Recently, the overall sentiment in the market has been utterly dismal.
Bearish news is flying all over the place, causing panic and a chorus of curses.
Combined with the self-media's interpretation and exaggeration of various news, the entire market is extremely lacking in confidence.
It can be said that the cliff-like drop in confidence will reveal the true short-term bottom of the market.
If there was still confidence to wait in July, by August, confidence had almost vanished.
We often say that the market's bottom has a policy bottom, a market bottom, and a capital bottom.
In fact, there is one more thing missing, which is the emotional bottom.
Why is it that every bottom is accompanied by an extreme contraction in trading volume? Because the market needs an emotional trough, a period of wailing, to grind out the true bottom.
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At the end of June, through macro fundamental analysis, it was confirmed that there would inevitably be a round of market movement in the second half of this year, which should start in mid-to-late July.
And it is a market movement that is extremely stimulated by policy, with a strength that should be unprecedented.But this round of expected market trends has been almost a month later than the original prediction, and the situation on the trading board seems to be even worse.
If we talk about the market in April, May, and June, it fluctuated with rises and falls, but it was still in the rotation of sectors, having some profit effect.
However, the market in July and August almost became a one-sided slaughter for retail investors, without any mercy.
This seems to be contrary to the expected market trend.
The reason for this is that the market's emotional bottom has not yet fully arrived.
Every time the market truly bursts into a trend, it comes in an extremely pessimistic situation.
Retail investors go from disbelief to belief, and then to disbelief again, which is the real emotional bottom.
The market's emotions, from the perspective of retail investors, are only two: I believe and I lie flat, I've lost so much I'm numb, and I'm fully replenished.
The other is, I don't believe, so I stop loss, I've lost so much I'm numb, and I will never buy again.
The trading emotions of retail investors fluctuate with the market's ups and downs and news, until they finally sink to the bottom.If your investment emotions fluctuate greatly, do not look at the news and be quiet by yourself.
More than a decade of market front-line investment experience tells me that any emotional decision is wrong.
In recent years, self-media has really poisoned more investors.
The reason why self-media has attracted so much attention is that it amplifies emotions and seeks emotional resonance.
And the goal of these people is traffic, not objective analysis, so there are often alarming statements.
Ambiguous conclusions, coupled with emotional rhetoric, are of no help to investors.
Some investors live every day watching the rise and fall of others, just to get emotional comfort.
This way, for investment, is really of no help at all, but will be led astray by emotions and make wrong investment decisions.
Because, what self-media can analyze is also what has already happened, or is a delayed release.In other words, it amplifies a result without analyzing the future.
The market capitalizes on the spread of emotions, using this method to "mow down" the retail investors.
When the index rises, a large number of self-media begin to promote that the bull market is coming, urging people to return to the market quickly.
Then the emotions of the retail investors become extremely excited, rushing in full of adrenaline.
Afterward, after suffering a loss, the self-media helps to find various bearish reasons, analyzing why the market has plummeted.
The emotions of the retail investors fall to an all-time low again, either lying flat or choosing to cut their losses, the situation is pitiful.
Do you think that the economic data is unknown to the higher-ups or to the main institutions, all waiting for the market to announce it?
Many times, when the "other shoe drops," it is the last emotional blow.
That is, the bottom of emotions often reaches a peak after the bearish news at a low position, leading to the lowest price.
Therefore, the bottom of the market's emotions is actually very easy to find, and there will be obvious reactions on the trading board.After a sharp decline, the subsequent contraction in volume often marks the bottom of sentiment and is the point of confirming the bottom. When the policy bottom and the sentiment bottom overlap, the capital bottom naturally arrives as well. Finally, based on valuation, it is possible to determine whether it is a short-term bottom or a long-term bottom.
The emotional pattern at the bottom is like this, and it is eternally unchanging, because this is the law of the great cycle.
The sentiment at the market's peak is often the opposite of that at the market's bottom. Whether they are real or fake, folk stock gods tend to emerge at the market's peak. Looking back, think about whether many of the self-media that people pay attention to have become gods during the bull market. The market used to be similar, but what was worshipped before was not self-media, but securities analysts.
Various analysts, like gods, led retail investors to make money continuously. Every day, when you turn on the TV or open QQ groups, there are various live broadcasts and views.These tactics are not a matter of a day or a night; they have existed for a long time.
However, it originally started with analysts on television, and now it's a bunch of unscrupulous self-media.
One might ask, how many truly capable investors would be so bored as to do live broadcasts on self-media every day to attract followers, when they have already achieved financial freedom.
When the world is full of financial self-media, risk comes quietly.
The so-called market sentiment's peak has a very obvious sign.
It's when retail investors feel that every drop is a good opportunity to get on board, which is also a time of great risk.
If a high position's drop is like crying wolf, then when this situation occurs many times, the wolf really comes.
Using emotions to judge the peak mainly depends on whether there is blind following.
Many investors actually do not understand the market and like to follow blindly.
When the market shows blind following and everyone starts shouting slogans, such as the index rising to 4000, 5000 points, the probability of a short-term peak in this situation is particularly high.Essentially, when the market is overly optimistic and looking higher, it is the perfect time to "mow the leeks" (a Chinese idiom referring to taking advantage of inexperienced investors).
At the top of the market, there will be no bearish news, because scaring away retail investors would leave no one to take over the shares. However, capital does not lie; stock prices will continue to fall, while retail investors remain optimistic.
This optimistic sentiment during a decline is illogical and can easily form a short-term top.
Self-media always shouts "buy, buy, buy," as if they have unlimited positions, or they add positions in the middle of the night.
Whenever there is an increase, they never miss out, but they have never warned anyone to escape the high position.
When the "rearview mirror" fears become more and more common, the transformation from bull to bear market comes quietly, and market sentiment shifts from hot to cold.
There is a saying that I think many people should have heard.
"Buy when no one is interested, sell when the crowd is noisy."
Emotion is the market's harvester; investing with emotions is destined to be harvested by the market.When your emotions are very uncomfortable, you might as well calm down first, and then think about what to do.
The onlookers see most of the game while the players see hearts of their own.
Review more after the game, and make fewer decisions during the game, especially last-minute decisions.
Emotional peaks and troughs must be grasped in time, because the big tops and bottoms of the market are basically inescapable from the clutches of emotions.