laitimes

After the holiday, pay attention to market risks!

Recently, A-shares and Hong Kong stocks are really bullish, and my overseas hedge fund customers are now thinking about getting their money out and entering the big A. Half a month ago, they were still shouting to go to sea, and it was not fragrant to go to sea in an instant. There are also many people who ask Lin Jiaotou what will happen to the market after the National Day, and my answer is:

After the holiday, pay attention to market risks!

The reason for this is that there are many divergences in the market as the market is about to open.

This divergence means that the game between the long and short sides is beginning to be unclear, and even if it rises after the holiday, it may not be as smooth as before the holiday.

But this does not mean that the market will immediately reverse and pull back, I am just telling you that there is a divergence and risk, and that's it, it is absolutely right to keep an eye on it. If you read my article and then come and scold me and say that I caused you to step into nothing, then I can only say that you deserve it.

1. Why is the market rising?

Shareholders have no memory.

On September 25, the market reached a maximum of 2952.45 points, and some people shouted "the national fortune is coming".

After the holiday, pay attention to market risks!
Brother, 3000 points haven't been fixed yet!

Of course, we all know our plot: the market is still running wildly, and the next day it easily regained 3,000 points, looking at this situation, the market sentiment is still high, and it is very likely that it will continue to run wild after the holiday.

After the holiday, pay attention to market risks!

Now return to rationality and ask yourself: why is the market rising so fiercely?

Anyway, after this big rise, all kinds of immortals have been dispatched - don't get me wrong, some people are really immortals, I admire their thoughts and cognition, but the market is the market, as an investor, I focus on how to use the market, not "everything is right but meaningless".

For example, most brokerages pointed out that this was caused by the September opening. But this doesn't explain anything at all, because it's not the first time that Z policy has been supported, and there have been several impressive Z policies called "epic" before, and the result? Tempting, trapped.

After the holiday, pay attention to market risks!

One of the bloggers I follow pointed out that this was because of the "financial reforms."

After the holiday, pay attention to market risks!

I read his article, it is very well written, but it is meaningless, it belongs to the type that is right after the fact, and the more esoteric and difficult to understand, the more unclear it is, but the macroeconomy and market performance are related but there is no inevitability, and there is a lot of truth and logic, which is suitable for writing books, selling courses, or the best way out is to enter the brokerage research institute, cancel the stock account, and write research reports with peace of mind to get a high salary, but this is useless for investment.

As an investor, I want something that is useful, not something that is "right but useless".

So, what exactly is something useful?

2. Why is the market rising?

The essence of the market is not complicated, and I have said no less than 10 times about the underlying logic DDM model. That is to say, the market is driven by three aspects - fundamentals, capital, and sentiment.

After the holiday, pay attention to market risks!

This model, without doubt, is the first principle of judging the market situation. I've seen someone criticize this model before, what is not caused by risk appetite this time, this time it is a deeper reason, balabala, the underlying logic, the deepening of reform, and almost wrote out the alien civilization. These people are all literati and writers, and they have a lot of reasoning when they open their mouths and close their mouths, and they seem to be right, but they are useless.

Let me ask you: Have you made any money?

I'll answer you first: I have, we were at the bottom full before September 25th.

After the holiday, pay attention to market risks!

What do I want to say? In the capital market, what we want is the result, the result, and the real profit, not the win.

On September 18, the Federal Reserve cut interest rates by 50bp, and on September 24, we followed up, superimposed on the "epic level (anyway, every time it is epic)", so the market reversed, and global capital was optimistic about China.

Of course, the mechanism behind it is not so simple, and when it comes to the issue of global capital allocation, you can see what Lin Jiaotou wrote in the past:

"Investing in Lin Jiaotou: Life and wealth depend on Kangbo, but how to understand the Kangbo cycle? 》

Investing in Lin Jiaotou: Three-Cycle Nesting: Zhou Jintao's Underlying Thinking Model

Investing in Lin Jiaotou: A Global Macro Hedging Framework (Zhou Jintao Edition)

Lin Jiaotou is by no means an afterthought, nor is he a literati on paper. As for the inflection point of interest rate cuts, I have been looking forward to it since last year:

