As the night gets deeper and quieter, the owner of the homestay still keeps the lights for the tenants who have not returned, and the red lanterns on the side of the street are reflected in the water.

In the dreaniness of the night, they seem to say goodnight to every visitor.

Li Xin didn't feel sleepy at the moment, he turned on the TV, and kept changing the channel with the remote control, looking for the programs he was interested in.

Xia Xiaona watched in front of the window for a few minutes, and suddenly remembered the topic that Li Xin hadn't finished in the hotel just now, so she walked over and pulled up Li Xin, who was half-lying on the bed watching TV: "I almost forgot, you just said that you were going to tell me about the stock trend when you came back." ”

"Do you remember this stubble, you're so studious, can't you say it tomorrow?"

"No, your words don't count, tell me now. ”

"Okay, okay, you go and take out the laptop in your suitcase and pick it up. ”

Xia Xiaona took out Li Xin's laptop from the suitcase and put it on the table to plug in the Internet cable, and then turned on the computer: "Okay." ”

Li Xin walked over and sat at the table to call up the market software: "Where did you just go?"

"You said that 3,000 points is not the bottom yet, and it will continue to fall in the future, I ask you what is the basis for this judgment. ”

"The 20% pullback I told you just now is the gold standard for the success of the bull-bear conversion, do you remember?"

"Yes. ”

"Now I'll tell you about the second gold standard: the Elliott Wave Theory. Have you heard of this theory?"

"Nope. ”

Li Xin casually drew a standard five-wave downward model with the line drawing tool in the market software: "The principle of wave theory is that any wave of rising or falling is a tortuous development, and the whole process can be subdivided into 5 small waves, or 5 small waves can be used to describe the whole process of falling or rising. Just like this downward model that I have drawn now, the whole downward process can be divided into 1 wave, 2 waves, 3 waves, 4 waves and 5 waves. Waves 1, 3, and 5 are down, and waves 2 and 4 are pullbacks. Can you understand this?"

"Hmm. Xia Xiaona sat next to Li Xin, staring intently at the computer screen.

"Good. As I said earlier, the Elliott Wave Theory is the gold standard for analyzing and predicting the rise and fall of a bull or bear market. The reason why it is said to be the gold standard is because many things in history have proven that no matter whether it is a bull market or a bear market, once a trend is formed, it will definitely come out of the process of five waves rising or five waves falling. Didn't you already calculate it at the dinner table just now? The peak of the bull market was more than 6,100 points, and when it fell to 4,800 points, the correction range had already broken through the gold standard of 20% of the bull-bear dividing line, right?"

"Yes. ”

"Well, now that the bear market has been determined, we can judge that the fall from more than 6,100 points to 4,800 points is just a pullback in a bear market. That is to say, the first wave of the decline is from more than 6100 points to 4800 points, and 4800 points to 5500 points is the second wave, which is just a pullback wave. ”

Xia Xiaona pointed to the candlestick chart on the computer screen and asked, "Is this the second wave here?"

"Yes. Now let me introduce you to the three iron laws of Elliott's wave theory. The first iron rule is that the wave 2 pullback will not recover 100% of the wave 1. According to this iron law, that is, the rise from 4800 points cannot exceed the 6100 points. Otherwise, if the high of this wave of growth exceeds the all-time high of more than 6,100 points, there will be no 2, 3, 4 and 5 waves below, that is, there will be no bear market. And this is contrary to the fact that the market has entered a bear market after falling below the 20% bull-bear dividing line. That's why I said that the wave of rise that started at 4800 points must not be chased, and those who expect this wave of rise to break through the highs of more than 6100 points and continue to create new highs of 7000 points or even 8000 points are just wishful thinking. It's a nerve-wracking question, can you understand the relationship?"

"I can hear it. ”

Li Xin continued: "The second iron rule is that the third wave will not be the shortest wave. According to what we just said, the first wave is from more than 6,100 points to 4,800 points, and the decline is more than 1,300 points, and the second wave will not exceed the first wave, which means that the shortest wave of the third wave will be more than 1,300 points, right?"

"It seems like yes. ”

Li Xin pointed to the computer screen and said: "You see that the third wave here is from 5,500 points to 3,000 points, and the decline is not just more than 1,300 points, but more than 2,500 points, and the decline is almost twice that of the first wave." Once you have determined that the bull and bear markets have begun, you can roughly predict where the wave 2 pullback will be, and you can be sure that there will be a third wave soon. ”

"Is it really that amazing?"

