Tencent Music Entertainment Group (TME) emerged as a standout performer in the SIA relative strength (RS) rankings for the latter part of 2023, despite a brief dip in the SIA International ADR Matrix Report. This downturn was short-lived, and TME shares are now back in the favored zone of the report. Examining the weekly candlestick chart, we've highlighted several key points. The first, marked in red, indicates when TME crossed above the 50-week moving average in early 2021. Following this, shares fell sharply from $18 to below $3 at their lowest point. However, in early 2023, TME broke above the 50-week moving average again and established a base for a summer rally, which ultimately tapered off. Currently, shares are outperforming, buoyed by a significant stimulus package from China. Resistance levels for potential rallies are expected between $16 and $18, with a more substantial barrier at the $30 mark for these previously beaten-down stocks.
The Point and Figure analysis presents a similar outlook, indicating that TME is indeed outperforming but facing significant overhead resistance. Support is noted at $9.34, with a stronger level at $6.94. Resistance levels to watch are $14.15, $15.62, and $19.05. The potential upside target is at $31.87 for those familiar with the explosive nature of Chinese equities. With an SMAX score of 8 out of a possible 10, TME demonstrates strong short-term performance across various asset classes. The shares are currently showing excellent relative strength compared to other investment classes and its peer group within the SIA International ADR universe.
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