April 10th [HKEX Podcast] Part-1-Hang Seng Index, CATL, BYD

1. The Hang Seng Index is currently neither showing a definitive peak nor has it fully strengthened; instead, after rebounding, it has risen to a key resistance zone and entered a phase of direction uncertainty.

The bullish side in the market believes that bull certificates with a recovery price at 25,294 points still have potential for further upside; the bearish side, however, thinks that after several consecutive days of gains, profit-taking is likely to occur at higher levels, potentially even testing 25,200 points. Looking solely at the current daily chart structure, both sides have their justifications, but technically, judgment must rely on whether key levels are breached or held, not merely based on sentiment-driven directional bias.

On April 10, the Hang Seng Index closed at 25,893.54 points, with an intraday high of 26,073.97 points and a low of 25,843.65 points. The index has regained its position above the 5-day, 10-day, 20-day, and 30-day moving averages, while the 250-day moving average remains below. This indicates that following the rebound from the low of 24,203.54 points, the short-term structure has indeed improved, and it is no longer in a one-sided weak downtrend. The gradual rise in recent lows also suggests that buying support has recovered somewhat.

However, despite the rebound, the resistance above remains quite concentrated. The most noteworthy range at this stage is between 26,070 and 26,300 points because this area overlaps with previous highs, the 120-day moving average near 26,098 points, the 60-day moving average near 26,221 points, and the upper Bollinger Band. In other words, although the index has now returned above 25,800 points, it has actually reached a denser short-term resistance zone, and until there is a confirmed breakout, it would be premature to assume that a new upward trend has fully begun.

Therefore, buying bullish warrants with a recovery price of 25,294 points in the closing session is not entirely without merit. If the Hang Seng Index merely consolidates normally at higher levels and can still hold above 25,590 points, or even the support zone between 25,380 and 25,260 points, then these relatively close-to-price bullish warrants still have room to continue rebounding. This is because the current technical pattern indicates the rebound is not yet complete, and there is no definitive downward reversal signal.

However, the bearish side mentioned, 'It's time to retreat to 25,200 because all bearish warrants have been squeezed out, and three days at a high position is also a good time for profit-taking.' This view cannot be completely ignored. The reason is that the Hang Seng Index has indeed approached an important resistance level, and after a short-term rebound, if capital fails to push it higher, profit-taking at highs is a natural occurrence. It’s just important to note that the forced closure of bearish warrants doesn’t necessarily mean the broader market will immediately reverse downward; what truly matters is whether key support levels are broken, which would disrupt the rebound rhythm.

As for derivatives investors switching from bearish warrants with a recovery price of 26,200 points to those with a recovery price of 26,500 points, this move seems more like a risk management adjustment rather than simply increasing bearish bets. Since the Hang Seng Index is currently nearing the resistance zone around 26,200 points, continuing to hold overly close-to-price bearish warrants could easily trigger forced closures if the market rises further. Raising the recovery price to 26,500 points essentially reserves more volatility space, making the position relatively safer. The core idea behind this strategy isn't a firm belief that the market will fall, but an acknowledgment that there is still potential for upward tests at current levels, so it’s better to increase error tolerance first.

Technically, the short-term watershed for the Hang Seng Index is quite clear. If it can effectively break through and stabilize above 26,098 to 26,221 points, the rebound could extend further beyond 26,300 points, giving the bullish side a stronger advantage. Conversely, if the index again fails to break through and falls back, first look to 25,590 points, then to the support zone between 25,380 and 25,260 points. Once this support zone is breached, concerns about a retest of 25,200 points will significantly rise.

In summary:

The Hang Seng Index is currently in a tug-of-war pattern where it has rebounded into a resistance zone. Before breaking through 26,098 to 26,221 points, it’s premature to consider it a full recovery; however, as long as the 25,380 to 25,260 support zone holds, the bearish side hasn’t fully gained the upper hand.

CATL’s overall trend remains strong, with widespread market optimism supported by solid technical foundations. However, the 690 to 700 yuan range already represents a key short-term resistance zone, and it may not break through without some fluctuations.

On April 10, CATL closed at 681.50 yuan, with a single-day increase of 9.02%, reaching a high of 682.00 yuan and a low of 631.00 yuan. The stock is now clearly trading above the 5-day, 10-day, 20-day, 30-day, and 60-day moving averages, with the 120-day moving average far below. This indicates that the recent upward movement is not just a one-day spike, but a continuation of improving medium-term structure. The stock price has been rising in waves, forming a classic strong uptrend pattern.

For investors planning to exit at 700 yuan, this target is not unreasonable. The stock price is now re-approaching the previous high of 690.117 yuan, and once it effectively breaks above this level, the market will naturally focus on the next psychological target of 700 yuan. As round numbers often act as psychological resistance, 700 yuan can be considered a reasonable short-term target.

Although the current trend looks impressive, it must be acknowledged that there are signs of overheating in the short term. The RSI has risen above 70, and the stock price is quite close to the upper Bollinger Band, indicating strong upward momentum but also suggesting that pullbacks, profit-taking, or shakeouts along the way are normal. In other words, while general optimism is justified, expecting the stock to rally straight to 700 yuan without any pullback is overly optimistic.

In the warrant market, some investors holding call warrants with an exercise price of 629.38 yuan described the trend as very positive, which is a reasonable assessment. With the current stock price at 681.50 yuan, it is clearly above the exercise price, reflecting the advantageous position of such products. Moreover, since the underlying stock itself is in a strong upward channel, these call warrants are naturally more likely to attract capital. If the stock breaks above 690 yuan, these close-to-the-money or deeper-in-the-money call warrants should theoretically reflect the underlying stock’s gains more effectively.

