Path of Least Resistance Trading Principle

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The following content is only an objective collation of market thematic information, provided solely for market observation reference, and does not constitute any investment advice. Stock market fluctuations involve risk; please make your own prudent decisions.
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1. Market Overview: Reading the Market with "Emotional Quantification·Three Axes"

On Thursday, using the Three Axes quantification system (Livermore's trend principles), we accurately predicted that the market would experience volatile declines on Friday. The core observation anchor is the Shenzhen Component Index as the primary, with the Shanghai Composite Index as a secondary reference.

Today, let's break down Friday's market with the "Emotional Quantification·Three Axes" market system. Above is the chart. First, clarify the core composition of the Three Axes: The first axe observes the strength of the red and green bars representing long and short positions. The second axe tracks the Shenzhen Component Index's intraday trend structure. The third axe analyzes the ratio between dynamic volume and static volume. Next, we'll deconstruct the Friday Shenzhen Component Index intraday chart point by point.
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First Axe—Red and Green Bar Signals: On Friday, the market exhibited a decline structure with green bars in a 1+2 pattern, indicating that short-side power intensified as the trading session progressed. Intraday rebounds showed red bars in a 1+2 pattern, but two long-side impulses failed to reverse the overall downtrend. This is exactly the reverse C node of the ACB structure in a downtrend, corresponding to the underlying logic of "as long as the longs don't die, the decline doesn't stop." The absence of a rapid early crash was due to ongoing long-side funds in the market absorbing pressure and slowing the index's decline. Once those long-side funds were exhausted, the index accelerated its decline. These intraday red bars are merely weak rebound stock games, not trend reversal signals.**
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Second Axe—Shenzhen Component Index Intraday Trend: The full-day trend showed a reverse ACD unilateral decline structure. By the end of the session, the index temporarily did not hit a new intraday low. However, combined with the 1+2 short structure from the morning decline, reversal conditions were not met that day. It is expected that next Monday, the Shenzhen Component Index's large-cap stocks will likely hit a new low below Friday's intraday low, continuing the weak downtrend.**
Third Axe—Dynamic vs. Static Volume Ratio: Friday's volume exhibited a medium coefficient characteristic, showing concentrated panic capital flight as the index weakened. The intraday dynamic volume and static volume formed a multiple difference, with dynamic volume representing the spread of market panic. The weaker the market's ability to absorb, the larger the volume of flight. In contrast, during stabilizing trends, capital takes positions in batches at lows, resulting in a more moderate volume expansion. The current medium-coefficient volume structure leaves room for further decline.

Synthesizing the Three Axes quantification conclusion: Next Monday, it is highly likely that the index will set a new stage low. However, the market also conceals bullish positives: the strongest bar among all red and green bars throughout the day was the rebound red bar, indicating that long-side counterattack power has begun to accumulate and strengthen at some node. Once short-side momentum is fully exhausted and the market completes its bottoming, the subsequent rebound speed and strength will be relatively fierce.

Additionally, I need to observe the Three Axes of the options market.

After using the Three Axes to analyze the Shenzhen Component Index, we overlay the options market as a supplementary verification: the Shenzhen Component Index provides a "large area" perspective, while options offer a more refined "small area" perspective. With leverage coefficients of tens of thousands of times in options, it's like using a microscope to magnify the real short-term capital movements, serving as an important reference tool to verify the Shenzhen Component Index's trend projection for next week.
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Last Friday morning, the put option contracts showed large-area red bar volume expansion, with short-selling funds entering collectively, displaying very strong bearish power. In the afternoon, short-side momentum entered a release phase, but the green bar absorption intensity throughout the day never exceeded the morning's put long volume size, indicating that the bearish power in the options market had not been fully released.**
From the small-area dimension of options, put contracts still have upward momentum next Monday. Since put appreciation corresponds to market pressure, this indirectly confirms that the Shenzhen Component Index is likely to continue a volatile decline trend next week. Using the options micro-perspective to aid verification of the index's major-level trends allows us to judge market direction more accurately.
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Risk Warning: Options are high-risk financial derivatives. The above is solely a market logic review and does not constitute any trading or operational advice.**
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Last Friday (June 26), the Shenzhen Component Index opened low and trended lower unilaterally throughout the day, closing at 15782.22 points, a sharp single-day drop of 3.44%, with a maximum intraday decline exceeding 3%. There was no effective rebound resistance throughout the day. The Shanghai Composite Index fell 2.26% in sync.
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Market-wide data: Only 790 stocks rose across both exchanges, while 4,676 fell, with decliners accounting for over 85%. Panic sentiment was concentrated in intraday liquidations, with 44 stocks hitting limit-down. The loss effect spread comprehensively, fully consistent with the previously quantified volatile decline judgment.**
I do not focus on thematic speculation; I rely solely on the quantified assessment of the overall market environment. Sectors are only used as supplementary market references, not as stock selection basis for trading.

