Is it a pullback or the top? (May 21, 2024)

Preface: The sudden news from the Middle East yesterday caused a sharp rise in gold prices. Today, some commentators pointed out that due to the smooth transition of events in the Middle East, gold prices fell immediately. So why did the Hang Seng Index drop another 400 points today?

U.S. Market Update

$Dow Jones Industrial Average(.DJI.US) fell 197 points last night, closing at 39,807 points. In contrast, $NASDAQ Composite Index(.IXIC.US) rose over 100 points last night, closing at 16,795 points.

As mentioned in the previous article, the divergence between the Dow and the Nasdaq has become increasingly frequent recently, which is not a good sign for the U.S. stock market. Originally, it was thought that this week would be uneventful, but this morning it was remembered that $NVIDIA(NVDA.US) is releasing its earnings this week. Currently, the market is optimistic about NVIDIA's quarterly earnings, so if NVIDIA disappoints, the Nasdaq could be impacted later this week...

Recently, it was discovered that some Hong Kong warrant issuers have launched warrants for NVIDIA. Friends with views on NVIDIA's future performance might consider these warrants.

Hong Kong Market Update

$Hang Seng Index(00HSI.HK) opened with a gap down below 19,500 this morning, and the market continued to fall, briefly breaking below 19,200. It managed to hold slightly above 19,200 before closing, ending at 19,221 points, down 416 points. Trading volume remained strong at 150.6 billion.

Strategy

The previous article already mentioned "once the Hang Seng Index reaches 19,500, it's time to start reducing positions in batches." True to his word, Ma Ba began taking profits on some stocks on Monday. Seeing the market conditions were off this morning, he further reduced holdings in stocks and derivatives. The cash-to-holdings ratio in the account changed from 1:10 to 1:3.

Regarding the Hang Seng Index's future trend, Ma Ba believes the measured rise from the head-and-shoulders bottom has already met its target, so consolidation at this stage is normal. The key consideration is the intensity of this consolidation. If it's just a slight pullback, it might only retreat to around 18,800. However, if it's a deeper correction, a return to 17,100 (the neckline of the head-and-shoulders bottom) is not impossible.

In the short term, Ma Ba suggests taking profits on profitable investments first. Wait for signs of a bottom during this pullback before buying back in, ensuring steady gains.

One thing that caught Ma Ba's attention today: Why was $XL2 CSOP A50.HK suspended? Ma Ba couldn't find any related information or announcements online. If anyone knows what happened, please leave a comment to inform Ma Ba.

Additionally, gold prices rose 1% yesterday and fell 1% today. Gold seems highly sensitive to Middle East news. Ma Ba believes the impact of Middle East news on gold is short-term; in the medium to long term, precious metals still have significant upside potential this year. Related investment tools, such as $SPDR GOLD TRT(02840.HK), $FL2CSOPGOLD(07299.HK), $CHI SILVER GP(00815.HK), $JIANGXI COPPER(00358.HK), etc., can be accumulated on dips.

(The above views represent personal opinions only. Any investment strategies provided in this article may not be suitable for everyone and should not be construed as an invitation or intention to buy or sell financial products. Securities prices can rise or fall and may become worthless. Trading securities does not guarantee profits and may result in losses. Investors and clients should exercise caution and consider this as one of many factors when making investment decisions.)