However, for investors holding call warrants, the more important thing moving forward is not just predicting the direction but whether the stock price can successfully break through the previous high. If the stock price fails to immediately rise above 690.117 yuan and instead fluctuates between 680 and 690 yuan or even retreats to test the support level first, the performance of the call warrants may not be as smooth as in the earlier upward movement. Especially after the underlying stock has already accumulated a certain amount of gains, derivative investors need to pay attention to profit-taking rhythms rather than simply focusing on the overall strong trend.

Short-term support can initially be seen at 647 to 650 yuan, which is near the recent consolidation zone and the intersection of short-term moving averages; the next level of support is around 632 to 636 yuan, close to the 5, 10, and 20-day moving averages. As long as the stock price can hold above 632 to 636 yuan, the overall strong structure will not have been significantly broken. Conversely, if the market successfully rises above 690.117 yuan, there is potential for further upward movement towards 700 yuan.

In summary:

CATL remains in a strong uptrend, and the market's optimism is justified, but 690 to 700 yuan is now a key short-term resistance zone. Breaking through 690 yuan could lead to a target of 700 yuan, while failing to hold above 647 to 650 yuan calls for caution regarding possible consolidation.

The most crucial issue for BYD shares now is not whether the market remains optimistic, but when the sideways range between 102 and 108 yuan will truly see an upward breakout. Investors note that this range has persisted for half a month—an accurate observation—since the stock price has indeed been oscillating within this range recently. Therefore, the core issue is not 'whether there is a rebound' but whether the rebound can evolve into an effective breakout, allowing the stock to firmly establish itself above 110 yuan.

BYD closed at 105.10 yuan on April 10th, with a daily high of 106.40 yuan and a low of 102.00 yuan. The current price stands above the 5-day, 20-day, 30-day, and 60-day moving averages, and has also returned near the 120-day moving average, indicating that the overall technical structure is not poor and is at least no longer in a weak pattern. After recovering from the low of 88.50 yuan, the stock has maintained a mid-term recovery trend and has recently formed a clear consolidation band between 102 and 108 yuan, suggesting that funds have not exited, though upward resistance has yet to be fully absorbed.

Therefore, the answer to the question of whether it can firmly stand above 110 yuan is: it is possible, but confirmation has not yet been reached.

This is because the area between 109 and 110 yuan itself represents the most immediate key resistance level. The chart shows that the stock price tested 109 yuan but has so far failed to create further upward momentum, reflecting significant selling pressure at this level. If the market continues to be constrained near 106.40 yuan or even 108 to 109 yuan, the stock price is likely to remain in a consolidating range rather than initiating a new upward trend immediately.

In other words, it's not impossible to stabilize above 110 yuan, but two steps must first be completed: First, re-establishing stability above 106.40 yuan; second, breaking through the resistance zone between 109 and 110 yuan, ensuring it’s not just a false breakout but one that holds afterward. Achieving these two steps would give the market more confidence that BYD has transitioned from range-bound consolidation to a new upward phase. If these are not achieved, the current situation should still be considered strong consolidation rather than a definitive breakout.

On the downside support, the short-term focus is on 103.44 yuan, a position near the convergence of several short- to medium-term moving averages; below that is 101 to 102 yuan, the recent range bottom. As long as this support level holds, the overall technical structure will not deteriorate, and the stock price will still have the potential to repeatedly challenge resistance levels. However, if even 101 to 102 yuan is breached, it would indicate the beginning of a downward breakout from the sideways range, at which point market expectations for reaching 110 yuan would need to be tempered.

As for investors watching the call warrant with a strike price of 116.98 yuan and feeling that its performance is very poor, this sentiment is quite normal. The reason isn't necessarily that the product itself has issues but that the underlying stock has not yet truly broken out. With BYD currently trading at 105.10 yuan, there is still a considerable distance to the 116.98 yuan strike price, making it a relatively out-of-the-money call warrant. When the underlying stock is stuck in a sideways range between 102 and 108 yuan rather than rapidly breaking out, such out-of-the-money products naturally react sluggishly, leading to the perception that 'even though the stock hasn’t fallen, the call warrant doesn’t rise.'

Simply put, the underlying stock is currently in a consolidation phase, which is most unfavorable for deep out-of-the-money call warrants. This is because such products typically require a relatively quick and decisive breakout rally in the underlying stock to show noticeable performance. If the underlying stock merely fluctuates within a range, the erosion of time value combined with the distance from the strike price can easily lead investors to perceive poor performance. This does not mean the bullish outlook is necessarily wrong, but rather that the chosen instrument may not be fully aligned with the current market rhythm.

Overall, BYD remains in a relatively strong consolidation pattern, and it is reasonable for the market to have expectations around the 110 yuan level. However, technically, a confirmed breakout is still needed.

Only by stabilizing above 106.40 yuan and then breaking through 109 to 110 yuan can we discuss the possibility of firmly holding above 110 yuan. If it fails to hold above 103.44 yuan, or even breaks below 101 to 102 yuan, the consolidation period could extend further.

In summary:

BYD is not weakening, but remains trapped in a sideways range between 102 and 108 yuan. A breakout above 109 to 110 yuan would open up upward potential; otherwise, it remains a consolidating market for now.

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 combine other data and should not solely rely on this article to make trading decisions. Please note that past performance is not indicative of future results. Follow Jenny's insights on Hong Kong stock warrants for more professional analysis.

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