The ten most classic tricks in the U.S. stock market

 

The ten most classic tricks in the U.S. stock market

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I believe that many friends have been completely fooled by the bullish tactics in the US stock market in the past few days. "TSLA soared without thinking, and there will be a round of plunge every few days." We just reminded everyone frantically on Thursday, and unexpectedly it crashed directly on Friday, but it also perfectly confirmed this rule. Today I won’t talk about anything else, just share with you some of the tactics I summarized before, which may be helpful for your future operations.

1. AAPL has 8 consecutive positive days or more

The company AAPL is often used to support the market and pull up the index. As the first-weighted stock in the U.S. stock market, AAPL has always been favored by institutional investors due to its strong repurchase ability, so it is often regarded as a safe-haven stock.

We often see AAPL rising 8, 9 or even 10 times in a row in some extreme market conditions. These are all manifestations of institutions banding together to avoid risks to the extreme. Or you can understand it as institutions constantly raising the AAPL index to protect their own escape, so this is often seen as a signal that the market is about to collapse.

This kind of market usually starts with a flash crash. Why is it a flash crash? Because AAPL opens low and closes high continuously, basically killing all puts in the market. Most stocks fall into a dog shit, but AAPL is still there squeezing out shorts. The index level often does not rise or fall. In the end, all those who play options die. But when AAPL cannot protect the market, puts often come back, so it is basically an instant flash crash.

From August 5 to August 20, AAPL saw 12 consecutive positive days, which was considered an extremely extreme market situation. After all, AAPL had just been sold off by Buffett, and it saw 12 consecutive positive days. It was obvious that the institution was preparing to run away, and it did experience a wave of sharp declines afterwards.

2. TSLA surges and squeezes out the market

We often see such a market situation, that is, when most companies in the market are sluggish, including the other six giants, TSLA suddenly emerges as a dark horse, and a company soars against the trend, and the surge is more than 4%. Once this kind of market situation appears, the stock index will plummet in a few days.

Please note that what we are talking about here is "brainless surge". It is normal for companies like TSLA to rise with the market. For example, today the Nasdaq rose 2%, and TSLA rose 5% on the same day. This is a normal rise. For another example, TSLA announced its delivery data today, which increased by 50%, ushering in a big positive news, and then the stock price soared, which is also a normal rise.

The so-called "brainless surge" means that TSLA has no good news, and the market has not risen, but TSLA has suddenly risen sharply without any signs. Last Wednesday and Thursday, in fact, it was very consistent with this trend. TSLA rose nearly 10 points inexplicably, and the hype news was what it would do next year. It will launch autonomous driving next year, and robots next year.

TSLA is the company with the worst fundamentals among the seven giants. When this company has a mindless surge, it often means that institutions are running away frantically. TSLA is the favorite company of retail investors. The surge in TSLA is actually luring retail investors to buy at the bottom. When TSLA has a huge increase in a short period of time, because there is no positive support, the upward momentum will soon disappear, and the next high probability is a U-turn and a sharp drop.

3. Gousheng is the opposite, the villa is close to the sea

This should be considered a classic contrarian strategy on Wall Street, but please note that this does not mean that you can reverse all Goldman Sachs ratings. Most of Goldman Sachs' ratings are relatively reliable. After all, such a large institution cannot have every analysis wrong. If all of them are really wrong, then there must be something fishy going on.

How should we understand this sentence? In general, when a company has already fallen a lot and it is obvious that it has fallen to the bottom, Goldman Sachs suddenly jumps out to downgrade its rating, saying that the company still has a huge room for decline. When a company has already risen a lot and it is obvious that there is a bubble, Goldman Sachs suddenly jumps out to say that the company still has a huge room for growth.

The most classic case is that before NVDA's financial report, Goldman Sachs significantly raised NVDA's target price, saying that there was no problem with the demand for NVDA's BlackWell and that the stock price still had 50% room to rise. This was ridiculous at first glance, and everyone saw the final result. NVDA's stock price fell like shit after the financial report.

In addition, let me remind you that before the AAPL press conference, Goldman Sachs significantly raised AAPL's target price and believed that "AAPL's press conference will usher in four major positive factors, and the stock price has 24% room for growth." This report looks ridiculous, but there is this precise 24% room for growth. Think about it carefully.

