We were early to point out the problems Tencent was facing in a series of articles earlier this summer. Investors tend to look at NASDAQ for overall clues about the market and overall momentum, but a truly global investor should dig into further details. We won’t go into a detailed discussion about Tencent, but this is an extremely important tech name to watch, irrespective if you “only” trade US tech (NASDAQ).
Tencent has been falling for long since the ATH we saw this spring. The negative trend remains intact, but just as we pointed out some 10 days ago, China and Tencent had started to show signs of life. The Asian tech giant has bounced nicely and is now trading at the upper area of the negative channel as well as testing the 50-day average for the first time since June.
Why do we watch Tencent? Beside the “tech fundamentals” this name offers, it is moving very close to the FAANGs. Below is a normalized (date adjusted) chart of Tencent versus FAANG index.
For overall market direction we need to watch NASDAQ, for NASDAQ clues we need to watch Apple, and for Apple clues, we need to watch beyond the obvious at times. Posted 10 days ago, the Apple versus Tencent chart has continued moving the trajectory outlined. I guess we need to study Tencent carefully here for clues on FAANG, as well for the slightly tarnished Apple.
Source: charts by Bloomberg
