Hexun Investment Advisor Feng Lushun: On March 16th, how will CPO move next?

On March 16, let’s analyze the trend of the CPO sector. The CPO sector has experienced three consecutive declines, and today it showed a bottoming and rebound pattern. Can this be the end of the decline and a reversal? We analyze this through volume and price relationships.

First, look at volume and price. During this rally, the stock price hit new highs, but the trading volume did not increase accordingly, forming a volume-price divergence. Volume-price divergence is normal; the key is how to confirm it. Confirmation requires a large bearish volume candle, but so far, there are no such signals, so the divergence has not been confirmed. In terms of operation, an upward trend always relies on support. As long as support holds, the trend remains intact.

So, where is the support in this rally? Support can be identified by larger bullish candles. For example, there was a big bullish candle with a 5.4% increase earlier. We can use the opening price of this candle and its midpoint to draw a horizontal line as support. Additionally, there is an upward gap that can also serve as support. From the chart, after the price retraced to this support zone, it did not break below, and today there was buying interest, indicating funds are entering at low levels.

Since the support is effective, it is possible to consider low-position buying within this range. What stocks to buy? First, choose stocks with a bullish moving average alignment, meaning the price is above the moving averages. Second, the MACD indicator should turn red; only stocks with a red MACD have the potential for a significant rise. Of course, the market has not fully stabilized yet. Whether it can continue to rise after retesting 4050 points today remains to be seen. Before the market stabilizes, this may just be a rebound, not a reversal. Therefore, stock selection should be stricter, preferably stocks with institutional funds entering.