Share prices have fallen sharply, especially sharply, which tends to trigger a rebound. Why did the stock price rebound? After the deep fall, the selling pressure eased and off-site funds came in to “pick up cheap”. Therefore, in the process of falling, the volume will have a larger shrinkage, there will be a rebound.
Investors with rich practical experience and quick-sighted can often get quick short-term returns from a wave of intermediate rebound market. However, many investors are unable to accurately define the nature and size of the rebound and effectively grasp the opportunity of entry and exit because they do not correctly grasp the technical essentials of the rebound operation. To make money, the result is serious quilt or loss. Therefore, it is very important to master the necessary rebound operation skills before participating in the rebound.
After a sustained decline, if there is a reversal of the day, i.e. low opening and high going, long closing line, or a long shadow line, it shows that there was fierce competition between the long and short sides, and the number of lower-end purchases increased, then the volume of the day is larger, generally enlarged than that of the previous down trading day. The next day, if the stock price rises or falls slightly, the volume will often shrink to a greater extent. If the volume contraction is not obvious, it shows that the selling pressure is still heavy, the time for rebound is not ripe, and another downward trend is often launched. If the volume of trade shrinks sharply due to a small increase, it shows that the air force has been greatly weakened, and a larger rebound can be expected. If the rebound is launched in the form of mild volume, it shows that the pressure has been reduced, market confidence has gradually recovered, and the rebound will last for a longer time, with a larger rebound. If the volume is released quickly, in addition to the situation with significant good news, it generally means that the bulls are expending too fast and the rebound will be limited. If the rebound market has lasted for many days, when the range is large, there will be a sharp increase in turnover, indicating that there are more profit plates in the market, and at the same time have encountered heavy upside selling pressure, which is often a signal of the rebound to the top. If there is a long shadow line on the same day, the possibility of peaking on the same day is greater; if the shadow line is not long, the possibility of peaking on the next day is greater.
Another typical scenario is that stop-falls occur in the form of cross-shaped upper and lower shadows on the right (which is more common in shadow-falls). Trading volume generally shrinks extremely, often at a very low level. If there is only one bottom, it will rebound slightly, which is a weak rebound, and the range is not large. If the decline time is longer and the decline has been larger, there will often be a complex trend of double bottom, head and shoulder bottom or other forms of multiple bottom, and the volume enlargement will not be too obvious. This often means an intermediate rebound. Regardless of the rebound in any form, a large amount of volume is generally a signal of a rebound to the top.
The following types of stocks are most suitable to participate in the rebound. They are:
(1) Choose stocks that fall fast and deeply. The general situation is not good, most third-tier stocks lack performance support, shareholders are short of breath, often sell cheaply, the worst fall.
(2) Choose stocks that have suffered a sharp decline in share prices. Such stocks, affected by bad news, shareholders sold a large number of shares, the stock price was severely depressed by the short side, and the decline was horrible. When the bad news distorts the stock price, and when the bad news is eliminated, in order to take advantage of the good opportunity of low absorption, the stock price will return to its original face and restore its reasonable price.
(3) Volumeless declining stocks. This kind of stock sells the pressure situation which almost does not exist, still does not have the quantity to continue to fall, its reason mainly stems from the banker deliberately suppresses or is dragged by the market extremely depressed. Once the general trend stabilises and rebounds, the stocks that have fallen enormously in the early stage tend to be resilient, making it relatively easy for investors to choose such stocks to make profits.
(4) Selecting newly listed stocks. Old stocks have a lot of holding chips, and when they rebound, they have a lot of resistance. However, the newly listed stocks have fewer holding chips, less pressure to unwind when they rebound, and are often taken care of by large households and major institutions, often winning the market.
(5) Leading rebounding stocks. Investors should choose those stocks that precede the stabilization of the market and the rebound of the market to intervene. In this way, when the overall trend is strong, such stocks tend to have bottom-line earnings in the band. Whether the future market is large or small, whether it is rebound or reversal, investors are able to cope with it freely. The key to participate in this kind of stock speculation is early operation, often in the downward trend of the market to choose stocks, in the stability of the market to intervene, and when the market rises, investors can choose the timing of selling according to the results of the general trend.
(6) Active small-cap stocks. Investors must be clear that participating in the rebound is a short-term speculation, not a long-term behavior. When selecting stocks, we should focus on the short-term speculative value of individual stocks rather than the investment value. As far as possible, we should not choose blue-chip stocks with investment value but slow stock nature or low-price index stocks. We should pay attention to the selection of speculative stocks with small circulation and active stock nature.
(7) Choose stocks that are cared for by the banker. Because some stocks are cared for by the bankers, they do not suffer setbacks or slight declines due to the downturn of the market. Once the market warms up, the banker will pull up with all his strength. There will be many followers, and the rebound will be fast. However, it should be noted that such stocks should be timely “off the sedan chair” in order to avoid becoming scapegoats.
(8) Choose stocks that have good rumors but are dragged down by the market. Some stocks are good rumors should have risen, but due to the market drag, the rise has not risen, once the market rebounds, it will stand out.
(9) Choose third-tier stocks with absolute low prices. The rebound is a short-term speculation, investors mostly shoot a shot and then slip away, trying to make a large profit in the short term, generally do not care about the quality of the stock. Low-priced third-tier stocks tend to fall the most miserably and pay less handling fees. Small and medium-sized retail investors are fond of them and show excellent performance in the rebound market.
Points for Attention in Rebound Stock Selection
First of all, not every rebound should choose the third-tier stocks. For example, in the early stage of the decline, because of the crazy speculation on the third-tier stocks before the fall, the stock prices of the third-tier stocks are generally high, so there is little room for rebound. At the end of the decline, the stock prices of the first-tier stocks have fallen sharply, and the space for rebound and rise is also large. Generally speaking, the best way to rebound at this time is to choose the second-tier stocks with large declines. The specific process of stock selection is to first browse the daily charts of various stocks, compare the declines of each stock with the declines of the stock price index, screen out the stocks whose declines are less than the declines of the index, and then compare the charts of the stocks whose declines exceed or at least equal to the declines of the index to find out these charts. The first resistance level above the rebound will be encountered in the rebound market, so that we can calculate the rising space of the rebound. The percentage of the price from the beginning of the rebound to the first resistance level will be removed from the stock whose percentage of the rebound is less than the percentage of the index rebound, and will not be selected. The remaining percentage of rebound is greater than or equal to the percentage of daily index rebound between the stocks do “active” comparison. The method is to extract the data of several trading days to compare their daily amplitude. The stocks with large daily amplitude have good activity, and the stocks with poor activity are excluded. At this time, there should be few remaining candidates. If we need to choose the best one, we can consider the factors such as performance factors and the number of circulation chips. The stocks selected by the process are generally able to perform well in the rebound market.
In addition, stock selection should also refer to the size of the daily turnover of various stocks. Large volume stocks can be bought more. Small volume stocks do not arrange too much, because stocks with large volume are easier to purchase and ship, while stocks with small volume are not very convenient to enter and exit, especially when they are shipped, once they rebound. It’s easy to put some of the chips you could have in your hands if you can’t sell them all at high levels, and after the rebound, the volume will be smaller and the shipment will be more difficult.