Will the Hang Seng Index challenge 20,000 again before futures settlement? (May 26, 2024)

Preface: The US stock market remains strong under the leadership of $NVIDIA(NVDA.US). But how long can the index be supported by just one stock?

US Market Update

Last Friday, all three major US stock indices were bullish: $Dow Jones Industrial Average(.DJI.US) opened high but closed slightly lower, up 4 points to 39,070; $NASDAQ Composite Index(.IXIC.US) rose 185 points to 16,921; S&P500 gained 137 points to 5,305.

$NVIDIA(NVDA.US) has shown strong performance since announcing its Q1 earnings, and last Thursday it displayed a "one-man army" momentum: NVIDIA alone prevented the NASDAQ from a major drop (while the Dow fell over 600 points that night). Regarding NVIDIA's 10-for-1 stock split, I previously mentioned: "A stock split can stimulate trading volume, but the news is only a short-term positive. The long-term direction of the stock price still depends on the company's profitability." The best reference is $Tesla(TSLA.US), which saw a temporary boost after its 3-for-1 split, but ultimately, the stock price followed its earnings performance.

Side note: Among the "Magnificent Seven" of the NASDAQ, TESLA has now been overtaken by $Broadcom(AVGO.US), dropping to eighth place.

Hong Kong Market Update

$Hang Seng Index(00HSI.HK) fell almost from open to close last Friday, dropping 260 points to 18,609 with a turnover of HKD 126.7 billion.

Strategy

After retreating from the high near 19,700, the big question is whether the Hang Seng Index is just correcting or has already peaked.

Last Friday, the Hang Seng Index hit a low of 18,532, very close to the 0.5 golden ratio. Coincidentally, earlier this month, the index formed a consolidation zone between 18,200 and 18,600, preceded by a gap. Personally, I believe the gap below 18,200 is a strong defensive level and unlikely to be broken this week. If the Hang Seng Index holds above 18,200, another upward wave is likely. However, this wave may not challenge 19,700 again... With the Fed's rate decision next month, the world's direction remains uncertain...

If the Hang Seng Index rises again, I will further reduce my holdings. For the next two to three months, I recommend a cautious and conservative approach to global equities.

For individual stocks: $HKEX(00388.HK) is not advisable to chase now. Instead, if it rises further (around $280), consider short-term bearish warrants for quick profits. $BABA-W(09988.HK) could be shorted if it breaks above $80, another strategy I might consider.

(The above views are personal opinions. The investment strategies provided may not suit everyone and should not be seen as an invitation or intention to buy or sell financial products. Securities prices can rise or fall, even becoming worthless. Trading securities does not guarantee profits and may result in losses. Investors should exercise caution and consider this as one of many factors in their investment decisions.)