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Cycle theory: How to estimate the rebound cycle.

32 Comments 2024-07-09

The market has finally rebounded, with cheers and leaps of joy.

However, this is a weak rebound, and I had already told everyone in advance.

Many retail investors are confused about the rebound, reversal, weak rebound, strong rebound, daily level rebound, and weekly level rebound.

So when doing a rebound, they don't know whether they should buy low or chase high.

They also don't know whether they should hold or do some high sell and low buy waves.

There are also some who don't know when to reverse, mistakenly treating a bull market as a rebound, and missing the market.

Everything has a cycle, whether it's a rebound or a reversal, it's just an upward cycle.

How to judge the length of the cycle and grasp the cyclical opportunities is the key.

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What is a cycle in the stock market?The term "cycle" actually refers to the recurring fluctuations in the market under a certain level of trend.

The market cannot only rise without falling, nor can it only fall without rising.

This is similar to human emotions, which always have ups and downs, forming one cycle after another.

Cycles themselves come in different levels, with larger cycles containing smaller ones.

It's like having 24 hours in a day, with perhaps 14 hours of happiness and 10 hours of unhappiness.

It's like having 7 days in a week, with perhaps 5 days of relative happiness and 2 days of less happiness.

It's like having 4.5 weeks in a month, with perhaps 3 weeks of happiness and 1.5 weeks of less happiness.

It's like having 12 months in a year, with perhaps 8 months of happiness and 4 months of less happiness.

In the stock market, the shortest cycles are minute cycles, followed by daily, weekly, monthly, quarterly, and annual cycles.

The cycles we often talk about are mostly calculated on a daily basis, with occasional mentions of the weekly cycle level.If we need to categorize this into specific levels, it's relatively straightforward.

The first type is the short-term rebound at the daily line level.

This kind of rebound mostly occurs within 1-3 trading days.

One-day tours, in fact, are very common.

The rebound of a one-day tour is half due to cyclical patterns, and the other half is stimulated by various news factors.

The reason for the emergence of a one-day tour is mostly because the funds are not ready.

This kind of rebound is actually just a release of short-term emotions.

When the release is over and the market has no following orders, it naturally falls, with no sustainability at all.

The difficulty of participating in this type of rebound is very high.

In most cases, it is not used to make money, but an opportunity to reduce losses and exit the market.The main force basically does not participate in this kind of rebound, only retail investors will chase the rise and kill the fall due to the internal movements of the plate, and it is easy to be trapped.

The second type is the mid-term rebound at the daily line level.

This kind of rebound mostly lasts for 2-4 weeks, which is mostly 8-20 trading days.

The mid-term rebound is a phased rebound, generally appearing after the decline at the weekly line level.

If the market has not had a decent rebound for 1-2 months, then the mid-term rebound will appear.

The mid-term rebound is a rebound that needs to be released due to suppressed emotions.

It's like a person who has been hungry for a long time and finally sees something to eat, and will rush to grab it, which is the same principle.

Continuously for 1-2 months, being in the mood of falling every day, will usher in this mid-term rebound.

The rebound here is also likely to be a mid-term rebound, which is based on the rebound sentiment brought by the seven consecutive weeks of the index at the weekly line.

The time of this kind of rebound is generally about half of the falling time, and it is unlikely to last too long.Because there has been no change in the fundamentals, it is merely a simple release of bullish sentiment.

The main force will take advantage of this kind of rebound to reduce positions, and some hot spots will be hyped up.

The third type is a weekly-level rebound.

This kind of rebound is calculated on a monthly basis, mostly occurring within 2-4 months.

A rebound of this level can already be considered a "meal" market, usually with a main theme.

This level of rebound often appears after a significant drop.

The recent declines that have resulted in 2863, 2885, 2635 are all of this level of rebound.

Many people mistakenly regard this kind of rebound as a monthly-level rebound. In fact, from the monthly line perspective, this rebound does not change any trend at all.

The reason for this kind of rebound is actually that the main force of capital, based on the long-term decline, or a significant decline, as well as the need to set up its own game, makes a large-scale rebound.

This kind of rebound often has a main logic, to hype up a new hot spot, a big hot spot to accommodate enough main force capital.Weekly-level rebound, which is also based on sentiment for the rebound, is not based on bull or bear markets, or valuation-based rebound.

This kind of rebound has already led some people to shout about the bull market, which is easy to confuse, and it is easy to trap people at the end of the rebound.

The fourth type is the monthly-level rebound.

This kind of rise at the monthly level seems to look like a bull market, but in fact, it is not.

The cycle of this rebound should be 8-12 months, most of which are the B wave rebound of the bear market cycle.

Such as the big rebound in 2009, the rebound in 2016-2017, etc.

This level of rebound looks similar to the bull market, and the duration of the cycle is also relatively long.

But this kind of rebound, in terms of actual increase, there is still a gap with the bull market, mostly appearing after the first sharp drop after the end of the bull market.

The first sharp drop after the bull market ends is the most fierce, so the corresponding rebound strength is often the strongest.

From 6124 to 1664, it fell by 73%, so there was a rebound of one time.The translation of the provided text into English is as follows:

The decline from 5178 to 2638 represents a 49% drop, hence the subsequent 36% rebound.

Without a significant downturn, there would be no rebound at the monthly chart level; everything would have to be judged at the weekly chart level.

The last type is the much-anticipated bull market.

The cycle of a bull market is also quite easy to determine.

Firstly, the emergence of a bull market requires a cleansing period of at least four years of adjustment starting from the high point.

Secondly, the duration of a bull market typically ranges from 13 to 26 months, which is about 1 to 2 years.

Although many people no longer believe in the bull market, it will definitely still occur.

As long as there is a thorough decline and the starting point is low enough, there is an opportunity to initiate a bull market cycle.

Starting from the 2021 decline, by 2025, the foundation for initiating a bull market will be in place, as long as there is a low valuation point.As for the funding issues that everyone is concerned about, they will be resolved once the bull market arrives, as there will be plenty of speculative capital when there is money to be made.

The law of cycles is that after a significant drop, there will inevitably be a rebound, and after a prolonged decline, a bull market will inevitably emerge.

Many times, retail investors focus too much on each trading day, thus overlooking the existence of cycles.

Finally, there will definitely be attention to how long this cyclical rebound can last.

This rebound is based on the 36 trading days of decline from May 20th to July 9th.

Usually, such cyclical rebounds can only last for 2-3 weeks, which is likely to end in late July at the earliest, and at the latest in early August.

Of course, if there are additional changes, such as the sudden appearance of incremental capital, the cycle can be extended, but the possibility is very small.

In the eyes of retail investors, the market takes one step at a time, but in the eyes of the main force, they have already seen through the cycles and have made a meticulous holding plan.

When the rebound begins, when it ends, when it is a bull market, and when it is a bear market, all have a fixed number.

The economy cannot be separated from cycles, and the stock market cannot be separated from cycles. It is just the natural law, there is no need to force it, just let it be.

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