Fundamental analysis and technical analysis are causally related, where the so-called causal relationship means that the fundamentals are the cause, and what is the cause? The cause is the question of whether to buy or not. After I have selected a particular stock, whether I buy or not is not solely determined by technical aspects, but rather there must be a close integration between the two.

When the fundamentals are good, in line with market trends and current hot topics, it is at this time that we study it, and we use the fundamentals to decide whether to buy or not. When to buy is a question that technical analysis addresses.

Fundamentals

Fundamentals can be viewed from these five aspects of indicators, one of which is the international situation and background.

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1. International Situation

For example, with gold, when the US dollar appreciates, a "seesaw" effect is formed between the dollar and gold. Generally speaking, during a significant appreciation cycle of the dollar, gold tends to decline. Of course, there have been historical instances where the dollar and gold moved in sync, but generally, such situations are rare and short-lived. Therefore, the international situation has a significant impact on this type of investment, specifically on a particular asset. Thus, during a dollar appreciation cycle in the international situation, we should avoid gold.

When the overall market or international situation is turbulent, and the dollar is in a depreciation cycle, it is crucial to buy gold or gold stocks. In such circumstances, gold futures generally rise, and when gold futures increase, it will inevitably be transmitted to the rise of stocks or spot market varieties.

So, precious metals are sometimes closely related to the international situation.

2. National Policy

Is the national policy supportive or suppressive? Is the overall situation improving or deteriorating?The overall economic situation, which is influenced by national policies, has certain reactions. For instance, when the economy is poor, policies should support it, and when the economy is overheating, policies should suppress it. When there is overcapacity, industries like steel, cement, and coal that are undergoing capacity reduction should be avoided.

After a continuous decline, if the national policy has been too strict, causing a change in the supply and demand relationship, this will lead to a reversal point, known as the principle of extremes meeting. When capacity reduction leads to a shortage of coal supply, and everyone thinks that steel is a less profitable industry with excessive production.

In reality, there is often a discrepancy between our thoughts and the information we receive and the actual operations. In terms of investment, we should not follow the crowd blindly but should focus on a specific product and truly understand the specific situation of the industry and the operational changes caused by policy influences.

3. Inflation

Inflation - In the early stages, moderate inflation is beneficial for the development of the stock market, and it is essential to invest in the stock market.

However, when inflation becomes severe, it is crucial to stay away from the stock market. At such times, regardless of what others say about having no other place to invest and needing to enter the stock market, no matter how good it seems, as long as there is severe inflation and the public is complaining, it is imperative to leave the stock market.

This is my personal summary of nearly 20 years of investment experience in this industry, and I offer it for everyone's reference.

4. Economic Data

Whenever economic data is released, such as our GDP for the third or second quarter, quarterly or annual GDP, or considerations like industrial output prices or CPI, the release of these economic data often has a significant impact on our investments in a particular area or even the entire market.

5. Demand for GoldThe demand for gold can also indirectly reflect the quality of the fundamentals of business operations.

For example, when the US dollar undergoes three rounds of monetary expansion—during times of monetary easing—gold prices have surged significantly, reaching over 1300 to 1400, with highs touching 1900. This indicates that during such periods, the impact from external factors is quite severe. The dollar's influence on gold prices is an important factor, as the trend in the dollar's value causes these fluctuations.

Therefore, the demand for gold can to some extent reflect whether the economy is improving or deteriorating. Generally, when the economy is overheating, the demand for gold also increases because there is more money in circulation and everyone has more disposable income. Conversely, during economic downturns, the demand for gold actually declines, which in turn reflects the state of the fundamentals.

These five points are what we refer to as the fundamentals, a summary and review of the previous fundamentals. In summary, the fundamentals are a cause for us when buying stocks, determining whether we should buy or not.

Technical Analysis

Technical analysis actually determines when we should buy and when we should sell.

We will mainly explain from four aspects for the future. One is the analysis of candlestick charts, another is trend analysis, another is pattern analysis, and the last is indicator analysis.

Candlestick charts are the most basic visible basis for our trading or chart viewing. When many candlesticks form a combination, this constitutes whether the trend is rising, falling, or oscillating horizontally. Thus, these combinations formed by candlesticks, when they reach a certain quantity, constitute a trend.

Generally, we buy stocks at the end of a downward trend and sell at the peak of an upward trend. This is the general content of trend analysis.

Pattern analysis, as we just mentioned, involves combinations formed by a few or several candlesticks, such as two bearish candles followed by a bullish one, or two bullish candles followed by a bearish one. These combinations form a pattern, and generally, there are no fewer than three. Pattern analysis is an important basis for us to judge the tops and bottoms.Here is the translation of the provided text into English:

There are also some commonly used indicators that people refer to, such as "let me check the KDJ indicator," "let me check the MACD indicator," or "let me check the Bollinger Bands indicator." These indicators are known as technical analysis indicators. They are derived and processed to assist investors in entering the market or to provide an intuitive view of the market, saving us the effort of analyzing specific or detailed complex candlestick patterns.

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