Tencent (700:HK): Distribution Phase in Progress


Tencent is well-receive by investors, analyst and fund managers. Following table shows the strong convictions by most analysts on Tencent. Source: Reuters.



However, market demand and supply situation is suggesting otherwise. Demand is diminishing since late 2017 and supply starts to overwhelm demand beginning Apr 2018. Today, we saw Tencent broke down below significant support HKS$375.00, Sign of Weakness (fall through the ice). 

 Tencent is relatively weaker than market as shown in our proprietary RS indicator. Fund Flow Index (FFI), which indicates fund flow is below zero, meaning flows are flowing out of Tencent. Lastly MACD continues to trade in bullish manner. 

 Thus, we are expecting Tencent to breaks further with first objective at HK$340-350 zone.

 Trading is no different to any other merchandising business as shared by Mr Wyckoff, we all reads the demand and supply conditions and react accordingly. 

 Distribution zone is simply a zone where demand diminishes and overtaken by Supply. By learning to identify these characteristics, it helps traders to understand the situation and trades in harmony with the markets. 

 I always remind myself that I'm not trading the stock, but trading the demand and supply of the stock.

 Cheers.

Popular posts from this blog

MIT: Expecting Change of Momentum after Existing Downtrend Line

Image
  MIT: Expecting Change of Momentum after Existing Downtrend Line What are we expecting? Mapletree Industrial Trust ( ME8U ) broke its key downtrend line on 18 Mar 21, technically signaling positive trend change. Similar to Apr 2020 move. Momentum Indicator, MACD (bottom of the chart) is displaying a upward sloping momentum which is supportive of the technical move. Who should be concerned? Investors:  Consider increasing allocation into ME8U under income portfolio, with current indicative yield of 4.50%. Traders: Taking Long positions  with 1st target price at S$2.95, next at S$3.30.Stop Loss below S$2.50. *Disclaimers apply
Read more

Chart Review: Xiaomi (1810:HK)

Image
Xiaomi (1810) We shared that Xiaomi have broke out of its Accumulation zone and is entering the Mark Up phase. Price continues to mark up as analysed. Congrats if you have followed the trade.  Accumulation Phase is a zone where supply exhaust and demand overtake the dominance. Also a zone where smart money comes into the market and pick up the stock at a low price. A break out from this zone will expect to see continuation of price mark up untill supply comes in. Understanding the Wyckoff's Accumulation Phase  helps individuals trade alongside with smart money.  Disclaimer applies.
Read more

Expecting Further Upside for Tencent (700:HK)

Image
 Expecting Further Upside for Tencent (700:HK) Expecting further upside after Tencent leaves Re-accumulation Phase (Trading Range) possibility entering in Mark Up Phase. Over the Re-accumulation range, stock showed the transition from supply dominated action to weakening of supply to demand dominated action. Stock is trading relatively stronger than the broad market ( RS above zero), indicating strength in demand for the stock. Price trading below $550 level will falsify the Mark Up Phase analysis and stock will reenter trading range. Disclaimers apply
Read more