The inflection point has arrived! How to allocate major types of assets in 2024? 》

"Will the A-share cycle come in 2024?" 》

Is the Fed still cutting interest rates? 》

Investment Opportunities in the Second Half of 2024

"3000 points are in sight! Is a bull market coming? 》

Yes, the capital market is not complicated, otherwise how do you explain that only this rebound is real (refer to Lin Jiaotou's "3000 points of recovery in sight!"). Is a bull market coming? Why is the starting point of the rebound on September 24, you can explain to me why this time the good is "epic", why the first three years of the various benefits are not "epic"? No, every time Z policy comes out, don't some people shout "this time is different" every day? Why did the previous benefits end up being tempting?

And then made up a whole bunch of complex "underlying logic", but it didn't make sense.

To put it simply, the weakness of the dollar has led to the outflow of global capital from Wall Street, looking for more cost-effective opportunities, not your A shares rise, as long as the dollar is weak, other assets will most likely rise, including commodities. On September 24, we appropriately launched a positive + easing, and the rise of A-shares is inevitable. But this time, A-shares and Hong Kong stocks are really outstanding, of course, it is not entirely the improvement in liquidity caused by interest rate cuts, but there are also reasons for the previous gods, but interest rate cuts are the first driving force, don't play tricks with me.

Social science is different from natural science, for "why is A-share rising", 1,000 people can say 1,000 reasons, and the more esoteric it is, the more unclear it is, but in the end you must get the result, otherwise it's all shrimp. At least in the past few years, I have used the DDM model as a framework to observe the market, and I can basically get results.

3, however, divergences arose

After the Fed cut interest rates, I started to go long on the offshore yuan, but I was shocked out of the market on Friday, and the yuan appeared an epic long black candlestick against the dollar, breaking the stop loss level calculated by our quantitative system. I took a look and the reasons are:

After the holiday, pay attention to market risks!

In other words, the global stock market is reacting to easing expectations in advance, and Lin Jiaotou also believed in a previous article that the global interest rate cut cycle officially began, but it was soon slapped in the face.

Because on Friday, October 4, the United States released non-farm payrolls data for September very good, with no signs of recession at all.

If there is no recession, what interest rate do you cut? Isn't the price high enough? As a result, global hedge funds began to bet on no more rate cuts in 2024, and the change in opinion was really faster than that of Western journalists.

So, has the market wind changed again?

After the rate cut, the Federal Reserve is currently setting the benchmark interest rate at 4.75-5.00%, from the Chicago Mercantile Exchange announced the future interest rate expectations, the market direction has not changed fundamentally, although the September non-farm data is better than expected, but the current global hedge funds still have a strong expectation of interest rate cuts, 97.4% probability, November will be lowered again, when the benchmark rate may be reduced to 4.5-4.75%.

After the holiday, pay attention to market risks!

That is to say, a positive non-agricultural season, does not mean that the general direction of the general trend has changed, Lin Jiaotou at this moment, also maintained the previous view unchanged: the world has entered the channel of interest rate cuts, and the overall bullish on large types of assets is bullish, but the previous over-optimism and bets on interest rate cuts have allowed the market to overdraft future profits in advance, so I am worried about a pullback after the holiday, but there is no evidence that the general direction of the bulls has reversed.

So, why is NFP so good?

Citi believes that seasonal adjustments may amplify the September data. Lower turnover rates rather than strong hiring pushed up employment figures. Citi stressed that in order to maintain solid job growth and prevent the unemployment rate from rising again, the Fed needs to see an increase in labor demand (hiring). But over the past year, the trend of weakening demand for labor in the United States has been consistent (albeit highly volatile), most pronounced in the declining hiring rate (which in August was at the level since September 2008) and the resulting rise in unemployment. A low turnover rate would mean strong seasonally adjusted growth, which is likely to be revised in October.

On the one hand, the general direction of the bulls remains unchanged.

On the other hand, the surge overdraws future expectations, fears, unwraps, and divergences, which will produce selling pressure and pullbacks.

4. Leeks are starting to enter, but not yet to the last leek

All in all, the market is worried that the monetary policy will continue to tighten and there will be a lack of liquidity, and the market's previous bet on easy liquidity is a bit excessive.

