Event-driven (2011-02-23 New World Development Co. Ltd. analysis)

I guess the focus today would be 2011-2012 Budget announced by the government at 11:00am. It would definitely do some impact on the stock market. One of the topics is of course the property market in Hong Kong. So I check one of the largest property companies in Hong Kong --- New World Development Co. Ltd. (0017.HK). With the new taxes suggested by many experts and organisations, the budget is expected to have a negative influence on these property companies.

Daily chart of New World:


New World Development has been dropping along the red down-trend line for a few months. Though there were two peaks, but eventually the stock price slided downwards.

I have identified two trend-lines for this stock, as shown in red and green. The former one is a short-term and the other is a longer one.

The stock price is currently testing the long-term trend-line. There is a support at around the level of 13.5.

However, I would expect the stock price to drop below this level. The red line would probably stop the price from continuing its plunge. Therefore, support level is at around 13.2.

Volume shrinks a lot, showing a lack of confidence by investors. MACD is at a low level now, and there is no sign of forming bullish cross.

Announcement of Budget 2011-2012 will be a great event today. News trader would have to keep track of the policies announced.