Chapter 24: Riding the Crest of the Wave, Looking Down with a Smile upon the Heroes of the World

The high spirits of Monday were dealt a crushing blow. Yan Fei’s expression darkened as he watched the market; a steady stream of long orders surged forth, driving the price of Shanghai copper futures upward until it quickly soared to 51,300 RMB per ton.

Suddenly, a massive long order for two thousand lots broke through, pushing the price in one go to 51,330, further widening the floating loss on Yan Fei’s account.

Staring at the screen, Yan Fei muttered coldly to himself, "I don't believe it. The Shanghai copper futures price has already hit the ceiling. The long main force dares to pull it up like this? If I had any idle capital in my account, I would definitely smash it down."

As if the short-selling main force had heard his command, it abruptly slammed down a massive short order for five thousand lots, instantly consuming all the long orders below and carving a "waterfall" line into the chart, plunging the price directly to 51,080.

This short order acted like a clarion call for a market crash. Countless short orders cried out as they flooded in from all directions, surging down like a waterfall. They quickly formed a powerful bearish momentum, driving the price of the Shanghai copper futures 0912 contract below the opening line.

Seeing that the 0912 contract had dipped underwater, a look of relief washed over Yan Fei. In trading parlance, "a true dragon does not go underwater, and a great rise does not get rained on." As long as the market fell below the opening line, it meant there would be no major rally today. Combined with the market state and the sharp rise of the previous days, Yan Fei concluded that the 0912 contract was destined for a deep plunge today.

With 140 million RMB remaining in the Shanghai copper futures account and 32.31 million RMB in the CSI 300 index account, Yan Fei initiated a transfer. A total of 172.31 million RMB vanished from his futures accounts.

He needed at least 180 million RMB today, leaving a gap of 7.69 million. It seemed he would have to transfer some funds from the rebar futures account. Yan Fei switched his page to the rebar futures 0912 contract.

Today’s opening price for rebar futures was 4,280 RMB per ton, a low opening of 0.5% that landed directly underwater. Yan Fei immediately judged that rebar futures were destined for a sharp decline today; the previous minor rebound was likely over, and a major slump was beginning.

He stared at the screen for over ten minutes. Short orders kept slamming down, and the longs had virtually no resistance. In just over ten minutes, the price of rebar broke through the 4,200 level, and the trading volume doubled.

With 44 billion in volume last Friday, today was set to exceed 64 billion. Such a decline accompanied by high volume almost invariably signaled continued sharp drops in the future market. The previously predicted target of 3,900 did not seem far off.

With this conclusion, Yan Fei decided against closing his rebar positions. After a moment of contemplation, he closed the rebar 0912 contract screen and switched to the CSI 300 index.

It was exactly 9:30 AM. The CSI 300 index opened at 3,003.54, down 1.42% from Friday’s closing price of 3,046.78.

This opening drop constituted a "major decline" start. If it couldn't rise above the opening line within two minutes, there was a high probability it would close with a sharp drop of at least 2%.

Yan Fei watched the screen, seeing massive short orders crashing down one after another, while only a few small long orders appeared—clearly the work of retail investors and wealthy individuals hoping to catch a rebound. Looking at the daily chart, the current position was exactly at the lowest point of the previous few days, forming a "Golden Arch," a standard reversal pattern.

Such a perfect chart pattern made Yan Fei itch to close his short positions and go long. After all, such patterns were rare, and most resulted in a significant rebound.

Watching the price oscillate at 2,985.64, two minutes had already passed. It was only 3 points away from the previous low of 2,982.22.

A surge of excitement rose in Yan Fei’s chest. He could clearly feel his heart pounding violently, pumping blood and accelerating his circulation; the tension and excitement sent his adrenaline skyrocketing.

His remaining reason curbed the urge to close his positions, as a faint sense of unease made him uncomfortable: the short orders had suddenly decreased, and long orders were appearing, yet there were no large orders.

This discovery broke Yan Fei into a cold sweat. He calculated rapidly: if the long main force wanted to mount a strong rally, why were there no large orders? If the short main force wanted to suppress the market, why were there no large orders?

