed afterward can be used to infer that the bulls’ power behind the sharp angle is very large. It forms an upward path. Once a path is formed, it will produce a perfect rise, which only ends when the trend accelerates upward.
So, for the second of the three-board hammers, the angle and shape of the intraday line are extremely important. If one day you understand it, you can举一反三 (apply it by extension) and use it in intraday quantification of stocks.
Three-board hammer Three: 3. Dynamic-static energy ratio
Dynamic energy refers to the trading volume formed by the market during a surge in volume up or down. Static energy refers to a kind of trading volume that appears when there isn’t a large fluctuation. The ratio of the area between dynamic energy and static energy is called the dynamic-static energy ratio.

This mainly refers to the amplitude range affected by the long-vs-short ratio. The larger the dynamic-static energy ratio is, the deeper the impact range; conversely, the smaller the ratio is, the stronger the absorption is, and the smaller the depth range it affects.
For example, in a stock-market crash, the dynamic-static energy ratio is generally a high coefficient; in a structural market, it’s generally a low coefficient. As shown:

Figure notes: In the figure, the blue circle is dynamic energy, and the red part is static energy. We can clearly see that each time during a decline, the dynamic energy released on rising volume is noticeably larger than the static energy. This indicates that during the volume surge, the absorption is smaller, which forms a larger gap—so the decline amplitude will be relatively bigger.
That means you can use the dynamic-static energy ratio in the early session to predict the long-vs-short amplitude for that day—whether it will have a big drop or not. Because if there is absorption, the dynamic-static energy ratio won’t be very obvious.
The bigger the行情, the bigger the dynamic-static energy ratio; conversely, the smaller the dynamic-static energy ratio, the smaller the行情’s volatility. As shown:

As in the figure above, in the early session we find that the dynamic energy and static energy ratio is very large, indicating that there is no absorption in today’s down market. Because only when the time for continued decline is longer and there is no absorption, will the dynamic energy be larger. In such a case, if you can use the high-coefficient dynamic-static energy ratio from the early session to predict a big drop in the afternoon, then you’ll know that your trading today should be buying or selling. For example:

In the chart above, we can see the market is declining. Do we need to worry that it might decline all day? At this time, you look at the dynamic-static energy ratio coefficient. You’ll find that the volume with rising volume and the static volume are not significant—meaning the dynamic-static energy ratio is a low coefficient. This indicates that the buy-sell price spread today has absorption. Then you don’t need to worry that the market will fall unilaterally, because with absorption, it means the long and short forces are fairly balanced—so no need to worry about a one-sided big drop.
What I explained above is the most basic formation of the market’s three-board hammer. Many students don’t understand it—what’s the benefit of learning it? There are too many benefits.
1. For example, based on the dynamic-static energy ratio coefficient, you can learn how to escape the top. During an up move, suddenly one day the market loses absorption, and it will show up through the dynamic-static volume ratio coefficient.
2. For example, if your stock is doing T today—today is positive T and reverse T—then you need to look at the market direction determined by the three-board hammer. If there is an expectation of a big drop, and the individual stock has no intraday pressure-measuring value, then you can sell first and buy later to do reverse T. If you find that the market has a sharp-angle rebound and an intraday ACB, and the market will surge higher, then you can buy first and sell later to do positive T.
3. If one day you’ve done well with your stock, you can also learn to do market-direction trades, such as stock index futures or options, etc.

Personal views, for reference only
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For now, I won’t go further with today’s battle method teaching @XI@, and preaching is not easy. I hope fate lets us cherish each other.**
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In 30 years of short-term trading practice, I spent 25 years focusing on bottom-catching. In the last 5 years, I shifted to board trading, including first boards, consecutive boards, and leaders. And all of the methods come from my self-created “Emotion Quantification ACB Trading System.”**
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On the TaoGuba platform, everyone can freely exchange ideas, learn from each other, and share experiences. I will also honestly share my own trading thought process, my views on the market, and my personal position records.**
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But I must remind everyone: the platform strictly prohibits stock recommendations or instructions to buy/sell. Everything I share is only my personal records and thought exchange, and does not constitute any investment advice.**
Friends and followers can refer to it and discuss it, but you must make your own independent judgment, be responsible for your own profits and losses, and invest rationally—don’t follow blindly, don’t blindly follow the crowd. Keep your own trading principles.

Next, we’ll move into the “in” and today’s post-session review segment. Today there are 4 companies with consecutive board limit-ups
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But I took a look—there’s no foundation for “a leader without a dragon,” so I can only observe whether there has been a double-break.

Recently, everyone has been very interested in buying at the double-break low absorption. The class monitor and the study committee members also made a stock-picking formula for it—it’s really very good. Being able to have such a great exchange platform in TaoGuba (TaoXiu) lets everyone grow together in competition—cheering for everyone.

I originally planned to养双破 (nurture the double-break setup). Only the one that has value should be watched closely. And generally, in the double-break group, you do two reviews—one at night for selection, and one again before the open in the morning for further selection. Sometimes Haixian (海先) will output one worth paying attention to, and sometimes it won’t produce any.
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Question 1: Should I wait for the setup to play out before sharing, following, exchanging, and learning @XI@? Or should I share the half-finished products from the pre-selection earlier for learning @XI@? Everyone can share which one is more beneficial for our learning @XI@.**

But I used to not want to share it in advance because I was afraid that these half-finished products would cause trouble for everyone. Let’s try it. But generally, only one that has value—I need to decide based on the auction “bidding focus” and the intraday dynamic value. For now, I’ll share the pre-selection first. Everyone share your thoughts; if there are negative effects, then the pre-selection will be cancelled in the future.
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Question 2: Everyone can look at whether there is resonance by using sector rotation hotspots. Do you have bullish or bearish views? Share your reasons—let’s exchange together and improve our understanding.

Personal views, for reference only. Limited to exchanges only; it does not constitute any investment advice. Risk is your own if you act on it.

Thank you all for your recognition. In this world, only sincerity can’t be disappointed. My wish is to have peach and plum trees fill the world.
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