Mourinho • The truth behind Hang Seng Index's failure to hold 24,000 points! Middle East conflict spreads to Hong Kong stocks. 14-06 Review

Hello everyone, time flies so fast, it's time for me, Mo Shuai, to share my weekly summary and review. Writing long posts isn't easy, so I sincerely hope everyone can give me more attention and support 🙏🙏

Review of this week's market trends
Last week, I mentioned that the market trend of the $Hang Seng Index(00HSI.HK) would benefit from the US-China trade talks held in London on Monday. While the market was hopeful for positive news post-talks, unfortunately, there were no significant highlights, leading to a market correction before the outbreak of the Middle East conflict. This week, the market first hit a new high for the week and June at ~24,439 points before stalling and retreating, initially testing the support level at 24,000 points. The market held above 24,000 points twice, and at the time, many believed the market was forming a double-bottom pattern starting from 24,000 points. However, as fate would have it, tensions in the Middle East escalated suddenly before Friday's market open, with the Israel-Iran conflict on the brink of eruption, impacting global stock markets, including Hong Kong stocks and the three major US indices last night: $Dow Jones Industrial Average(.DJI.US) $NASDAQ Composite Index(.IXIC.US) $S&P 500(.SPX.US), all plummeting sharply. This was due to a massive flight of capital from equities into safe-haven assets, driving up risk-off sentiment and pushing gold prices back above $3,400. Additionally, WTI crude oil prices surged over 12%, reclaiming $75, as markets feared reduced oil supply. Rising oil prices further stoked inflation concerns, potentially delaying rate cuts.

Thus, the market, which had already risen over 5,000 points earlier, used this negative news to breach the psychological support level of 24,000 points, where a double-bottom had just formed. The market even briefly fell below the 10-day moving average (~23,866 points) to hit the week's low of ~23,774 points. However, some bargain-hunting later narrowed the losses, allowing the market to recover the 10-day line by the close, though it failed to reclaim 24,000 points. Overall, the market remains in an upward trajectory, at least holding above the 10-day line. Simply put, this week's performance was quite strong, resisting the Middle East turmoil, with the market closing at 23,892 points.

The market's June high was driven by the US-China trade talks alleviating tariff concerns, coupled with the rally in the three major US indices, attracting capital into equities. Rising risk-off sentiment also fueled gains in traditional blue-chip financials and resource sectors, particularly insurers and banks like $CCB(00939.HK) $ICBC(01398.HK) $CM BANK(03968.HK) $CHINA LIFE(02628.HK), and the "Big Three" oil giants: $CNOOC(00883.HK) $PETROCHINA(00857.HK) $SINOPEC CORP(00386.HK), alongside metals players like $ZIJIN MINING(02899.HK) $CHINAHONGQIAO(01378.HK). Biotech and pharma remained hot, with $SBP GROUP(01177.HK) soaring over 20%. CRO leaders $WUXI BIO(02269.HK) $WUXI APPTEC(02359.HK) also hit new highs. In contrast, tech heavyweights like $TENCENT(00700.HK) $BABA-W(09988.HK) $MEITUAN(03690.HK) $XIAOMI-W(01810.HK) underperformed.

In summary, the market rose 100 points this week to close at 23,892. Turnover totaled HKD 1.27 trillion, up from last week, with daily averages above HKD 250 billion, indicating strong momentum.

Technically, the market formed a high-then-low pattern, with this week's high (~24,439 points) exceeding last week's (~23,951), and the low (~23,774) above last week's (~22,668). The weekly chart shows a long-upper-shadow bearish candle, but with Middle East tensions rising, support may retest last week's low (~22,668), a key 50-day MA level, while resistance lies at the lost 24,000.

Next week's outlook
Friday's US indices $Dow Jones Industrial Average(.DJI.US) $NASDAQ Composite Index(.IXIC.US) $S&P 500(.SPX.US) plunged on Middle East fears, especially tech stocks like $Apple(AAPL.US) $NVIDIA(NVDA.US) $Meta Platforms(META.US). However, stablecoin issuer $Circle(CRCL.US) surged 25% as US firms explore digital currencies. $Tesla(TSLA.US) also rallied on thawing US-China relations. While US gains may not lift HK, their drop could drag next week's market, likely testing the 20-day MA support. Watch closely 😉😉

Weekly highlights
1. Middle East tensions spiked oil prices, boosting oil services: $SHANDONG MOLONG(00568.HK) $SINOPEC SSC(01033.HK) $UNITEDENERGY GP(00467.HK).
2. $POP MART(09992.HK) hit new highs on Labubu's global success. $LAOPU GOLD(06181.HK) reclaimed HKD 900 on gold's rally. $MIXUE GROUP(02097.HK) stabilized above HKD 500 post-peak.
3. Ant Group's stablecoin license plans lifted $BRIGHT SMART(01428.HK) $YUNFENG FIN(00376.HK), the latter nearly doubling.

This week's trades
$BABA-W(09988.HK) — Took profits at HKD 120, then added at HKD 112 during Friday's dip, targeting HKD 130+.
$LI NING(02331.HK) — Exited at HKD 16 (bought at HKD 14.5), re-entered at HKD 15.5, eyeing HKD 16+.

Future plans
The $Hang Seng TECH Index(STECH.HK) underperformed, lacking the AI-driven momentum of early 2024. Despite testing June's high (~5,484), it couldn't breach May's 5,500 resistance, closing at 5,239. AI believers could consider China Merchants' HSTECH ETF $CMS HS TECH(03423.HK) on dips. Safe-haven options include US Treasury ETFs $HSCMS 7-10Y UST(03435.HK) $HSCMS 1-3Y UST(03436.HK).

Summary
This week's rally past 24,000 toward the year's high (~24,874) was disrupted by Middle East tensions, gold/oil spikes, and underwhelming US-China talks. The uptrend may pause for consolidation, though June's month-end window-dressing could cushion falls.

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This content is for reference only and not investment advice.