May 21 [HK Stock Podcast] Part-1 – Hang Seng Index, Sunny Optical, Tencent

1. After breaking below its short-term moving averages, the Hang Seng Index is now approaching the lower Bollinger Band. While 25,000 is emerging as a psychological target for bears, immediate focus remains on the support/resistance level at 25,340.

The Hang Seng Index closed at 25,386.52, down 264.60 points or 1.03%. The index opened at 25,655.12, reached an intraday high of 25,833.71 and a low of 25,341.73, closing near the day's low—indicating persistent short-term selling pressure. On the daily chart, the index has broken below the 10-day MA (26,039.93), 20-day MA (26,031.05), and 30-day MA (26,043.79). These three key short-term moving averages cluster between 26,030 and 26,045, forming a clear overhead resistance zone. Unless the Hang Seng Index rebounds above 26,000, its short-term trend remains bearish.

Regarding the Bollinger Bands, the middle band sits at 26,031.05, the upper band at 26,664.44, and the lower band at 25,397.65. The Hang Seng Index closed at 25,386.52, slightly below the lower Bollinger Band, signaling that the short-term downtrend has reached the lower channel boundary. This typically reflects concentrated selling pressure, though it does not necessarily indicate an immediate bottom. The key will be whether the index can hold today’s low of 25,341.73. If the index continues to close lower and breaks below 25,341, the bears’ psychological target of 25,000 will likely become the next focal point.

In terms of the Relative Strength Index (RSI), the short-term RSI stands at approximately 24.377, entering notably oversold territory, indicating significantly weakened short-term momentum and confirming a meaningful decline. The medium-term RSI is around 37.897, lower than the longer-term RSI of approximately 44.777, suggesting that short-term weakness is more pronounced than medium- to long-term trends. In other words, the current pullback is not merely a strong correction but reflects a genuinely weakened short-term structure. Unless the index quickly recovers the 25,650–25,830 range, any rebound should temporarily be viewed as technical repair rather than a sustainable recovery.

On trading volume, today’s turnover was approximately 298.552 billion HKD, slightly higher than the previous day. Combined with the index’s decline and close near the day’s low, this suggests active selling rather than a simple low-volume pullback. This is unfavorable for the short-term outlook, as increased volume during a decline indicates unstable market support and continued dominance of bearish sentiment.

In terms of market sentiment, investor comments have clearly turned bearish. Bearish investors believe the Hang Seng Index (HSI) could drop to the 25,000 level—a view aligned with the current technical structure, where the index has neared the lower Bollinger Band and lost all short-term moving averages. However, 25,000 remains a psychological target for the next support level rather than an immediately confirmed technical level. In the near term, attention should first focus on whether the low of 25,341 can hold; only if this level is breached and closed below will downward pressure toward 25,000 intensify.

For investors holding bear warrants with a call price of 25,963, there is currently some profit cushion, as the HSI closed at 25,386.52—still a notable distance from the call price of 25,963. However, the risk with these bear warrants lies in a potential sharp rebound that pushes the index back into the 25,650–25,830 range, which would start eroding the risk-reward ratio for short positions. Should the index move closer to 26,000, the risk around the 25,963 call price would increase significantly. Therefore, holding these bear warrants is more suitable in line with the prevailing downtrend, rather than blindly adding short exposure when the index is already near the lower Bollinger Band.

In terms of short-term strategy, the HSI remains biased to the downside, with initial support seen at 25,341 and near the lower Bollinger Band at 25,397. If 25,341 is breached and not recovered within the same session, the next key psychological support would be 25,000. On the upside, resistance zones are clustered around 25,650, 25,833, and 26,031. Notably, the 26,031–26,044 range represents a confluence of the 10-day, 20-day, and 30-day moving averages; only a firm re-establishment above this zone would signal potential improvement in the short-term weakness.

Overall, the short-term risk-reward profile of the Hang Seng Index still favors the bears, though it’s no longer the most comfortable spot to initiate new short positions. Bears should monitor whether the index breaks below 25,341; if so, the credibility of a move toward 25,000 increases. Conversely, if the index bounces near the lower Bollinger Band and climbs back above 25,833, short positions should tighten risk controls. $HS-HSI @EC2609A.C (27959.HK)$$UB-HSI @EC2609B.C (27924.HK)$$JP-HSI @EP2608B.P (26359.HK)$$BI#HSI RC28097.C (65619.HK)$

2. Sunny Optical surged sharply back above HK$68; HK$75 has not yet been confirmed—first watch whether it can stabilize above HK$68.53.

