With the earnings window approaching, how far can Tencent's rebound rally go?

Since entering March, $TENCENT (00700.HK)$ the stock price has ended the previous adjustment trend lasting over two months and started this round of rebound. The current price has recovered to the 560-yuan range, successively stabilizing above the 5-day, 10-day, 20-day, and 30-day short-to-medium term moving averages, with short-term bullish momentum clearly dominating. However, the current share price is still constrained by the pressure of the 60-day moving average at 576.21 yuan. Whether it can effectively break through this mid-to-long-term trend line will become the key signal in determining if this rebound is a technical correction or a medium-term trend reversal.

As a market focal point, Tencent will announce its Q4 and full-year results for the period ending December 31, 2025, this Wednesday (the 18th). According to Bloomberg's consolidated market forecast data, the market generally expects the company to achieve Q4 operating revenue of 194.1 billion yuan (RMB, same below), representing a year-on-year growth of 12.6%; adjusted net profit of 64.504 billion yuan, increasing by 16.6% year-on-year. For the full-year performance, total revenue is expected to reach 751.08 billion yuan, up 13.8% year-on-year; adjusted net profit of 258.88 billion yuan, growing by 16.2% year-on-year, with both revenue and profit maintaining steady growth.

From a technical indicator perspective, the current short-term momentum in the market is transitioning from weak to strong, with multiple indicators forming resonance signals. Both the Stochastic Oscillator (KD) and Momentum Oscillator have issued buy signals, while the CCI indicator has moved out of the negative zone into bullish territory, collectively suggesting that the downward momentum of earlier prices has largely dissipated, and upward momentum is gradually building. The RSI indicator, which reflects overbought/oversold market conditions, is currently in the moderately strong region at 54, not yet entering the overbought zone, leaving sufficient room for further price increases. More notably, the MACD indicator has also formed a golden cross buy signal, further strengthening the credibility of this technical rebound. However, the Williams %R and some oscillation indicators remain in neutral territory, and the ADX trend strength indicator has not shown significant strength, indicating that the current rebound is still primarily characterized as a short-term technical correction, with a full trend reversal requiring more time and volume validation.

In terms of key price levels, the current stock price has preliminarily broken through the upper boundary of the recent consolidation range, shifting the first support level to 529 yuan, with the second strong support level located at the 510 yuan integer mark. If subsequent pullbacks can stabilize within the aforementioned range, the rebound trend is likely to continue. The key resistance levels above need attention: 579 yuan (near the 60-day moving average) and 607 yuan. The former represents a significant medium-to-long-term pressure level since this round of adjustments began, while the latter corresponds to previous highs. Considering that the stock price has broken through multiple short-term moving average resistances, and several oscillation indicators have turned bullish, the short-term trading strategy could lean towards buying on dips. If the stock price can stabilize above the 10-day moving average with continuously increasing trading volume, it may challenge the first important resistance near the 60-day moving average at 579 yuan.

From March 12th to 16th, derivatives street-level data shows that market expectations for this earnings season are characterized by a clear pattern of 'mainly bullish, with heightened divergence between bulls and bears.' On one hand, bullish positions maintained steady growth; call warrants street volume slightly rose from 8,889.99 million shares to 8,952.31 million shares, and bull contracts increased from 1,235.47 million shares to 1,254.86 million shares. Their synchronized, steady growth suggests most investors are betting on results meeting or exceeding market expectations, driving the share price's continued rebound. On the other hand, bearish positions showed more significant increases: put warrants street volume surged from 477.13 million shares to 518.39 million shares, an 8.6% increase over three days. Bear contracts rose from 208.71 million shares to 221.32 million shares, with gains also higher than bullish products, reflecting some capital positioning early to hedge against downside risk if results fall short of expectations. Market sentiment indicates intensified bulls vs. bears activity ahead of the earnings window.

Looking back at March 10, 2026, Tencent’s underlying stock recorded a 1.26% decline over the following two trading days, during which bearish products gained significantly as the stock fell. $UB#TENCTRP2812L.P (58047.HK)$ The cumulative increase over the two days reached 15%. $BITENCT@EP2606A.P (23122.HK)$ The increase was 13%. $BI#TENCTRP2812D.P (57847.HK)$ The increase also reached 12%.

Bullish Deployment Strategy:

If investors believe Tencent will successfully break through recent resistance, they may consider out-of-the-money call warrants. For instance, $SGTENCT@EC2608C.C (26235.HK)$ with an exercise price of 660.5 yuan, offering approximately 8.2x leverage. Its key feature is having the lowest premium among similar products, effectively reducing time value decay, making it suitable for leveraging breakout scenarios. Another option is $BPTENCT@EC2609C.C (25920.HK)$ with an exercise price of 660 yuan and about 8.1x leverage. It has relatively lower implied volatility, potentially benefiting in a rising implied volatility environment, making it suitable for bullish investors expecting increased volatility.

For investors with higher risk tolerance, seeking greater leverage, and believing that stock prices will not drop significantly, bull certificates are a more direct choice. $BI#TENCTRC2612N.C (56756.HK)$ The forced recovery price is HKD 520, far below the current stock price, offering approximately 10.6 times actual leverage with relatively low premium, providing stronger downside protection. If investors believe that the stock price will consolidate strongly within a narrow range before moving upward, $UB#TENCTRC26083.C (56892.HK)$ it is also worth considering, with a forced recovery price of HKD 527, offering up to approximately 14.7 times leverage, with relatively lower premiums, and greater potential for explosive gains.

Strategies for bearish or hedging positions:

If investors think the rebound is unsustainable and the stock price will retest support levels, they can consider put warrants. $BITENCT@EP2606A.P (23122.HK)$ With a strike price of HKD 499.8, it has the lowest premium, and its implied volatility and leverage level (approximately 9.6 times) are both ideal, providing a cost-effective tool for bearish strategies. $UBTENCT@EP2606A.P (21984.HK)$ With a strike price also at HKD 499.8 and leverage around 8.8 times, its implied volatility is also at a relatively low level, making it suitable for bearish investors concerned about declines in implied volatility affecting their holdings.

For bearish investors who can tolerate the risk of being called back, bear certificates offer higher leverage. $UB#TENCTRP2812L.P (58047.HK)$ The forced recovery price is set at HKD 580, near a key resistance level, with actual leverage as high as approximately 26.6 times and relatively low premium, suitable for aggressive short-term strategies expecting a quick pullback after the stock price hits resistance. If investors have a lower bearish target, they may consider $BI#TENCTRP2812D.P (57847.HK)$ with a forced recovery price of HKD 585, offering about 19.3 times leverage, also featuring the advantage of relatively low premiums.

The market generally expects Tencent's full-year adjusted net profit to grow by 16.2%. What do you think is a reasonable target price for Tencent? Currently, bullish positions dominate Tencent's derivatives market, but put warrant positions have increased by nearly 9% over four days. If you hold Tencent shares, would you choose to add to your position, take profits, or hedge risks before the earnings announcement? Feel free to share your insights in the comments section. For more market analysis, keep following 'HK Stock Warrants Jenny' for daily updates!

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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