To answer this question, we should mention two very simple but famous laws-the bear market law and the bull market law. These two laws were put forward by Dao and Jones, the originator of securities analysts, and they are very simple to express: in a bear market, the high point of each band is lower than the high point of the previous band; In the bull market, the low point of each band is higher than the low point of the previous band. At first glance, these two sentences seem to be meaningless, but when we think about it carefully, we find that if we apply these two laws to the analysis of market trends for a period of time, we will come to the same conclusion.
First of all, these two laws judge that a strong city has a low point and a weak city has a high point, which is contrary to the way many people are used to thinking-most people judge where the head of a strong city is and analyze where the bottom of a weak city is.
But the correct way is not to analyze which point is the highest point in the upward trend or the lowest point in the downward trend, but to analyze whether the upward or downward trend will end, which should be scientific in thinking.
To put it more directly, the application value of this theory lies in: for the obvious upward or downward trend, it is necessary to judge whether the stock index is out of the weak market or not, depending on whether the high point of the rebound exceeds the high point of the last wave of rebound; Judging whether the stock index has ended the strong market depends on whether the low point of the callback has penetrated the low point of the last callback.