I. Last Friday's Three Strongest Sectors (with intraday strong stocks for review only)
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1. Lithography Machine/Semiconductor Equipment Sector**
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   It strengthened against the market panic. Supported by the long-term logic of domestic substitution, capital bundled into hard tech at low levels. Strong stocks that day: MLC Optical (688502), Xinqi Micro Assembly (688630). Many core stocks bucked the trend and closed in positive territory.**
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2. Live Pig Breeding (Pork Concept)**
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   A defensive and hedging track. Continued industry capacity reduction brought expectations of rising pork prices. Capital switched to this sector for hedging. Strong stocks that day: Muyuan Foodstuff (002714), Shennong Group (605296). The sector bucked the trend and showed independent strength.**
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3. Aerospace Equipment & Military Sector**
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   Catalyzed by geopolitical tensions and military order expectations, it showed independent strong trends. Capital exiting high positions flowed into low-level growth tracks. Strong stocks that day: China Satellite (600118), Dianguo Lantian (688818). Heavy net capital inflows on the day.**

II. Last Friday's Three Weakest Sectors (with intraday weak stocks for review only)
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1. CPO/Optical Communication/F5G Computing Power Sector**
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   Previously bundled hot sectors realized concentrated profit-taking. The sector as a whole led declines, being one of the main directions dragging down the Shenzhen Component Index that day. Weak stocks that day: Zhongji Innolight (300308), Eoptolink Technology (300502). They saw heavy volume and sharp declines.**
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2. Lithium Battery/Energy Metals & New Energy Upstream**
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   The lithium carbonate spot price continued to pressure the sector. Capital fled from high-level growth tracks. The Shenzhen market was heavily dragged down by this sector. Weak stocks that day: Ganfeng Lithium (002460), CATL (300750). They oscillated weakly throughout the day and closed lower.**
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3. Consumer Electronics (Apple Supply Chain)**
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   Overseas US tech stock weakness combined with weak terminal demand expectations caused heavy volume plunges in supply chain stocks, quickly retracing earlier rebound gains. Weak stocks that day: Luxshare Precision (002475), Foxconn Industrial Internet (601138). They were primary directions for capital flight.**
   Note: I use the Three Axes quantified market as the core narrative, listing the strongest and weakest sectors. The essence is to treat strong sectors as emotional red bars and weak sectors as emotional green bars, to assist in verifying the market's quantified trend effectiveness, not for thematic speculation.
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4. If future market quantified signals show a turnaround to strength, previously strong sectors often have capital absorption advantages and are more likely to show sustained trends—they are the directions for first repair.**

2. If the market remains weak and declining, strong sectors that bucked the trend may experience capital flight and catch-up declines, while weak sectors will further decline under pressure.

3. Strong and weak sectors are only emotional auxiliary references. Final trading decisions still follow the Three Axes market quantification + Livermore trend principles. All sector information is for observation only and does not constitute investment advice.
II. Introduction to Emotional Quantification Strategy
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Here, I briefly share the Emotional Quantification Strategy.**
The entire system is built upon Livermore's path of least resistance trading concept. The analytical approach does not emphasize subjective thematic judgment. The core relies on hand-collected statistical data to quantify and deduce the market's long-short sentiment ratio.
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Combining the quantified long-short sentiment ratio, matching with corresponding individual stock intraday trends, and integrating the three-cycle dimensions (large, medium, small) of individual stocks, we comprehensively reference the relative strength of current long and short forces. Then, combined with the strategy's detailed rules, we seek observation intervals and trading opportunities with game value.**
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Additionally, using quantified statistical methods, we sort out the price movement's height and width dimensions to assist in judging the market's capital operation structure. The entire analytical framework uses objective long-short sentiment data ratios as the primary reference, reducing deviations from subjective judgments.**

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1. Today's Extreme Tug-of-War Sector:
Taiji Industry 600667: Core: HBM advanced packaging+AI computing power storage+partnership with SK Hynix+Wuxi state-owned capital. AI high-bandwidth memory shortage drives recent surge.**
Boqian New Materials 605376: AI high-end MLCC ultra-fine nickel powder leader. Photovoltaic copper replacing silver+high performance growth catalyzes rise.**

What is the Extreme Tug-of-War sector? It refers to the mutual reversal of human greed and fear between two extremes. When greed and fear reach extremes, this phenomenon occurs. By using counter-human nature techniques, one can find this value and based on its performance, adopt corresponding strategies for monitoring or exiting.

