To The Moon

Yesterday Hang Seng Index shot up 6% while the popular tech-heavy Hang Seng Tech Index was up even more at 8%.

Investors were scratching their heads about the sudden jump since there wasn't any big news that could move the markets like that.

But before you start to harbor hopes for a rebound, we have some not so good news for you.

First, U.S. markets were bullish on 3 and 4 Oct 2022, S&P 500 index gained 6% over the course of two days.

Hong Kong markets were closed on 4 Oct and hence 5 Oct was just to catch up with the gains in U.S. markets. The amount of gains were the same.

Second, we talked about how bad Hang Seng Index has performed previously. It has broken the 30 year trendline and having a PE of just 7x.

For anything that has dropped so much the rebound can be strong - just like throwing a ball hard on a ground. Volatility will spike so big moves in both up and down directions are common.

Third, the bear is still firmly in control over Hong Kong stocks.

From a technical analysis perspective, the most important milestone is for Hang Seng Index to return to its 30-year uptrend trajectory which is around 18,000 level. It has to stay above that and within the channel too.

Or, the 18,000 level doesn't hold and Hang Seng Index may resume its downtrend.

Hence, it is too early to tell if Hong Kong stocks are on the road to recovery.

That said, if you have been dollar cost averaging, you don't need to worry about all these - just keep buying.

If you have been eyeing some stocks and they are trading at good prices, just buy.

If you are not interested in Hong Kong stocks, just ignore.

If you have Hong Kong stocks and have been waiting for the rebound, continue to be patient.

If you have Hong Kong stocks and want to sell, take the losses and move to other stocks that you would prefer to have in the portfolio. Don't lament.

Hong Kong stocks are still in the bear territory but more importantly what are you doing about it?