Practical Teaching Lesson 95: Emotional Cycles in the Quantitative Era

Now there’s basically nobody studying the emotion cycle anymore. Even many people say the emotion cycle has already failed. Today I’ll walk you through this year’s emotion cycle. [Taoguba]
First, let me give everyone a basic piece of common knowledge: the best stocks over the long run stay below 5 consecutive limit-ups, which is the chaos phase. The difficulty of trading in the chaos phase is even higher than in the decline phase, because the decline phase
at most lasts 3 days, while the chaos phase can last up to 2 months.
So we can simply divide the market into two types: the chaos phase and the main upswing phase (since the pullback phase is extremely short, I won’t break it out separately).

Cycle phases are determined solely by consecutive limit-ups. Everything else goes to the side.

There are a few variables that affect the cycle: 1) Whether an all one-word limit-up stock counts as the cycle’s leading “dragon.” 2) Whether the 2nd wave’s leader counts as a continuation of the cycle. 3) Whether a “positional takeover” appears within the current cycle.
Rule one: If a restructuring stock with all one-word limit-ups appears, it subjectively adds points to this cycle. Usually I don’t look at it as part of the chaos phase, but I don’t treat it as the cycle’s “strategic eye.”
Rule two: After the 2nd-wave dragon, once Chen Xiaoqn leaves, it shows no outstanding performance again. It is to be kicked out of qualification for cycle classification.
Rule three: If it’s a node, the cycle resets. If it’s a positional takeover, the cycle continues. I’ll write a dedicated article later about nodes and positional takeovers.

With the above basic understanding, we can start dividing from January 5 this year.
January 5: Leiko Defense emotion cycle (the highest board, Fenglong Co., Ltd., is because it’s an one-word limit-up. Subjectively, I consider it part of the main upswing phase, so I would be a little less prepared against the chaos phase)
January 6: Continue the Leiko cycle (two one-word limit-up stocks, Shengtong and Fenglong, get added points)
January 7: Leiko Defense cycle
January 8: Leiko Defense breaks a board. Whether the cycle is over depends on whether there’s a positional takeover. Galaxy Electronics and ZhiTe New Material achieved a positional takeover successfully, so on January 8 the cycle enters the period of Galaxy Electronics and ZhiTe New Material.
January 9: Galaxy, ZhiTe cycle.
January 12: Galaxy, ZhiTe cycle. In one cycle, a positional takeover can happen at most once—there is no other positional takeover.
January 13: Look for low-position nodes; Pufei Electric cycle. It ends on January 16. On the 16th, there’s no positional takeover—look for a low-position node. Because Pufei ends at 5 boards, there are suspicions of a chaos phase.
January 19: Look for low-position nodes; Guangdong Radio and Television Electronics and Jianghuai Micro. (I was also tricked in this round. Subjectively I thought it was a transitional move of Guangdong Radio and Television Electronics, and there was nothing fundamentally wrong in itself. The key is
January 22: On the day Guangdong Radio and Television Electronics falls, a positional takeover appears. But because Jianghuai Micro hasn’t died yet, this positional takeover isn’t clear-cut that day. The real positional takeover should be
January 23: Nonferrous Metals (Silver) achieves the positional takeover. Here the most important part is a thought process about whether it’s in the chaos phase. The previous stock, ZhiTe New Material, was still a big bull stock, so the sentiment carrier shouldn’t
be limited to 5 boards—so most people were wrong.
January 30: The Nonferrous Metals (Silver) cycle ends, with a node being Hengdian Film and Television. Here are two details: first, Hengdian Film and Television broke on the 5th day. second, after its 2nd wave, it directly A-killed, opening a very bad head. Because you can’t get past 5 boards, and then you A-kill—it delivers a double blow. At this point, it can basically be determined that the market has entered the chaos phase.
February 11: A cheating stock came out of the chaos phase—Yuneng Holdings. Because the first 4 days were one-word limit-ups, seemingly it was a 7-board stock, but in reality it was a 3-board.
And another popular stock, Farsense, won with announcements exactly the same as Yuneng Holdings—once it goes up again it will stop trading. This made the chaos phase’s main characteristics even clearer.
The chaos phase lasts all the way until Sanfangxiang. The last 5-board stock is on March 19. Huadian Liaoneng achieved a positional takeover over Sanfangxiang successfully, and directly entered the main upswing phase.
The node produced by Huadian Liaoneng breaking a board is Tianyao Pharmaceutical.

Emotion cycles are still useful, but you can only look at the first wave’s consecutive limit-ups. Remove all the 2nd waves and the trends entirely. Then there are only two kinds of changes: positional takeovers and nodes. Just like in ancient times,
an emperor would either pass it to his son, or be killed by someone else—there’s no third scenario.
Each round of emotion cycle corresponds to that cycle’s consecutive-limit-up “dragon.” They are a symbiotic relationship like fish and water.
Theoretically, ice point, launch, main upswing, and climax take 4 days. So if the ice point is a first board, the maximum is 4 boards. If the ice point is a 2-board, the maximum ends at 5 boards. That’s why the highest in the chaos phase is always around 4 to 5 boards.

So based on the above reasoning, Teacher A-shen’s idea that you should do more in good situations and do less in bad ones can be quantified: do more in the main upswing phase, do less in the chaos phase, and only the
decline phase lasting 1 to 3 days can be ignored. This article was first published by Master Yang in Taoguba. If you转载, please indicate the source.