Starting with a fully invested A-share portfolio to become a capital...

Chapter 11 The King of Indicators: MACD
Friday, January 4th.

After yesterday's volatile buying opportunity, Zhang Yang was ready to engage in day trading and chose to buy 10 yuan worth of simulated funds when Changan Automobile's opening auction price was -1.2%.

Last night, he analyzed Changan Automobile again, considering policy, technology, capital, and sentiment. Overall, the trend is still upward.

Unfortunately, Lai Weijie approached him too late; otherwise, he could have easily achieved a return of at least 100% by manipulating ST Xiaxin (which has been acquired by Xiamen Xiangyu).

In his previous life, Zhang Yang achieved the top ranking in investment returns by accurately predicting ST Xiaxin's consecutive limit-up days.

Once the upward trend of Changan Automobile is confirmed, Zhang Yang's operation is very simple: just keep making positive T trades to profit.

At 10:00 AM, the banking and securities sectors continued to decline, dragging the overall market down with them.

Zhang Yang was not in a hurry to buy. He didn't have much money left, and he needed to be extremely cautious.

As the intraday chart of the market moved slowly, his eyes were fixed on the MACD moving average below.

The MACD (Moving Average Convergence Divergence) is a fundamental technical analysis tool, often referred to as the "king of indicators" by stock market investors.

why would you say so?

Because it can provide a large amount of real-time market information, and this real-time information is very important!

To put it simply, it's like a daily chart with intraday charts. The only difference is that it doesn't have 5-day, 10-day, and 20-day moving averages. Instead, it consists of a zero line, histogram bars, DIF line (difference line), and DEA line (mean crossover line).

The commonly referred to top divergence is when the stock price reaches a new high, but the MACD indicator's DIF line and histogram fail to reach a new high simultaneously. This may be a signal that the stock price is about to peak, indicating that the upward trend may be about to reverse.

……

"The volume of the declining bars is shrinking, the DIF line is showing a horizontal trend, and the banking sector is experiencing a V-shaped pullback..."

"Tat-tat--"

Zhang Yang's eyes scanned the screen constantly, and his mouse clicked rapidly.

Real-time information about the A-share market enters his brain and is quickly digested and integrated.

At 10:14, the banking sector dragged the market down again. Zhang Yang did not hesitate and immediately bought all of his remaining 20 yuan.

Just ten minutes after the purchase, the banking sector formed a W-shaped trend, and the securities sector also formed a V-shaped upward trend.

Banks led the broader market, while securities firms boosted small and mid-cap stocks, and A-shares once again embarked on an upward trend.

At 11:21, the upward trend gradually weakened, and the DIF line turned downward twice, showing a topping signal in the intraday chart. Zhang Yang decisively sold all of his 20 shares of JAC Motors and the 50 shares of Changan Automobile he had bought the day before.

As stocks were sold off, the DIF line and intraday chart line rose again, and the closing price at 11:30 even broke the previous high.

However, Zhang Yang showed no sign of regret for missing out, because there's an old saying in the stock market: "A late-day rally is either a sign of treachery or theft."

why would you say so?

The end of the trading day is when market funds tend to loosen.

A surprise attack at the end of the trading day is somewhat similar to a night raid on an enemy camp, indicating that the bulls' momentum has been exhausted and they can only make a last-ditch effort through a surprise attack.

It includes not only the closing session in the afternoon, but also the closing session in the morning.

Of course.

No single indicator is correct.

All stock market indicators must be considered in conjunction with the ever-changing market conditions. Zhang Yang also observed that the banking sector was showing some weakness today and seemed poised for a correction.

But what he's unsure of is whether a new main storyline will emerge to take over.

……

While Zhang Xiang advocated for stability, investment students were becoming increasingly aggressive. After the morning session closed, the "Investment 122 King Kong" chat group was in an uproar.