Why is Gousheng so shameless? Think about it, a company has fallen to the bottom, and we should obviously buy the bottom. At this time, Gousheng tells you that there is still a huge room for decline. This is nothing more than panicking retail investors. A company's bubble is already very large, and institutions are obviously selling. Gousheng tells you that there is still room for growth. It would be strange if you go long and don't lose money.

4. Bank of America raises target prices for chip hardware stocks

Bank of America is not a familiar inverse index, but it is an inverse index for the chip track. How should this sentence be understood? That is, Bank of America normally raises and lowers the target price in other tracks, but when it comes to chip hardware, it often performs a standard inverse index.

Bank of America often accurately raises the target price of a chip stock at the highest point of a round of market, and often accurately lowers the target price of a chip stock at the lowest point of a round of market. I don't know why it is so accurate, but Bank of America's level is definitely not low, so it can only be explained as a routine.

Being proficient in this routine is actually beneficial in many cases, that is, when a chip stock soars, as long as you see that Bank of America has upgraded its rating, you can immediately reduce your position and run away. Of course, the opposite is also true.

5. Morgan Stanley raised the target price of a certain company

Before NVDA's financial report, we have summarized this rule, that is, we found a big reversal. Morgan Stanley's routine is very deceptive. Why do I say that? Because after the stock's rating is upgraded, it often first has a rapid explosion to lure more investors, and then a big crash.

Previously, Morgan Stanley raised the target price of DELL, saying that it was the best time to buy the bottom of DELL. After the target price was raised, DELL rose by 10% in three days, and then fell from $160 to $87, nearly halving. Morgan Stanley raised the target price of TSLA, saying that TSLA's market value could increase by $500 billion. TSLA also rose by 10% in three days, and then fell from $280 to $138.

Before NVDA's financial report, Morgan Stanley was wildly bullish on NVDA, saying that BlackWell had no extension and investors should be reassured. However, after NVDA surged 10% in a row, it went sideways for 4 consecutive days. After the financial report, it fell from $130 to the current $102. It seems that the stock has not fallen to the right level yet, and it is estimated that there is still a lot of room for decline.

Coincidentally, Morgan Stanley also started to sing bullish before the AAPL conference. Morgan Stanley believes that the introduction of Apple Intelligence in iPhone 16 will help release pent-up demand and accelerate the replacement cycle of iPhone. I think everyone should be careful. The classic routine is expected to be staged again. I estimate that the intensity of AAPL's dive will not be small.

6. Seven giants continued to pull up to support the market

This is a common pattern. Often we see that only seven giants in the entire market are rising, and the rest of the companies are basically falling. This kind of market is often a sign of a collapse.

Other sectors are falling, indicating that funds are frantically withdrawing from the market, and the 7 giants are being pulled up, on the one hand to force the index to rise, and on the other hand to cover up the intention of institutions to sell. Institutions are frantically gathering together to gather together the 7 giants, which is actually a manifestation of the brewing risk aversion sentiment. Imagine that the entire market is gathering together to avoid risks, what will be the next trend?

The seven giants have been rising continuously. This kind of market is actually very easy to do. You can just blindly buy the giants. No matter whether there will be a crash next, you should first seize this round of rising market. Don’t dare to buy other small-cap stocks, and don’t dare to buy the super giants. It’s better not to buy US stocks. When the giants are obviously unable to move forward, immediately reduce all positions, because the crash may be coming.

Although the funds needed to pull up the giants to protect the index will not be too much, it is impossible for the giants to rise indefinitely. After a continuous surge, the giants will lose their upward momentum. When the giants make up for the decline, the index will definitely go down.

7. NVDA stands out

Just like the mindless surge of TSLA, we often see that all other companies are falling, but NVDA is rising against the trend. It can be understood that this is the mindless surge of NVDA, which looks a bit similar to the mindless surge of TSLA, but in fact it is the opposite. Many times this is a signal to go long and buy at the bottom.

NVDA has the best fundamentals among the giants. The fact that institutions are buying this company shows that bulls are trying to attack, but the potential is not there, so they are forced to focus on NVDA. Imagine that the market was originally dominated by bears, but bulls are attacking at this time. When NVDA continues to rise for a few days, bears may not be able to resist closing their positions, and bulls will then stage a major counterattack.

Therefore, when NVDA is the only one standing out in the market, we don’t need to panic too much. The liquidity will be sucked up by NVDA in a short period of time, but soon the liquidity will go to other giants. At this time, the giants will take turns to explode. If you grasp the rhythm well, you can make money by going long.

