The divergence between Hang Seng Index MACD and Williams %R suggests a potential market reversal from a technical perspective?

Last Friday (March 20th) $Hang Seng Index (800000.HK)$

The index closed at 25,277.32 points, down 0.88% for the day, with trading volume of 342.518 billion yuan. Technical indicators signal a buy with strength level 9. According to the indicators, the Williams %R is in oversold territory, giving a buy signal, while the Ichimoku Cloud suggests a possible bottom after excessive decline. Although the MACD signals a sell, several oscillating indicators show signs of improvement. Overall, following consecutive adjustments, conditions for a short-term technical rebound are gradually accumulating.

Key support levels for the Hang Seng Index are seen at 24,898 points and 24,447 points, with resistance at 25,900 points and 26,762 points. It will be crucial to observe whether it can stabilize above the 25,900-point resistance level, which will determine the strength of the short-term rebound.

Last Friday (20th), key blue-chip stocks showed mixed performance. AIA, Ping An, and HSBC recorded gains, while the other seven declined. Alibaba and Xiaomi saw significant drops. The following is an analysis based on technical indicators:

1. Oversold stocks: Tencent (00700) closed at HKD 508, down 0.97%. The closing price was below all major moving averages, with RSI falling to 37, entering the oversold zone. The technical buy signal strength is 11, indicating a strong short-term rebound signal from oversold conditions. Alibaba (09988) closed at HKD 123.7, down 6.29%, with RSI dropping to 31. Clear signs of being oversold after a sharp decline, also receiving a buy signal strength of 11. Xiaomi (01810) closed at HKD 33.2, down 8.59%, with technical signals turning to buy, suggesting potential technical rebound after quickly releasing downward momentum.

2. Rebound stocks: AIA (01299) closed at HKD 86.05, up 3.93%, reversing above the 10-day moving average. RSI rose to 52, entering the neutral zone, but technical signals turned to sell, indicating possible pullback pressure after a short-term rebound; it is not advisable to blindly chase highs.

3. Resilient stocks: CCB (00939) closed at HKD 8.08, almost unchanged, still holding firm above all major moving averages. RSI is 58, slightly strong, with neutral technical signals, showing relatively stable performance. Meituan (03690) closed at HKD 79.15, down 1.92%, barely holding above the 10-day moving average, demonstrating good resilience. Technical buy signal strength is 9, providing a foundation for rebound after adjustment.

The Hang Seng Index and several blue-chip stocks adjusted, with most stocks issuing oversold buy signals. Short-term rebound opportunities are embedded in the market divergence, with an overall neutral-to-bullish outlook.

Review and Selection of Warrants and Bull/Bear Contracts

Previous review:

The two Hang Seng Index-linked BOC bull contracts recommended on March 16 performed well, with 69774 rising 22% over two days and 53747 increasing by 19%, in sync with the minor rebound of the Hang Seng Index, bringing decent swing trading profits to investors.

Product Picks:

In combination with the Hang Seng Index’s technical trends, two selected warrant products suitable for short-term market rhythm have been chosen, both focused on the Hang Seng Index target, offering controllable risk and fitting the current market environment.

1. UBS Group Call Warrant (23090): Leverage of 17.9, strike price at 26,733, relatively low implied volatility, suitable for investors optimistic about a short-term rebound in the Hang Seng Index and seeking stable swing trading returns.

2. BOC Bull Contract (57737): Leverage of 22, recovery price at 24,218, relatively low premium, aligning with expectations of the Hang Seng Index bottoming out after being oversold, offering high flexibility for swing trading.

Risk Warning: Warrants are derivatives with significant leverage effects; investors should choose based on their risk tolerance and manage positions appropriately.

The Hang Seng Index has shown an oversold buy signal. Would you choose to invest in Hang Seng Index warrants, or will you continue to wait and see? 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.

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