Still bullish, 9.18 is the lowest point, because the worst is no more interest rate cuts this year, but it is impossible to return to the rate cut cycle. But to withstand the pullback, if the market really overdraws the expectation of interest rate cuts, someone will run.

In terms of emotion, it is more metaphysical, and I can't say why. When I was playing at the Temple of Heaven during the National Day, my brother sent me a picture:

After the holiday, pay attention to market risks!

And here's what I said:

After the holiday, pay attention to market risks!

And some rational voices have appeared in the industry, such as Dan Bin:

After the holiday, pay attention to market risks!

So, is the market overheated? Judging from the price-earnings ratio of the CSI 300 in the last 10 years, it closed at 13.26 times before the holiday, while the standard deviation of plus double is 14.31 times, and the danger value is 14.03 times. The market brought by this round of β has not yet reached the time when it was crazy in 15 and 21 years, so although there are differences after the holiday, it will not be reversed, because the mood is far from being as crazy as in 15 and 21 years.

At this moment, there are still many people queuing up to open an account, holding the money and preparing to take over.

There are also many people, shouting that this is an opportunity to change their fate, and are preparing to increase leverage.

There are also many people who run too early, or don't enter the market with a hard mouth, and when the aunts around them make money, they will not be able to stand it and rush in again with the money.

After the holiday, pay attention to market risks!

All in all, this article is all about the risks.

Risk represents a possibility.

5. Can I still get on the bus if I step on the air?

Will it rise after the holiday, or will it pull back?

Don't make it!

I don't make any predictions about the market, I just watch the market, judge the changes in the wind direction and tides, and prepare for it.

After the holiday, pay attention to market risks!

I don't give investment advice, and if I had to ask, I would tell you to be aware of the risks, because that's the right nonsense.

But it is precisely because of so much nonsense that too many people don't care, and in the end you lose money in the market, not because you lack knowledge, but because you ignore common sense. Don't be greedy, don't panic, do a good job of risk control, everyone will say these "big truths", but few people will do it.

Take CSI 300 as an example:

After the holiday, pay attention to market risks!

If you're at the bottom, then September 18 is the iron bottom (Figure 1 above), because that's the day the Fed started its rate cut cycle, and I really can't think of any reason for the market to fall below that, and if it does, I won't dig into the reasons, and I'll not write useless articles to brag, I'll silently clear all long positions and backhand short positions.

If this position is unacceptable to you, then for A shares, September 24 is also the bottom (the position in Figure 2 above), you can put your stop loss here, if it falls below this position, the big A is really hopeless.

If you haven't entered yet, want to get on the car, I won't stop you, because if you step short, you will definitely blame me, I will only suggest that you put the stop loss in the position of Figure 3 above, because there is a gap, the volume of the rise, indicating that the bulls here are strong, is the vast majority of people to open a position, if it falls below the highest price of the day of 9.27, you can consider admitting losses, and then choose the opportunity to enter.

Using Wyckoff's method to interpret, you can also think that the pre-holiday (September 30) rise is overbought (BC), which belongs to the rise of the top volume, and there is a possibility of tempting long, but after overbuying, it does not mean that it will necessarily fall sharply, and the market will pull back to the AR position in the figure below, and rise again to confirm the market (ST). If the previous high is broken, then the market still has the possibility of rising, and if ST cannot break the previous high, then the second confirmation fails. These will only become clear after the market comes out.

After the holiday, pay attention to market risks!

What if the market falls below stop loss level 3 and then rebounds to the upside? Don't ask me, this is very common, if such a bloody thing really happens, it is not an uncommon thing, we have experienced a lot of battles in the market, and we have seen a lot, and dog blood is commonplace. If it doesn't work, you will put the stop loss at the bottom of the 27th, and then the bottom of the 26th, I just tell you how to control the risk, you have to carry it to the position of 1 and 2, you can also, because 1 and 2 are the absolute bottom, if even 1 and 2 fall below, then don't hesitate. It depends on how much risk you dare to take.

Risk is a possibility, it doesn't have to happen, but when it does, you have to be able to live with the outcome.