8. The top appears in the descending trilogy

When the U.S. stock market reaches its peak, it likes to go through the technical pattern of the decline trilogy at a high level. It has basically gone through it in the recent peaks. What is the decline trilogy? Simply put: first there is a negative line with large volume, then it fluctuates and rises for a few days, but it can never break through the highest point of the negative line with large volume, and then suddenly crashes, and then another negative line with large volume is formed.

The market from August 22 to September 3 was a standard decline trilogy. July 24 to August 1 was also a decline trilogy. July 1 to July 16 was also a decline trilogy. April 4 to April 12 was also a decline trilogy. After that, the market basically continued to fall a lot. It can be seen that the probability of a decline trilogy appearing at the top of the US stock market is quite high.

Why is the decline trilogy deceptive? On the first day, there is a sharp drop in volume. This kind of negative line with large volume is 100% sold by institutions, and it is sold from the opening to the closing. It is very certain that this is the institutions selling. Then retail investors chase in and short. The institutions give you a three-day shock rise. The retail investors who are shorting are completely panicked and quickly cut their losses. The retail investors who are long think that the opportunity has come and quickly buy the bottom and go long. As a result, the institutions turn around and plummet, killing the retail investors again. Therefore, the decline trilogy is very anti-human.

9. High-level peak Yang line hanging neck line

Many people are familiar with the hanging neck line, which is a candlestick with a lower shadow at a high position. This candlestick is mostly a negative line. The negative hanging neck line is probably formed in this way: after opening high, it opens high and moves high, then quickly plunges during the trading session, and then rises before closing, but the closing price is lower than the opening price. Most people can avoid this kind of hanging neck line. After all, when a negative line appears at a high position, most people will start to be cautious even if they don't know the hanging neck line.

The real killer is the Yang Hanging Neck Line. Look at the S&P K-line on August 30th. This is a typical Yang Hanging Neck Line. It opened sharply higher, then quickly plunged during the session, and violently pulled up before the close, and strongly set a new intraday high. This kind of K-line is the most lethal, because retail investors saw that the index was so strong, and they would definitely chase the rise, but the next day they had a flash crash.

Seeing the hanging neck line on August 30, how should retail investors avoid risks? In fact, just look at the trading volume. The rise of US stocks does not require trading volume. Institutions can achieve a rise by reducing the volume and forcing shorts, but once the high level increases the volume, it actually means that the institutions have begun to run away. The intraday dive of the positive hanging neck line is the institutions running away, and the late-day surge is actually the entry of retail investors.

When the stock price keeps rising, retail investors have no chance or dare not to get on board because there is no trading volume. Suddenly one day, institutions start to sell. Because there is no volume before, a slight drop in the market will cause a rapid plunge. Retail investors see the dive at this time and think it is a chance to buy at the bottom, so they quickly enter the market to buy at the bottom, and finally pull up the index at the end of the trading day. But the institutions have all run away, what will happen to the subsequent market? It is conceivable.

10. PEG after financial report

This is my secret, but it works every time. What is PEG after earnings? PEG is the abbreviation of power earnings gap, which refers to the gap after the earnings report, which is accompanied by an increase in trading volume. Once this gap is formed, it can provide a clear direction for trading in the next three months.

I usually do upward PEG, because a sharp drop in earnings report may not necessarily continue to fall. Sometimes the stock price plummets on the day of earnings report, which is the routine of institutions, or the earnings report is wrongly killed. Many companies often plummet on the day of earnings report, and then start to rise sharply the next day. After all, the US stock market is a bull market, and short selling is still risky, so the PEG I often mention is the gap formed by the gap.

Why is the PEG trading strategy so powerful? Because it helps us select companies with very strong fundamentals. Think about it, the earnings report day itself opened high, and Power means strong. The closing price on that day was a positive line, which means that from the opening to the closing, the closing price must be significantly higher than the opening price. This kind of K-line can be called PEG.

Companies that form PEG generally have two trends. One is that they continue to surge the next day and continue to rise. The other trend is that they start to pull back the next day and fluctuate for a period of time. However, we should note that after a company releases its financial report, institutions can pull it from opening to closing, which shows that the market is frantically scrambling for chips, and the opening price of the day is the cost of the institutions buying in. As long as we can make the cost lower than this price in subsequent transactions, we can basically make a profit.