Daniel Will: Profiting in the Stock Market Surge

Compared to a bear market, investing in a bull market is indeed easier. The continuous bull market in U.S. stocks has led to substantial profits for many investors. The fundamental operating strategy in a bull market is to hold onto stocks. As long as the market situation for stocks remains bullish, one should not easily sell stocks. When trading in U.S. stocks during a bull market, every dip in stock prices is an excellent buying opportunity. Once the stock price is rising, let it continue to rise to levels beyond your belief. If you arbitrarily sell stocks during an upward trend, not only will you lose potential future profits, but you will also waste more funds when re-entering.

Throughout the entire process of a strong market, stock selection is a crucial part of the operating process. Not all stocks can be profitable. Moreover, in a bull market, the first thing to remember is not to be clouded by temporary prosperity.

In the initial stage of a bull market, the rising prices are generally driven by high-quality stocks. If high-quality stocks are not performing well, and instead, there is a speculative surge in low-priced small stocks, it indicates a speculative uptrend. At this point, you should raise your guard and prepare to exit. If the uptrend of first-tier and second-tier high-quality stocks is driven by the rise of speculative low-priced stocks, and most of the trading volume is in speculative stocks, you should doubt the sustainability of this uptrend.

It's important to note that in the early stages of a strong market, there is no need to be overly concerned about the possibility of a decline in stock prices. Generally, a decline occurs when all investors in the stock market are making profits, and the initial decline is very sharp. The decline also brings opportunities for short-term rebounds. However, this rebound is your last chance, and once done, you should exit the stock market as quickly as possible.

In the middle stage of a bull market, second-tier high-quality stocks with a smaller market capitalization tend to rise more significantly, especially small-cap quality stocks with favorable themes. When the bull market enters the main rising stage, it is the best time to buy and hold small-cap quality stocks. When selecting small-cap quality stocks, try to choose those whose stock prices are constrained by relative price relationships. Stocks with fixed relative price relationships often lack the momentum for subsequent rises.

The final stage of a bull market involves the participation of third-tier low-priced stocks, creating a stage of frenzied speculative fervor throughout the entire stock market. While we do not oppose participating in this enthusiastic speculative game during this stage, remember not to chase after those third-tier stocks that have already been hyped, or you will suffer a heavy loss. Additionally, in the last stage of a bull market, be prepared to sell stocks and exit the market at any time.

Furthermore, during a bull market, be vigilant against the danger of a market top. When stock prices continue to rise, and the trend of increasing trading volume lasts for some time, pay attention to whether stocks have begun to reach the top. One of the most typical signs of a top is when the trading volume remains high, but the overall market rise shows signs of stalling. You can judge the top by studying the daily chart and other chart patterns of stocks. If typical reversal patterns such as "double tops" or "head and shoulders" appear on the chart, be prepared to retreat at any time.

Of course, during the entire upward trend, stock prices will experience a few adjustments or declines, which are normal. These adjustments are mainly reflected in stocks with large increases in a short period; high-quality stocks with smaller increases generally do not experience significant declines. Additionally, the time for adjustments or declines is not too long.

If a prolonged consolidation lasts for a long time at high levels, it indicates that there is very little capital chasing high prices in the market, and there is a high likelihood of a downward development in the future.