Our Blogposts

The week beginning Monday, the 5^th June is Week 23 as per ISO numbering convention of the weeks of a year.

Country in focus:

This week we look at the Stocks from Hong Kong in Hang Seng Index (HIS).

The Hang Seng Index (HSI) is a free float-adjusted market-capitalization-weighted stock-market index in Hong Kong. It is used to record and monitor daily changes of the largest companies of the Hong Kong stock market and is the main indicator of the overall market performance in Hong Kong. These 66 constituent companies represent about 58% of the capitalisation of the Hong Kong Stock Exchange.

(Courtesy: Wikipedia.com)

Stock/ETF in focus:

Specific Stock in focus is Meituan (Ticker: 3690.HK). The Stock is listed in the Hang Seng Index (HSI), the trading currency is Hong Kong Dollars (HKD).

This week’s Stock in focus is more for the purpose of illustrating how Volume Spike trading strategy works and how can you take advantage of the information available from the Volume Spike trading application to build your own trading plan for the Stocks/ETFs of your country of interest.

Trade Direction:

BULLISH, Volume Spike study since beginning of 2020 reveal 100% probability of success in a BUY (LONG) trade.

Although, all the LONG (BUY) trades following past Volume Spike events were winners, but please note that probability is not certainty, so always trade with complete discipline of risk management and also ensure that there is a plan if trade does not playout as you had anticipated.

Most Recent Event:

Most recent Volume spike event was on Monday, the 29^th May 2023. Usually, the trade is opened on the day after the Volume Spike event, or Tuesday, the 30^th May. But, since this blog is being written over the weekend, the opportunity is perhaps late for placing a trade.

Overview:

Meituan operates as a tech retail company in China and internationally. The company was formerly known as Meituan Dianping and changed its name to Meituan in October 2020. Meituan was founded in 2003 and is headquartered in Beijing, China.

The company operates through Core Local Commerce and New Initiatives segments. The company offers food delivery services; helps consumers purchase local consumer services provided by merchants in numerous in-store categories or make reservations for hotels, and attraction and transportation ticketing. It also sells goods from B2B food distribution services and Meituan grocery; and engages in various businesses, such as Meituan Select, Meituan Instashopping, ride sharing, bike-sharing and electric mopeds, power banks, and micro-credit services. In addition, it offers cloud computing services; and merchant information advisory services.

(Courtesy: Yahoo Finance)

Sector and Industry Details:

Sector(s):                              Consumer Cyclical

Industry:                               Internet Retail

Full Time Employees:        91,932

(Courtesy: Yahoo Finance)

Fundamentals:

52 Week Range       109.200 - 211.600

Avg. Volume             31,577,774

Market Cap              818.255B

PE Ratio (TTM)        289.52

EPS (TTM)                 0.420

Earnings Date          Aug 24, 2023 - Aug 28, 2023

(Courtesy: Yahoo Finance)

Current trading price:

As of Monday, the 29^th May 2023, or the day the latest Volume Spike event took place, the stock closed at 115.8. The size of the Volume Spike was 3.24X of the average volume.

VOLUME SPIKE EVENT:

The Stock was BULLISH 100% of the time following Volume Spike events since the beginning of 2020, average spike size being minimum of 3X. Here is the key Volume Spike event performance of the Stock:

Summary report: Since beginning of 2020, there were 7 Volume Spike events, out of which the latest event of 29^th May is yet to be traded, that is the current BULLISH trading opportunity being discussed in this blogpost. This leaves 6 completed trades using Volume Spike trading strategy, of which all 6 were winners (and hence 100% confidence or Probability) with average move up (AMU) of whopping 26.51% and average move down (AMD) of 5.87% for an average holding time (ADH) of about 47 days.

Historical RRR in those completed trades was 3.15:1. Please note that RRR shown here is a worst-case scenario, as many trades could be closed sooner with higher profit compared to trades closed at the end of 9-week period.

Detailed Report, Trade Performance: If 1,000 stocks were bought following those Volume Spike events, then a trader would have had a Gross Profit of 240,150, Gross Loss of 0, making a Total Net Profit of 240,150. In those closed trades, the Largest Win was 66,700, the Largest Loss was 0, the Average profit/trade being 34,310. All figures above are in HKD.

The Profit Factor (which is quotient of Gross Profit and Gross Loss) in those trades was Infinity! This is because there were no losing trades after 3X Volume Spike events since year 2020.

Detailed Report, Trade by Trade Performance: Results of each trade taken following the Volume Spike events since the beginning of 2020 are as shown in the table below. These tables are from the Detailed report of the Volume Spike trading app.

Histogram Chart: The chart below shows the percentage moves of the underlying Stock of Interest following each Volume Spike event for the period of analysis mentioned earlier, for a quick visual clue of the trade-by-trade performance.

Candlestick Chart: The candlestick chart of the underlying Stock/ETF’s latest performance is as shown below. In the web-based Volume Spike trading app, the chart is available for all the Volume Spike events since the year in the “Data since” in the input filter page.

Trade Structure:

This week’s Stock if interest is for the purpose of illustration only as mentioned before and hence no trade structure is included in this blog.

Further Information about trading applications:

Please visit the following URL for more information on various trading applications from Sapphire Capitals which are designed to deliver high probability trading opportunities for swing trading as well as for intraday trading:

https://www.sapphirecapitals.com/pages/swing-trading-stock-seasonality-strategy/

https://www.sapphirecapitals.com/pages/swing-trading-stock-price-action-strategy/

https://www.sapphirecapitals.com/pages/swing-trading-volume-spike-stock-trading-strategy/

https://www.sapphirecapitals.com/pages/day-trading-intraday-seasonality-trading/

Disclaimer:

Sapphire Private Assets (ABN: 34 613 892 023, trading as Sapphire Capitals) is not a broker or a financial adviser but an education and research organisation; we provide training and tools for traders and DIY fund managers for trading in global financial markets. The contents of the blog have been produced by using technical analysis and trading applications developed by Sapphire Capitals for the Stock and ETF traded worldwide. The contents of this blog are intended for education and research purposes only and is not a recommendation or solicitation to invest in any Stock or ETF.

For more details, please visit http://www.sapphirecapitals.com/Disclaimer.