Hang Seng Index 25,000-point defense line tested: Do technical signals suggest a short-term rebound is possible?

On March 4th, sentiment in the Hong Kong stock market was rather pessimistic, $Hang Seng Index (800000.HK)$

The trend remained weak throughout the day, closing at 25,249 points. During trading, it briefly fell below the 25,000-point level, hitting a low of 24,958 points. From a technical perspective, its support and resistance levels are clearly identifiable: There are two support areas, the first being 24,994 points (core support below) and the second at 24,720 points (baseline support after an extreme pullback). Resistance also has two areas, the first being 25,505 points (short-term core resistance) and the second at 25,743 points (a strong resistance level where bulls will face challenges breaking through). Breaking through or falling below any of these regions will influence the direction of the short-term trend.

On the previous day (4th), in our 【HK Stocks Report】, we commented on the Hang Seng Index: market investors’ views have diverged. Some bullish investors believe that after three consecutive days of declines, there may be a slight rebound opportunity today (5th). Therefore, they are paying attention to bull contracts with a recovery price at 24,800 points. On the other hand, more cautious investors believe that the index needs to stabilize above the 25,400-point level before confirming a strengthening trend, and until the trend becomes clear, they continue to hold bearish contracts. In the short term, market sentiment is indeed not optimistic.

Based on the summary of technical signals, buy signals for the Hang Seng Index currently hold a slight advantage, with overall sentiment leaning bullish. Specific data shows nine buy signals versus five sell signals, with short-term technical indicators mainly favoring bullishness. However, investors should be reminded that while there are more buy signals, they do not yet indicate a strong buying signal. Investors adding to existing positions or opening new ones should keep this in mind.

Stock Technical Highlights: Tencent (00700) and Alibaba (09988) received “Strong Buy” signals, with strengths of 12 and 13, respectively, and their RSI levels dropped to 26 and 24, entering deeply oversold territory. HKEX (00388), Ping An (02318), and China Mobile (00941) also received “Buy” signals, with multiple oscillation indicators suggesting oversold conditions and possible bottoming. However, most stocks’ trend indicators have yet to improve, with share prices still in a downtrend. Any rebounds should temporarily be viewed as corrections from oversold levels.

Review and Selection of Warrant Bull/Bear Products

(1) Product Review: The performance of Hang Seng Index-related warrants and bull/bear products recommended on February 26 was impressive. Specifically, BOC Bear Certificate (62631) and UBS Group Bear Certificate (59692) rose by 30% and 33%, respectively, over two days, matching the Hang Seng Index’s 1.22% decline during the same period, providing solid returns for bearish investors.

(2) Product Selection:

1. BOC Call Warrant (23126): Actual leverage of 15.5, exercise price at 26,733, with the lowest premium and implied volatility, suitable for investors who are optimistic about a short-term rebound in the Hang Seng Index and seek low premiums.

2. UBS Group Bear Certificate (67848): Actual leverage of 19.6, recovery price at 26,382, offering high actual leverage and low premium, ideal for investors who remain cautious about the short-term outlook.

Risk Warning: Warrant bull/bear products carry leverage and are highly volatile; investors should choose reasonably based on their risk tolerance and control their positions.

Short-term oversold signals have emerged; one may cautiously watch stocks receiving 'Buy' or 'Strong Buy' signals, but avoid blindly adding positions—confirmation of a rebound is needed. For warrant investments, prioritize products with reasonable premiums and implied volatility to avoid risks from excessive leverage, and set stop-loss and take-profit points in a timely manner.

If the Hang Seng Index rebounds, which blue chip do you think will take the lead? (Tencent, Alibaba, or HKEX?) Feel free to share your thoughts 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.

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