The Hang Seng Index extended its decline for a sixth consecutive week starting May 15, hitting 22518 points on June 26 — the lowest level since May 7 of the previous year — before closing at 22671, down 405 points for the day and 1253 points or 5.23% for the week. The index broke through multiple technical support levels including the 50% Fibonacci retracement at approximately 23658 points and the 61.8% golden ratio support at approximately 22621 points, measured from the April 9 low of 19260 points to the January 29 peak of 28056 points. The decline coincided with the USD/HKD exchange rate breaking above 7.83 in late April and recently surpassing 7.84, alongside signs of international capital withdrawal as Hong Kong stocks underperformed regional markets including Japan, South Korea, and Taiwan which reached new highs.
Hang Seng Index Breaks Multiple Technical Support Levels in Six-Week Decline
The Hang Seng Index recorded lower highs and lower lows for five consecutive trading days last week. The index first broke below the 38.2% Fibonacci retracement support at 24696 points on June 8, followed by a breach of the 50% retracement level at approximately 23658 points two weeks later. Four days after that, the index fell through the 61.8% golden ratio support at approximately 22621 points.
From the January 29 peak of 28056 points, the index would need to fall below 22444 points to officially enter a bear market, defined as a 20% decline from the high. The index bottom on April 9 at 19260 points preceded a rally that accumulated 8796 points before the recent decline phase began.
Cathie Wood ARK Funds Reduce Alibaba ADR Position by 71% Within One Month
Three ARK funds managed by Cathie Wood sold a combined 176,000 shares of Alibaba American Depositary Receipts. Wood had purchased 245,300 Alibaba ADR shares in early June, holding the position for less than one month before reducing it by over 71%, resulting in an approximate 25% loss. The ARK funds retained approximately 30% of the Alibaba ADR position.
Alibaba stock (09988) declined from 142.97 HKD on May 14 to a low of 88.65 HKD on June 26, representing a nearly 39% drop compared to the Hang Seng Index's approximately 16% decline over the same period.
Market Shows Mixed Technical Signals Despite Weekly Decline
Despite the 1253-point weekly decline, at least 20% of blue-chip stocks rose each day for five consecutive days. The strong stock index, which reflects buying pressure in strong stocks according to the EJFQ system, increased 1.4% to 28.4% on a fluctuating basis.
Northbound capital flows showed a slight weekly increase with a net inflow of approximately 8.9 billion HKD. The Hang Seng Index formed nine consecutive bearish candlesticks, a rare technical pattern.
FAQ
What technical support levels did the Hang Seng Index break in June?
The Hang Seng Index broke through three key Fibonacci retracement levels in June: the 38.2% support at 24696 points on June 8, the 50% retracement at approximately 23658 points two weeks later, and the 61.8% golden ratio support at approximately 22621 points four days after that. These levels were calculated from the April 9 low of 19260 points to the January 29 peak of 28056 points.
How much did Cathie Wood's ARK funds lose on their Alibaba ADR position?
Cathie Wood's three ARK funds purchased 245,300 Alibaba ADR shares in early June and sold 176,000 shares within one month, reducing the position by over 71% with an approximate 25% loss. Alibaba stock declined from 142.97 HKD on May 14 to 88.65 HKD on June 26, a nearly 39% drop.