Sunny Optical closed at HK$68.600, up HK$5.850 or 9.32%. The share price rebounded strongly from an intraday low of HK$62.900, reaching a high of HK$70.250, and finished above HK$68, reflecting notably stronger short-term buying interest. On the daily chart, the price has reclaimed the 10-day MA (HK$65.085), 20-day MA (HK$64.978), and 30-day MA (HK$64.452). These short-term moving averages, which previously acted as resistance, have now turned into support, marking a clear improvement compared to the earlier consolidation between HK$62 and HK$66.

Regarding Bollinger Bands, the middle band sits at HK$64.978, the upper band at HK$68.530, and the lower band at HK$61.425. Sunny Optical closed at HK$68.600, slightly above the upper Bollinger Band, indicating strong short-term upward momentum but also entry into overbought territory. A sustained close above HK$68.53 would confirm a valid breakout; however, if the move higher is only a one-day spike followed by a pullback, the price may retest the moving average support zone around HK$65–66.

On the Relative Strength Index (RSI), the short-term RSI stands at approximately 68.557—approaching elevated levels but not yet extremely overbought. The medium-term RSI is around 61.847, and the long-term RSI is about 58.602. All three RSI lines are trending upward in unison, signaling a clear recovery in momentum. This is a positive aspect of today’s move, as the price action reflects renewed short-term strength rather than just a one-day bounce.

In terms of trading volume, today’s turnover expanded significantly, with the volume bar substantially higher than most recent sessions. Combined with the sharp price rise and strong closing level, this indicates solid volume support behind the rally. Compared to the prior period of sideways trading with steady but modest volume, today’s breakout on higher volume carries stronger technical significance. Near-term market focus will center on whether this breakout can be sustained.

An investor asked whether there’s still a chance to return to the HK$75 entry price. From the current technical setup, today’s sharp rally has reopened upside potential, though HK$75 cannot yet be confirmed as a near-term target. The critical first step now is whether the price can hold above HK$68.53 and maintain the bullish structure established after today’s breakout. If the stock consolidates around HK$68 and then breaks above today’s high of HK$70.250, it could gradually progress toward HK$75. Conversely, if it fails to hold HK$68 and retreats back into the HK$65–66 range, HK$75 would remain a distant rebound target, and it would be premature to consider it confirmed in the short term.

As for investors taking short positions via put options with a strike price of HK$58.99, this positioning runs counter to today’s strong rebound in the stock price. Since the share price has already reclaimed key short-term moving averages and broken above the upper Bollinger Band, the risk-reward ratio for chasing shorts in the near term is not favorable. Unless the stock price re-breaks below HK$68.53 and further loses support near the HK$65 moving average zone, bearish positions will likely remain against the prevailing trend for now. If puts are initiated solely based on expectations of a pullback following today’s sharp rally, the focus should be on risk management rather than simply waiting for a significant decline.

In terms of short-term strategy, Sunny Optical has shifted from sideways trading to a moderately strong rebound. Initial support levels are seen at HK$68.53 and the HK$65–HK$66 moving average zone, while immediate resistance stands at HK$70.250. Only if the stock breaks above and stabilizes beyond this level will it have the conditions to advance toward HK$75. Investors who entered positions near HK$75 previously should avoid concluding they’ve already recovered their entry price based solely on today’s sharp rally. A more prudent approach is to first observe whether the stock can break above HK$70.250 and maintain strength. For those taking short positions via puts, current technical indicators do not favor bearish bets; only if the price falls below HK$65 will the odds clearly tilt in favor of the bears.

Overall, Sunny Optical showed notably stronger momentum today, with a sharp, high-volume rally pushing the stock back above its moving averages—a positive short-term signal. However, the share price is now nearing the upper Bollinger Band, making aggressive long entries relatively risky. The key short-term level is HK$68.53; as long as this holds, the rebound may continue. A breakout above HK$70.250 would gradually shift the psychological target of HK$75 into a more realistic upside objective. $BI-SUNY@EC2706A.C (27858.HK)$$JP-SUNY@EP2701A.P (28444.HK)$$UB-SUNY@EP2703A.P (28194.HK)$

3. Tencent broke below HK$440, and its weak trend remains intact; HK$400 is not yet confirmed as a target, but downward pressure persists.