Two questions sprouted in his mind, striking like lightning through chaos. He instantly understood: the long and short main forces had reached some sort of agreement, and they were currently luring the bulls.

***

With this realization, everything that didn't make sense fell into place. The heat in his heart instantly cooled. His eyes remained icy as he watched the clumsy performance of the bulls and bears.

By 10:00 AM, the market had oscillated for nearly twenty minutes. The low of 2,982.22 remained unbroken, and over ten thousand lots of small long orders had accumulated, yet the market had neither rallied nor crashed.

As soon as 10:00 AM passed, several large short orders for a thousand lots each slammed down, creating a domino effect that instantly crushed the long positions built by retail and wealthy investors. The CSI 300 index cascaded downward like a waterfall, dropping to 2,968.47.

After hitting a new low, the downward trend was confirmed. Countless retail and large investors immediately closed their positions and flipped to short, further accelerating the index's decline.

The short main force continued to provide ammunition from behind. Whenever retail shorts couldn't suppress a long rebound, they would immediately slam down a massive short order, crushing the bulls' resistance. The entire market fell with rhythm until the midday close, by which time the CSI 300 index had fallen to 2,912.45.

Looking at the midday closing position, Yan Fei knew that the 2,900 mark would definitely be broken today. It might even close slightly above 2,850. It was a "Black Monday" following a "Black Friday," leaving countless people feeling like life was worse than death, with no energy left to work.

After the afternoon session opened, the CSI 300 index, just as Yan Fei had expected, broke through the 2,900 integer mark without any resistance, continuing its downward plunge without hesitation.

Yan Fei frowned at the screen, muttering, "They aren't even pretending anymore. A waterfall-style drop like this, ignoring support levels and resistance—they are being too impatient."

After watching for half an hour, the index continued its slow decline. Yan Fei's expression grew increasingly grim; he felt that the main force's behavior would lead to trouble.

At 2:30 PM, Yan Fei thought the long main force might emerge to counterattack, as the decline had already exceeded 5%. Such a brutal drop far exceeded his expectations, causing a bit of panic in his heart.

After waiting a few minutes, the long main force remained unmoved. The market continued to fall, showing signs of acceleration, breaking through the 2,850 mark without a hint of resistance.

The decline exceeded 6% and continued. In just over ten minutes, at 2:50 PM, the CSI 300 index had fallen 7%. Such a terrifying drop set the largest single-day decline of the year—after all, the largest single-day drop last year was 7.42%.

After a minute of thought, Yan Fei, with a heavy heart, closed all five hundred of his short lots at an average price of 2,828.46. He then spread his hands, leaned back in his chair, and let out a heavy sigh.

For Yan Fei, the CSI 300 index position had a book profit of 56.45 million RMB. Including his principal of 72.1179 million RMB, his total account value reached 128.5679 million RMB, but he felt little joy.

Leaning back, Yan Fei closed his eyes for half an hour before his phone rang. It was Li Feng, and from the tone of the call, Yan Fei could sense his tension and seriousness.

After tidying up, Yan Fei drove his Mercedes GT500 out. He soon arrived at Li Feng’s office. Sitting across the desk from a solemn-looking Li Feng, Yan Fei asked in a low voice, "Uncle, what's wrong? Has something happened?"

Li Feng nodded and said gravely, "After the close on November 18th last year, the CSI 300 index fell 7.42%. The next day, some people were visited by the Public Security Bureau. I fear the same will happen this time."

Yan Fei's expression remained indifferent. He replied slowly, "That has nothing to do with us, does it? We aren't the main force manipulating the market. I'm just a retail investor with five hundred lots."

After a short silence, Li Feng said, "In two weeks, you've earned nearly 400 million from the futures market. The CSRC has its eye on you. They might come to investigate you in the next couple of days, and I will be questioned too. We have nothing to hide, but we must be careful."

Yan Fei sighed softly, nodded earnestly, and said, "Uncle, I’m short 8 million in funds. Please process the exchange and deduct it from my futures account."

