After years of decline following regulatory crackdowns, Meituan (3690.HK) is finally showing signs of a strong comeback.

Breaking through the critical 150 psychological resistance, the stock is now holding firm above new support, driven by recent Chinese government stimulus measures.

With the uptrend gaining momentum, could this be the start of a massive rally with target to 250 gradually?

Discover why this breakout could signal a major turning point, how Meituan's chart is shaping up for a potential surge, and the strategic entry points to capitalize on the next move. Don't miss this chance to catch the rebound before it’s too late!

Meituan (3690.HK) was one of the Chinese Tech stocks that declined heavily since 2021 due to the Chinese government crackdown.

It is a Chinese technology company that operates a popular platform for a wide range of services, including food delivery, hotel and travel booking, ride-hailing, and lifestyle services such as movie ticketing and grocery delivery.

Amidst market weakness over the past 3 years, it traded lower from a high of 450 in 2021.

There were signs of the uptrend taking shape since June 2024 as the longer-term moving averages started to reverse upwards.

We have also seen higher lows, as it approached the key 150 psychological resistance level that we have traded below since Feb 2023.

Each time we neared the 150 resistance, sellers came back, and a retracement was seen.

However, finally, over the past week, we have broken this key 150 psychological resistance.

This was on the back of the Chinese government announcing a set of stimulus measures to spur the economy, property and stock markets.

It led to a spike up in many of the heavily beaten down technology stocks. And the market rebounded furiously.

With prices above 150 new support for Meituan now, the reversal can continue.

In addition, the short-term trend has pointed upwards firmly as seen from the 20-day moving average green line.

As long as 150 is a support for Meituan, a potential rebound towards 250 seems likely if the 200 resistance gives way.

These were the previous resistance levels in 2021 and 2022 where profit taking can appear again before the next push up.

Entries can be taken on dips near 180 -190 for a more aggressive trade with a potential break of 200 to see it head towards the next target at 250. Stop loss can be at 170 just to protect against the downside risk.

So, how does one take a position in Meituan whereby you are able to reap more return to ride the reversal further?

Well, one can buy the Meituan structured warrant listed on the SGX to profit from more upside.

It allows you to multiply your returns with a smaller amount of capital.

To simulate the potential returns of a Meituan call warrant based on my views of Meituan shares, I can use the Warrant Selector tool. On the drop down box, I select Meituan, and “Call”, as I believe a potential rebound toward 250 in the near-term seems likely, given that the stock is trading at HKD 197.20 as of 2 October’s close, which is way above my HKD 150 support level.

Next, I enter my target price of HKD 250 in the “Select Target Price” field, and increase the number of weeks.

Immediately, the simulated returns of the two Meituan call warrant that are quoted on tight spreads – JGQW and 8W3W, are reflected. If Meituan shares were to go up 26.8% in two week’s time, these warrants which I can buy now for a low capital outlay of SGD 0.086 and SGD 0.164 respectively, will go up by 167.4% to SGD 0.230 and SGD 0.410 respectively, around 6 times more than Meituan’s +26.8% gain.

I will keep increasing the number of weeks to see how the warrants will perform with time. By the 9th week, JGQW would have expired, so the maximum number of weeks using this warrant is only 8.

Meanwhile, the warrant returns of the other warrant 8W3W is less at 148.8% by the 9th week compared to the 2nd week, due to the time decay of the warrant, which kicks in more the longer you hold onto the warrant, eroding into the warrant’s ability to produce geared/multiplied returns.

It is therefore important that I exit from the warrant the moment the stock hits my target levels, instead of holding onto the warrants. The quicker Meituan takes to hit my target levels, the better the warrant returns.

What if Meituan shares were to drop to my cut loss level of HKD 170? Similar to cutting losses in the shares, I will also have to cut loss in this warrant. Adjusting the target price on the “Select Target Price” field to HKD 170, I can see that the losses on these warrants are also magnified, with estimated losses of between 65.9% to 67.4% % losses on the two warrants.