2. Intraday Four-Cycle Sector
Xuguang Electronics 600353: Aluminum nitride AI ceramic substrate+controllable nuclear fusion. Domestic substitution combined with computing power demand speculation.**
Huanghe Xuanfeng 600172 (Fireproof Cyclone 600172): CVD diamond AI chip heat dissipation+state-owned capital entry. Cultivated diamond sector strengthens.**
Boyun New Materials 002297: AI PCB micro-drill cemented carbide domestic substitute. Large aircraft+military new materials boost explosive earnings growth.**
Hailiang Co., Ltd. 002203: AI server high-end PCB copper foil+liquid cooling. Lithium battery ultra-thin copper foil opens growth space.**
Jin'an Guoji 002636: Copper-clad laminate price hike across the industry. AI server drives PCB demand. Capacity expansion leads to explosive performance.**

What is the intraday Four-Cycle? It is the strongest morning long-short battle. If long exceeds short, it may form a four-cycle intraday pattern.

3. Double-Break End-of-Day Sector
Jiangwu Equipment 600397: Private placement injects tungsten, tantalum, niobium rare metal assets. Divested loss businesses, fundamentals reversed to strengthen.**
Ai Hua Group 603989: AI server aluminum electrolytic capacitor+super capacitor concept. New energy component volume rises.**
Xianfeng Holdings 002141: Copper-clad laminate price rise benefits AI computing demand. Plus veterinary vaccine+Hengqin Greater Bay Area thematic catch-up rally.**
Xiangxin Technology 002965: Acquisition enters AI liquid cooling heat dissipation track. Humanoid robot dexterous hand business simultaneously catalyzes the trend.**

The Double-Break end-of-day sector refers to the formation of a capital bar, but it's not consecutive limit-ups, and there is still a small amount of short-side capital needing release. At this point, it breaks below the stronger moving average (the 5-day line is the first break) and also breaks below the day's intraday price line (the second break), hence "double-break." By the end of the session, short-side capital is exhausted. It usually accompanies the market's decline, producing a synchronized 2,4,6,8,10-step decline pattern.

Note: This type of capital bar's double-break the next day typically has an intraday dynamic value—a tail-end sector after decline.
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The long-short ratio for double-break is 85:15. Therefore, double-break generally must meet the following five conditions:**
1. After a long negative candle, find a learning/observation point, do not buy, to avoid the B-to-C intraday risk.
2. On the long-negative candle day, there is a center-of-gravity upward shift, indicating an arc-shaped bottom decline.
3. On the long-negative day, break below the intraday moving average + end-of-day strategy.
4. The next day after the long-negative, there may be a 4-cycle ACBC2 observation/learning point for intraday dynamic values.
5. Theoretically, hitting a new high is the exit point.
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Try not to chase limit-ups or buy on strength. Wait for it to fall. Wait for it to fall below the 5-day moving average and the intraday moving average. Take a step back, and the sea is wide and the sky is open.**

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Personal views, for reference only, limited to exchange, not constituting any investment advice. Trading based on this carries own risk.**
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Today's strategy learning ends here. Sharing the path is not easy. I hope fate makes us cherish each other.
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30 years of short-term trading, with 25 years focusing on bottom-fishing, and in the last 5 years, shifting to chasing limit-ups (first boards, consecutive boards, and leaders). All strategies come from my self-created "Emotional Quantification ACB Trading System." Now, I have returned focus to low-position game modes, including the double-break low-position game, extreme tug-of-war, and intraday four-cycle strategies.**
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On the Taoguba platform, everyone can freely communicate, learn from each other, and share experiences. I will also openly share my market views and thoughts.**
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But I must remind everyone: The platform strictly prohibits stock recommendations or guiding buy/sell orders. All content I share is only personal records and thought exchange, not constituting any investment advice. Followers can reference and discuss, but must make independent decisions, bear own risks, invest rationally, do not follow blindly, and stick to your own trading principles.**
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Thank you for your recognition. In this world, only sincerity cannot be betrayed! My wish is to have students everywhere.**
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Thank you to the loyal fans for the refueling tickets, keeping the article's heat alive and motivating continuous updates.**