Li Feng nodded and quickly processed the paperwork. Looking at the 180 million-plus RMB in his account, Yan Fei stood up to leave. Upon returning home, he immediately transferred 110 million to Liu Zhe’s company and 72 million to Dazhong Dianping, leaving only tens of thousands in his account.

***

A few minutes later, Liu Zhe called, laughing, "The money arrived. I heard from Suxin that you teamed up with her to invest 120 million to start a stranger-social networking company?"

Yan Fei replied immediately, "Yes, Uncle Liu. With the development of large-screen smartphones and the rapid progress of touchscreen technology, phones that function like computers will inevitably become an indispensable part of people's lives. I believe that in the future, people will treat their phones as their most important possession, wasting most of their time on them. With the rise of mobile entertainment, the social needs of the mobile internet will replace those of the PC. Seeking excitement is human instinct, so there is great potential in the stranger-social networking field."

Listening to Yan Fei, Liu Zhe understood part of it and asked curiously, "Why not do acquaintance-based social networking?"

After a moment of thought, Yan Fei said earnestly, "The acquaintance-based social field is much larger, requires more investment, carries higher risks, and has a lower success rate. Furthermore, that field is dominated by a behemoth like Tencent. I have no confidence in succeeding there."

Liu Zhe nodded in agreement and said, "Since you won't be in direct competition with Tencent's business, I will speak to Pony's father at the Chamber of Commerce when necessary, and let Momo Technology take that market segment."

Hearing this, Yan Fei thanked him happily. Even if success wasn't guaranteed, if they could delay Ma Teng's entry into the stranger-social field, it would be a huge victory for Momo. As long as they gained a head start in the tens of millions of users, there would be great potential in the future.

After hanging up, Yan Fei looked at his phone and called Zhang Tao back. Once connected, Zhang Tao said happily, "Mr. Yan, I just tried calling, but you were on the line. The money arrived. I will fulfill our agreement and elevate the food delivery business to the same status as the group-buying business."

Yan Fei nodded and said in a low voice, "When competing with peers, be careful with control. Do not engage in vicious competition. Now is not the time to occupy the market regardless of the cost. Oh, by the way, let me mention that I have also invested in a small food delivery company in Shanghai called 'Ele.me'. Please be mindful of the competition between the two."

Zhang Tao smiled and agreed, giving Yan Fei face. After hanging up, Zhang Tao called his assistant and said, "Go check on the situation at Ele.me."

Half an hour later, the assistant brought the investigation results. After reading them, Zhang Tao breathed a sigh of relief. He didn't take Ele.me seriously, believing Yan Fei was just placing a casual bet because he valued the delivery industry too much.

Time flew by to Tuesday. Today’s Shanghai copper futures 0912 contract opened at 49,310 RMB per ton. Compared to yesterday’s settlement price, the drop wasn't huge, but it was significant.

After watching the market for ten minutes, the battle between long and short was intense, but the volume was much smaller than yesterday. Yan Fei estimated today’s volume would be around 150 billion, about 60 billion less than the day before.

For ten minutes, the market oscillated within a hundred-point range, remaining underwater. It looked like it would be a day of oscillation with no major changes.

Calculating the trend, Yan Fei concluded that it was still in a bearish phase and expected it to continue falling tomorrow. He decided not to close his positions and switched to the rebar futures 0912 contract.

The opening price for rebar futures 0912 today was 4,098 RMB per ton. After ten minutes of trading, it had fallen to 4,070 RMB per ton—a drop of 2.47% from yesterday’s settlement of 4,173 RMB, which counted as a major decline.

Yan Fei stared at the screen, watching the continuously increasing volume and the strong short main force. No matter how the bulls struggled, they kept the price oscillating between 4,060 and 4,080. In just half an hour, the volume reached over 30 billion RMB, and the daily volume was expected to exceed 90 billion.

This volume excited Yan Fei. Since yesterday’s volume was only 64 billion, today’s increase of nearly 50% meant the downward channel had completely opened. The price of 3,900 RMB per ton was beckoning to him.