What does a sharp plunge indicate? Funds are cashing out profits. But why is there a large volume of transactions? It shows that both buyers and sellers in the market are very active — which precisely indicates that the main force's accumulation phase has been completed.

Why can the main force judge that the accumulation is finished? By checking if the 5-day moving average crosses above the 60-day moving average. Once this technical breakthrough is achieved, the next step is to start shaking out weak hands. The purpose of shaking out is very clear: to clear out profit-taking retail investors and trapped buyers, paving the way for a subsequent strong rally.

Faced with this kind of plunge, stubbornly holding on is obviously unwise and can easily turn into a mistake. The best approach is to observe for a few days, as the overall market will enter a consolidation phase — this kind of market condition is usually not very friendly to retail investors and instead provides a window for institutions to test the waters.

What signals should we watch for next? Many people have heard this rule: when the 5-day moving average crosses above the 60-day moving average, it indicates the start of accumulation. After accumulation, there will be a shakeout, and the real big move is likely to unfold only when the 30-day moving average crosses above the 60-day moving average.

Once position management goes wrong, days of effort are wasted. When prices rise, rush in aggressively; when prices fall, cut quickly — this is the formula for nurturing retail investors.