Trading Opportunity for China Internet and China EV.

Hong Kong market is bad. Hang Seng Index is below 18,800 and people are now saying maybe we test the 14597.31 low in Oct 2022. I recall Oct 2022 low was printed with:
1) fear of Mainland-Taiwan tension
2) President Xi announcing his new leadership team in Communist Party Congress
3) high inflation in US and Europe and US FED rate hikes
4) a cold winter with no gas in Europe

None of the above became a real issue and today, we are worry again(?):
a) US stock market correction. US S&P has been above 4,000 year-to-date despite Morgan Stanley US equity strategist Michael Wilson kept saying S&P could fall to 3,000.
https://www.cbsnews.com/news/morgan-stanley-stock-outlook-20-percent-drop/
b) Europe stock market correction. Eurostoxx 50 is up 16% in one year. N225 is up 15% in one year. EUR has strengthened against USD year to date and currently at 1.07 vs last year Sep low of 0.96. JPY has weakened from 128/130 to 140.
c) US Fed rate is at 5-5.25% and CPI is still going up. So rates may stay at this current level. This is a real issue and affects business that is leverage.
d) US Treasury yield curve is inverted and this predicts a recessionary future. 5% rate for 1 year or shorter. 3.7-4.3% for 2-30 years. It is inverted but not that inverted. CME FedWatch tool is implying 28% chance for Fed Rate to be at 3.75-4% in Jul 2024. This could make the yield curve flat. Plus US Treasury is not keen to pay high coupon for their long dated bonds.
https://www.ustreasuryyieldcurve.com/
e) US Debt Ceiling => technical default for a few days?
f) Hang Seng Index is down 7.3% in a year and many ex-HOT stocks testing Oct 2022 low

I would only worry about the last two items.
Short term volatility from (e) Debt Ceiling saga could indeed cause a roller coaster to stocks and bonds market. 3 potential actions:
i) Sell in May and Go Away. Buy back after the debt ceiling is lifted.
ii) Bargain hunt if S&P goes below 4,000
iii) be Warren Buffet and sit tight

Unrealised losses from (f) is really making investors sad. Alibaba, JD and Tencent have been getting cheaper since end of Jan (last rally) and many clients are stuck, running out of bullets to average down. Tencent has been paying special div through JD and Meituan shares to keep shareholders happy. Alibaba spin-off is likely to pay shares to shareholders as well. JD has not got much to pay its shareholders and it is down 42% year to date. Tencent is down 1.7% and Alibaba is down 11% year to date.

What to do? Well, the good news is that Alibaba, Tencent and JD still have a good business and they are profitable. So sit tight is an option.

China EV sector is a “polarised sector”. BYD +16.4% year to date, LI Auto +34.2%, Nio -20%, XPeng -19.5%. We would switch out of Nio and XPeng and buy BYD and LI. EV is a long term trend but not all players can survive. Aston Martin makes really nice cars but you may not want to be their shareholders

CFD Trading –Sell Alibaba Group Holding. (BABA.NYS) @ $90.00. Stop @ $94.50 and Target @ $79.80.

Alibaba Group Holding Stock Code BABA.NYS

Outlook

Price broke below the cloud in the previous trading session, changing the chart outlook to bearish. Conversion line and base line had a bearish crossover and is hinting at a bearish price trend ahead. Lagging Span is below price of 26 days ago but is above the cloud at the moment.  MACD is bearish with both its lines below the zero line and heading lower. If price is unable to move above the cloud, it could be heading towards the support at $74.33.

Strategy                  

$90.00                Sell

$79.40                Price Target

$94.50                Risk Management Stop

3 weeks              Trade Duration

CFD Trading – Buy Alibaba Group (BABA.NYS) @ $88.20. Stop @ $79.90 and Target @ $104.85.

Alibaba Group Stock Code BABA.NYS

Outlook

Price broke above the cloud, changing the chart outlook to bullish. Conversion and Base lines had a bullish crossover earlier, hinting at a bullish price trend. Both Conversion and Base lines have a steep slope, hinting at a strong bullish price trend. Lagging Span is above price of 26 days ago but is the cloud at the moment. MACD is bullish with both its lines above the zero line. MACD is hinting at a bullish price trend.  We think price is likely to move higher to the previous price resistance at $104.89 in the next 2-3 weeks.

Strategy                  

$88.20                Buy

$104.85              Price Target

$79.90                Risk Management Stop

3 weeks              Trade Duration

CFD Trading – Buy Alibaba Group Holding Ltd (BABA.NYS) @$161.50. Stop @ $145.50 and Target @ $181.00.

Alibaba Group Holding Ltd Stock Code BABA.NYS

Outlook

Price reached a low of $138.43 on 4 October 2021 and this low was accompanied by a bullish divergence warning from the MACD indicator. This could be a hint that price has found a bottom and a possible reversal could lie ahead.  However, MACD is bearish with both lines below the zero line but there was a bullish crossover hinting of a reversal. Price had a gap two days ago and has been moving higher over the past two trading days. Price, crossing over the 20EMA is another sign of a possible price reversal.  We think price is likely to move higher to the support turned resistance line at $181.00 in the next 2-3 weeks.

Strategy                  

$161.50              Buy

$181.00              Price Target

$145.50              Risk Management Stop

3 weeks              Trade Duration

CFD Trading – Buy ALIBABA GROUP (BABA.NYS) @$228.50. Stop @ $218.50 and Target @ $245.65.

ALIBABA GROUP HOLDING LIMITED Stock Code BABA.NYS

Outlook
Price broke above the cloud in the previous trading session which could signal the end of an eight-month correction. Price also broke above a downtrend line which dated back to the high of 27 October 2020. Conversion and Base lines had a bullish crossover, hinting of a bullish price trend. Lagging Span is above price of 26 days ago but is below the cloud. MACD remains bearish but both its lines are likely to move above the zero line soon after a bullish crossover. We think price is likely to move higher to the previous resistance high at $245.65 in the next 2-3 weeks.

Strategy                  
$228.50              Buy
$245.65              Price Target
$218.50              Risk Management Stop
3 weeks              Trade Duration