[Zhao Zhenyu]: Baosteel shares opened high and closed low, even though there were continuous positive news and the stock price rose with high volume just two days ago. I don't understand it.

[Ming Qixuan]: Chasing the rise and hitting the limit up is the key. I bought Gaochun Ceramics yesterday, and it's up 10% today. It's so satisfying. [Yin Shichang]: You're happy. I bought ST Zhufeng, hoping for a V-shaped rebound after a sharp drop, but I got a 10% loss.

[Wang Liu]: ST Zhufeng was manipulated by speculative investor Zhao Laoge. He cleared out his position and ran away some time ago. If you go in, you'll just be asking for trouble.

[Yin Shichang]: Damn, I heard that other speculative funds had gotten involved, but I didn't expect that this might be a fabricated story in the market.

[Dong Lulu]: Maybe it's true, but they still need to clean up the mess.

While Zhang Yang was eating in the cafeteria, he also took out his Nokia 3250 phone and looked at the messages popping up in the QQ group while eating.

Many people suffered heavy losses this morning, especially those who tried to buy at the limit price. Eight people have already suffered a 10% loss, but it is unknown how much they invested.

To Zhang Yang's surprise, He Jing actually made another 2% profit, and the stock she chose to trade was Changan Automobile.

"It seems like she's got this first place in the bag."

Zhang Yang muttered to himself.

If this trend continues, He Jing may become the first student to achieve a return of over 50%.

Don't think 50% is a small amount. Buffett's total annual return is only 25%, so this is already double his.

However, this doesn't mean He Jing is better than Buffett, because they used simulated trading funds, which don't affect their real trading.

If you're playing a real-money game, when you use 100 million to "buy up" stocks, the dealer will immediately notice and may take countermeasures.

Real trading is often a hundred times more dangerous than demo trading.

Warren Buffett's ability to achieve a total annual return of 25% in real trading demonstrates that his reputation as a "stock market guru" is well-deserved.

"Didn't you trade this morning?"

Zhang Yang glanced to the side and saw that it was He Jing who was speaking. Today, she was wearing a white short-sleeved shirt that was a size too small and loose ripped jeans, showing off her figure as usual.

Standing next to her were Xu Zhiruo and two other girls whose names he recognized but couldn't recall, who were probably her roommates.

"Zhang, you're not really going to forfeit, are you? Or is there some inside information about Baosteel that we don't know?"

Xu Zhiruo also asked a question.

Influenced by Zhang Yang, many investment students hold shares in Baosteel, with each holding around 20% of the company's stock. They all believe that Zhang Yang may have inside information, so they are not in a hurry to trade.

"I really don't have any inside information. I'm writing market research reports, and I might be planning to develop into a financial analyst in the future." Zhang Yang told a lie, intending to get away with it.

"I see." Xu Zhiruo suddenly realized, and said somewhat naively, "Then when you become a top analyst in the future, don't forget us. At the very least, you have to give us an alumni discount."

"It feels like those people in economics and accounting are going to lose their jobs. Our investment whiz has given them a heavy blow by switching fields!"

"Haha, students from other majors in the School of Finance must be trembling with fear too!"

The School of Finance at Shanghai University of Finance and Economics offers several majors, including Finance, Insurance, Investment, Financial Engineering, Credit Management, and Financial Leasing. Many students choose to become analysts as their first career.

As for accounting and economics, there are even more analysts.

Zhang Yang, a top student in investment studies, switching careers to become a financial analyst, does indeed have a kind of "dimensionality reduction" feel to it.

He Jing gave a barely perceptible smile and chimed in, "It's getting late, and we need to get back to the market before one o'clock, so we won't bother Analyst Zhang any longer."

"Keep it up, Zhang Da analyst!"

“I’ve ordered them all, Analyst Zhang.”

"Looking forward to the next market research report."

Hearing the teasing and laughter, Zhang Yang responded calmly, "No problem, the next research report will be delivered right away."

(End of this chapter)