"The magic is still to come, you listen to me tell you about its third iron law: wave 4 and wave 2 do not overlap. From this iron law, we can deduce that the high of wave 4 retracement starting from 3000 points will hardly reach the level of 4800 points, otherwise the space of wave 4 and wave 2 will overlap. This violates the 3rd iron law of Elliott's wave theory, and there will be no subsequent 5th wave, which is one. Second, if it rises from 3,000 points to more than 4,800 points, it will regain the 20% decline that fell from a bull market to a bear market, and the bear market will be over and it will return to the pattern of a bull market. And this possibility is very small. In other words, the probability of continuing to fall and forming a wave 5 is much greater than the probability of the end of the bear market. That's why I said that the rise from 3,000 points to 3,700 points is not small, more than 20%, but it is still a correction wave in the whole bear market. If you chase higher in this place, there is a good chance that you will lose a lot in the next wave 5 decline. ”

"Oh, I seem to understand, you first use the gold mark of 20% correction to accurately determine that the bear market has begun, and then judge the emergence of waves 2, 3, 4 and 5 according to the decline of wave 1 according to the three iron laws of Elliott wave theory, right?"

"Yes, that's what it means. Li Xin couldn't help but secretly sigh that Xia Xiaona was really smart, and she could immediately understand it when she heard such a theory for the first time.

Xia Xiaona thought for a while: "But I still don't understand, in case of an unexpected situation, no theory can be 100% accurate, right?"

"Yes. This wave theory is not 100% accurate, especially when judging the trend of individual stocks, the probability of error is relatively large. However, this relatively large probability of error often occurs in a short-term uptrend or downtrend. In such a short-term small-level trend, it is not enough to form a full five-wave rise or fall, since the duration and the amount of money involved in trading is not very large, in which case this theoretical distortion will be a little more common. However, if the duration of a wave is relatively long, and the amount of funds involved in the transaction rises or falls relatively large, even for individual stocks, the judgment of this 5-wave theory is very accurate. ”

"Is it really so important that the duration and the amount of money involved in the transaction?"

"It's so important that the size of these two quantities plays a decisive role. Actually, this question is also very easy to understand, as if it is difficult to judge the behavior habits of many other people based on the behavior habits of one or two people. Because your data sample is not sufficient, the patterns found from this are not high in accuracy. But conversely, if you infer the behavior of one or two people based on the behavior and characteristics of people summarized and analyzed by hundreds of thousands or even millions of data samples, then the accuracy of such judgment is much higher. ”

"That makes sense. ”

"In a bull market or bear market like this, which lasts for more than half a year and nearly a year, the amount of funds involved is more than tens of trillions, and once the resulting trend is determined, it will be unstoppable. Therefore, it is very accurate to use the Elliott Wave Theory to analyze and predict the trend of a bear market or a bull market. ”

"Are you sure there will be a wave 5 in the future?"

"Definitely, although I don't know where to start the fall of Wave 5, but the low point of the decline of Wave 5 must break through the 3000 level, otherwise it is not Wave 5. ”

Li Xin watched Xia Xiaona staring at the computer screen without speaking, and asked, "Did you really not go in to copy the bottom?"

"No, if I want to buy stocks, can't I ask you first?"

"That's good. Li Xin was relieved.

After a while, he pointed to the computer screen and said to Xia Xiaona: "Didn't you notice the increase of more than 20% from 3,000 points to 3,700 points?

"I didn't pay attention to this, what is the reason?"

"Interest rate cuts. ”

"Rate cuts?"

"Yes. Didn't I tell you just now that once a bull or bear market is formed, the market will follow its own steps to firmly go through the whole process of 5 waves up or 5 waves down. Other factors are ignored, or other factors can have some influence on the upward or downward trend, but cannot fundamentally reverse or change it. ”

Li Xin zoomed out the candlestick chart on the computer screen a little more, and then explained: "We just discussed a bear market, and now I will give an example of a bull market, in which the principle is the same. At present, this wave of bear market has not completely come out of all 5 waves, I will now let you see how the bull market process from more than 1600 points to more than 6100 points is explained by the Elliott Wave Theory, and you will understand why the current bear market has not yet ended. ”