Tencent closed at HK$439.000, down HK$16.200 or 3.56%. The stock traded between a high of HK$460.000 and a low of HK$438.400 today, closing near the session low—indicating sustained selling pressure into the close. The current price is below the 10-day moving average (HK$454.910), 20-day MA (HK$463.485), and 30-day MA (HK$476.163), reflecting a clear downward pressure from short-term moving averages. Until the stock reclaims these key averages, its technical posture remains weak.

Regarding Bollinger Bands, the middle band is at HK$463.485, the upper band at HK$487.479, and the lower band at HK$439.491. Tencent closed at HK$439.000, slightly below the lower Bollinger Band, placing it in the lower end of the channel. This indicates pronounced selling pressure but also suggests the stock is nearing a short-term oversold zone. Chasing additional shorts from here may not offer an ideal risk-reward ratio. The immediate key level to watch is today’s low of HK$438.400; a close below this level could extend the downtrend further.

On the Relative Strength Index (RSI), the short-term RSI is approximately 28.729, the medium-term RSI around 33.831, and the long-term RSI about 37.360—all indicating relatively weak momentum. While the short-term RSI is nearing oversold territory, signaling a sharp recent decline, there is still no clear sign of a rebound. As long as the stock fails to recover above the HK$454–HK$463 range, the technical structure will remain bearish.

In terms of trading volume, today’s turnover was approximately 3,965.38 million shares—significantly higher than some recent sessions. Combined with the price decline and close near the session low, this confirms that the drop was accompanied by active selling. This suggests the current pullback is not merely a low-volume correction but reflects substantial selling pressure. For the short term, the combination of rising volume and a break below the Bollinger Band lower rail makes the market more cautious about near-term support.

Investors have asked whether the stock could fall to HK$400. Based on current technical levels, HK$400 cannot yet be confirmed as a near-term target, as there remains a notable gap between the current price of HK$439.000 and HK$400. The immediate levels to monitor are today’s low of HK$438.400 and the Bollinger Band lower rail near HK$439.491. If the stock breaks below HK$438.400 and fails to quickly recover, downward momentum would intensify. However, to consider HK$400 as a short-term target, we would first need to see sustained weakness below HK$440 and an inability to rally back above HK$454. In other words, HK$400 is a downside extension target under bearish sentiment, not a confirmed immediate objective at this stage.

As for investors taking bear warrants aligned with the current downtrend, with a call-back price of HK$506, this positioning aligns with Tencent’s current price action. The stock has broken below key short-term moving averages and is now near the lower Bollinger Band, giving bears a technical edge. Since the call-back price of HK$506 is still far from the current level, immediate knock-out risk is low. However, with the price already near the lower Bollinger Band, any short-term technical rebound could cause significant volatility in bear warrant prices. Thus, such positions are better suited for trend-following holders, with close attention to whether the stock remains below HK$454.910 and HK$463.485. If the price reclaims this zone, the risk-reward profile for short positions will deteriorate.

In terms of short-term strategy, Tencent remains in a bearish pattern. Initial support levels are seen around HK$438.400 and HK$439.491. If these levels are breached with a lower close, the market would then have room to seek even lower lows. Upside resistance is first seen at HK$454.910, followed by HK$463.485—these two levels are key hurdles for any short-term recovery. If any rebound only reaches around HK$454 before pulling back, the bearish trend remains intact; only a sustained move above HK$463 would signal an initial shift from weakness toward tentative recovery.

Overall, Tencent’s short-term downtrend remains clear. After breaking below HK$440, bears retain control. HK$400 shouldn’t yet be treated as a confirmed target, but if HK$438.400 is lost and the stock continues trading below the HK$454–HK$463 range, market discussions about a move toward HK$400 will intensify. At this stage, the bias remains bearish, but with the price already near the lower Bollinger Band, traders should avoid overly aggressive shorting immediately after sharp declines. $BITENCT@EC2706A.C (28657.HK)$$UBTENCT@EP2608B.P (26702.HK)$$HSTENCT@EP2608B.P (27511.HK)$$BI#TENCTRC2612X.C (59771.HK)$$JP#TENCTRP2810N.P (66045.HK)$$BI#TENCTRP2812F.P (68562.HK)$

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, views, 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; asset performance should be comprehensively evaluated with other data. Trading decisions should not be made solely based on this article. Please note that past performance is not indicative of future results. Follow Jenny's HK Stock Warrants for more professional insights.

122K Views