The Hang Seng Index is under pressure from a pullback with increased volume; key support is seen at 25,600 points

On March 2nd, Hong Kong stocks saw a broad-based correction, which we discussed in our column show [Hong Kong Stock Broadcast] $Hang Seng Index (800000.HK)$

The previous day (2nd) saw a pullback, closing at 26,059 points, barely holding above the 26,000-point level. From a technical perspective, the closing price was just above the lower Bollinger Band on the daily chart (around 26,035 points), with both levels extremely close.

Although the market briefly broke below the lower band during trading, the closing price ultimately failed to confirm a breakdown. However, it is worth noting that trading volume increased alongside the decline on the 2nd, which is traditionally considered a bearish signal in technical analysis, indicating widespread pessimism about future performance.

Some investors expect the Hang Seng Index to test further downside towards 25,500 or 25,400 points. In terms of short-term technical support, the first major support for the Hang Seng is around 25,600 points; if this level breaks, the next key support is at 25,100. On the resistance side, the initial resistance lies around 26,700 points.

Among individual stocks, losses were seen across the board on the 2nd, with Meituan (03690), Baidu (09888), Alibaba (09988), Xiaomi (1810), and Kuaishou (01024) all dropping by more than 3%. The sector faced significant selling pressure, with market sentiment tilting towards pessimism.

From a technical indicator perspective, there are clear signs of divergence, which investors should pay attention to.

1. Moving Average Patterns: Closing prices were significantly below the MA10, MA30, and MA60, presenting a standard bearish alignment, indicating a strong short-term downtrend. However, all moving average signals concurrently showed 'strong buy' indications, implying that stock prices have deviated far from their averages, creating expectations for a potential mean reversion rally.

RSI Indicator: The RSI for most stocks fell below 30, with Meituan hitting a low of 24, Tencent (00700) at 27, and Alibaba at 29. This intensifies oversold conditions, signaling potential technical rebounds.

3. The overall technical indicators show strong 'buy' signals, with intensity ranging from 9 to 11. Multiple oscillation indicators (such as the Williams %R and CCI) have issued oversold signals, indicating a strong technical rebound is needed.

Friendly reminder: This divergence of 'falling stock prices but buy signals' does not guarantee an immediate rebound; it still requires confirmation through trading volume. Investors should avoid blindly following and instead patiently observe the performance of key support levels.

Review and Selection of Bull/Bear Warrants:

1. Review of past products:

Looking back at the two UBS Group bear warrants recommended on February 24th, their performance was impressive: UBS bear warrant 61223 rose 20% over two days, while UBS bear warrant 54764 gained 21%, compared to a 0.79% drop in the Hang Seng Index over the same period. This aligns with the market's downward trend and also reminds investors to closely follow broader market movements when using structured products.

2. Selected Warrant Bull/Bear Products:

Based on the Hang Seng Index movement and technical signals, two high-value products have been carefully selected for investors' reference:

JPMorgan Call Warrant (22977): Leverage of 15.9x, strike price 28,200. Its core advantage lies in having the highest leverage while maintaining low premium and implied volatility, making it suitable for investors optimistic about a short-term rebound in the Hang Seng Index.

BOC Put Warrant (23127): Leverage of 11.9x, strike price 24,875, with the lowest premium and implied volatility, making it a good reference for investors who are bearish on the Hang Seng Index and looking to hedge against market volatility risks.

Risk Warning: Warrants are derivatives with significant leverage effects. Investors should choose based on their own risk tolerance, and position control is even more crucial.

The Hang Seng Index narrowly defended the 26,000-point level. Do you think it will test the 25,600-point support this week? A. Yes. B. No.

Feel free to share your insights in the comments section.

Reminder: This article does not constitute any investment advice.

This article is for reference only and does not constitute any investment advice. The market data, opinions, and analysis contained herein may change at any time without prior notice. We are not responsible for any loss or damage caused by reliance on the information in this article. Technical analysis only shows whether certain technical conditions are met; a comprehensive assessment of asset performance should be conducted using additional data. Decisions to trade should not be based solely on this article. Please note that past performance is not indicative of future results.

#Hong Kong stocks #Hang Seng Index #Real-time analysis #Warrant picks #Warrant strategies #Derivatives hedging #Technology stocks #Technology sector #Technical analysis

52K Views