Hi YXI friends,

Today, we are going to cover the technical analysis of the remaining list of well known US-listed Chinese stocks, mainly in the entertainment and internet services sectors.

The tickers include BILI, NTES, TME, WB, EDU, ATHM, BIDU, BEKE, BZ, FUTU, TCOM, YUMC.

If you haven’t already, please check their valuation comparables in Part 1 of this series. In Part 2 we covered Chinese E-Commerce and Electric Vehicles (links below).

A quick note on the Elliott Waves Theory (EWT) before we proceed, as one of our members asked to what extent I utilise volume information with the EWT. My response is as follows:

Just to build on this. I think generally people tend to hold two views towards technical analysis.

1) price action is just noise in the short term. Only long-term fundamental analysis of buying an asset below its true value can bring you the edge that Wall Street’s bonus cycles can’t afford waiting for (i.e. a long-term oriented value investor), or

2) the price already holds everything we need to know, and there are predictable patterns (cue TA) we can take advantage of due to the human fear and greed.

I actually don’t think the two views necessarily conflict. The long term path is always probabilistic and never certain. We can understand a business and its long term value orientation while simultaneously trade the shorter term price action.

It really does depend on one’s own time frame and how much energy they want to spend watching charts and thinking about how the messy financial world connects the dots. Buying a long-term stock then playing golf may sound more appealing to many people!

Now, let’s dive in.

DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

1. Entertainment

1) BILI: Bilibili

BILI is similar to YouTube + Twitch in China, where people can upload their own videos or live stream.

BILI Weekly (https://www.tradingview.com/x/VJaMr3sA/)

BILI enjoyed a phenomenal rise during COVID, when its stock price shot up from $20 to $150. It then suffered a even steeper 5-waves down from the all-time-high, crashing below $10. Safe to say, BILI is not for the faint of heart.

When a stock goes 5 waves down and bounces, like in BILI’s case, I would always proceed carefully, as the stock’s primary direction still points down until proven otherwise.

The latest action has cleared above wave circle-1 high, which makes the bullish path ahead more likely. Once it completes (3) of circle-3 here, I would consider the bull trend is fully in place. It sounds like a conservative take, but I do think it pays to be cautious when the same stock went up 700% and down 95% in just 3 years.

BILI Daily (https://www.tradingview.com/x/zxtl7V83/)

On the daily chart, as we zoom in wave (3) of circle-3, I see BILI having potentially completed wave 3 of (3), now undergoing a wave 4 retrace towards $26. There is likely a wave 5 higher that targets $40+. In terms of the volume profile, there is not much volume for the activities above $20 - very thin air for both resistance or support.

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