Hexun Investment Advisor Zhang Tingyu: How to Bottom Fish?

On April 3, Hexun Investment Advisory’s Zhang Tingyu said that “buying the dip” can’t be done carelessly. First, I’ll explain two situations that you absolutely must not buy the dip in. These two are often just a continuation of a decline. After I finish describing these two, I’ll talk about what kinds of situations are suitable for buying the dip. The first situation you must not buy the dip in is stocks whose fundamentals have collapsed. No matter how deeply and tragically they’ve fallen, don’t touch them—this kind of decline often has no bottom. The other is a stock that keeps increasing volume during a pullback; you also must not touch it, because this is a typical signal that major funds are distributing. By avoiding these two pitfalls, you can help yourself lose a lot less money.

Next, I’ll talk about two situations that I think are relatively suitable for buying the dip. These are the ones that, based on our long-term practical experience, have a relatively high winning rate—everyone remember that. The first situation is called a “second pullback.” After some stocks rise and then have a normal pullback, once the pullback stabilizes, they then sell off downward one more time. When this kind of second pullback occurs, you should also pay attention to whether it comes with a reduced-volume characteristic—then it can be a buy-the-dip opportunity, and it’s relatively more stable. The other situation is called “Double Ice, One Reversal.” We may have heard the saying that market sentiment hitting a low point can be used to buy the dip and bet on a rebound, but the fact that market sentiment hits a low point doesn’t necessarily mean there will be a rebound, and the probability is not high. However, if the market hits a low point for two consecutive days—that is, “Double Ice”—then the probability of a rebound on the third day becomes much higher. Everyone should pay special attention to these two situations.

(Editor: Zhao Yanping HF094)

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