The sharing on how one can take a position using warrants has been contributed by Macquarie warrants who is the issuer of these warrants listed on SGX.

About the Author - Joey Choy

Joey is Singapore’s renowned mentor on how to make an income by trading the stock market, an author and one of the most-watched, quoted and followed stock trading trainers in Singapore. Over the years, he has conducted numerous full house seminars, enriching thousands to trade more profitably. 

Joey’s come back story from a S$740k debt has been featured in the Business Times and inspired thousands in Singapore. In less than 3 years, he is highly regarded as one of the Top Tier Remisiers (Stock Brokers) and Traders, bagging numerous yearly awards like Top Trading Representative and Top CFD Achiever every year from 2014 to 2023 in Phillip Securities.

More about Joey here

Hope you have found the above content useful 😃 

If you have yet to attend my FREE webinar on how I select HIGH PROBABILITY WINNING STOCKS, you can check it out here!

Look forward to see you on the inside!

- Joey

Disclaimer and Warning
This publication is provided by Trading Impossible Pte Ltd for general information and educational purposes only. Trading Impossible Pte Ltd is NOT licensed or regulated for the provision of investment or financial advice, and we do not seek to do so.
This content has been produced by Trading Impossible Pte Ltd. Singapore Exchange Limited (“SGX”) and/or its affiliates (collectively with SGX, the “SGX Group Companies”) have not had any input into this publication and/or the content, and SGX shall not be responsible or liable for the same. This document/material is not an offer or solicitation to buy or sell, nor financial advice or recommendation for any investment product. This document/material has been published for general circulation only. It does not address the specific investment objectives, financial situation or particular needs of any person. Advice should be sought from a financial adviser regarding the suitability of any investment product before investing or adopting any investment strategies. Use of and/or reliance on this document/material is entirely at the reader’s own risk. Trading Impossible Pte Ltd shall not be liable for any loss arising from any investment based on any perceived recommendation, forecast, or any other information contained here. Investment products are subject to significant investment risks, including the possible loss of the principal amount invested. Past performance of investment products is not indicative of their future performance. Any forecast, prediction or projection in this document/material is not necessarily indicative of the future or likely performance of the product. Examples (if any) provided are for illustrative purposes only. This document/material is not intended for distribution to, or for use by or to be acted on by any person or entity located in any jurisdiction where such distribution, use or action would be contrary to applicable laws or regulations or would subject the SGX Group Companies to any registration or licensing requirement. While each of the SGX Group Companies have taken reasonable care to ensure the accuracy and completeness of the information provided, each of the SGX Group Companies disclaims any and all guarantees, representations and warranties, expressed or implied, in relation to this document/material and shall not be responsible or liable (whether under contract, tort (including negligence) or otherwise) for any loss or damage of any kind (whether direct, indirect or consequential losses or other economic loss of any kind, including without limitation loss of profit, loss of reputation and loss of opportunity) suffered or incurred by any person due to any omission, error, inaccuracy, incompleteness, or otherwise, any reliance on such information, or arising from and/or in connection with this document/material. The information in this document/material may have been obtained via third party sources and which have not been independently verified by any SGX Group Company. No SGX Group Company endorses or shall be liable for the content of information provided by third parties (if any). The SGX Group Companies may deal in investment products in the usual course of their business, and may be on the opposite side of any trades. Each of SGX, Singapore Exchange Securities Trading Limited and Singapore Exchange Bond Trading Pte. Ltd. is an exempt financial adviser under the Financial Advisers Act (Cap. 110) of Singapore. The information in this document/material is subject to change without notice. This document/material shall not be reproduced, republished, uploaded, linked, posted, transmitted, adapted, copied, translated, modified, edited or otherwise displayed or distributed in any manner without SGX’s prior written consent. Please note that the general disclaimers and jurisdiction specific disclaimers found on SGX’s website at http://www.sgx.com/terms-use are also incorporated into and applicable to this document/material.