New World Development Co Ltd: Strong Rebound Signals Bullish Momentum

Date: October 3, 2024
Broker: CGS International Securities

Overview of New World Development Co Ltd

Company Description:
New World Development Co Ltd (Bloomberg: 17) is a diversified Hong Kong-based conglomerate involved in a wide array of businesses through its subsidiaries. The company is primarily focused on property development and investment. It also provides services in contracting, property management, and transportation. Additionally, it operates across infrastructure, telecommunication services, department stores, hotels, restaurants, and media and technology businesses.

Technical Buy Recommendation

As of October 3, 2024, New World Development has been identified as a technical buy opportunity, with the recommendation backed by clear bullish technical indicators. This analysis suggests strong momentum and signals a potential upside in the stock price.

Key Price Levels

• Current Price (as of report date): HK$10.60

• Entry Points:

  • Buy spot at HK$10.56
  • Accumulate on pullbacks at HK$8.60 or HK$7.40

• Stop Loss: Set at HK$5.70 to limit potential downside risks.

Support and Resistance Levels

• Support Levels:

  • Support 1: HK$8.43
  • Support 2: HK$6.82

• Resistance Levels:

  • Resistance 1: HK$13.78
  • Resistance 2: HK$16.32

Target Prices

• Target Price 1: HK$13.45
• Target Price 2: HK$16.50
• Target Price 3: HK$20.40
• Target Price 4: HK$24.50

The report encourages traders to shift the stop loss to break-even once the first target price (HK$13.45) is achieved, thereby minimizing potential risks while maintaining upside potential.

Technical Indicators Supporting the Buy

1. Breakout from Downtrend:
   The stock has confirmed a breakout from a long-term downtrend with a breakaway gap on September 27, 2024, further supported by a rise in trading volume, indicating a strong bullish reversal.

2. Ichimoku Indicator:
   Prices are trending above the Ichimoku cloud, confirming a bullish trend.

3. 23-Period Rate of Change:
   The short-term 23-period rate of change has sharply risen above the zero line, indicating strong bullish momentum and divergence.

4. Directional Movement Index (DMI):
   The DMI shows a resurgence in bullish strength, with both the ADX and DM+ lines rising.

5. Stochastic Oscillator and MACD:

   • The mid-term Stochastic Oscillator indicates an oversold crossover, a bullish signal.
   • The long-term MACD (Moving Average Convergence Divergence) has crossed over at the bottom, showing a positive histogram and confirming the bullish momentum.

6. Volume Surge:
   There has been a noticeable surge in trading volume over the past 10 periods, further supporting the bullish case.

Conclusion

The report provides a strong buy recommendation for New World Development Co Ltd, supported by a combination of technical indicators pointing towards a significant upside. The breakout, volume surge, and other indicators suggest that the stock is poised for a potential rally, with multiple target prices outlined. Traders are advised to monitor the stock closely and adjust positions based on the given price levels and stop-loss recommendations.