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PDD Holdings Inc (PDD) - January 31, 2024


The recent selloff in China-related markets continues to expand out from Chinese stock markets through commodities into Chinese ADRs listed in the US. PDD Holdings, Inc. (PDD) a Chinese online retailer who owns the Temu website, started this year in the top spot of the SIA NASDAQ 100 Index Report.

PDD’s relative strength has eroded over the course of this month and yesterday it’s decline accelerated dramatically, sending the shares crashing out of the green zone and back down into the Yellow Neutral Zone for the first time since July. PDD is now in 43rd place after falling 15 spots yesterday, and falling 41 spots over the last month.

The last time PDD was this low was during a drop from the green zone to the red zone and back between March and May of last year. Back then, between when PDD fell down out of the green zone and climbed up out of the red zone the shares fell 13.7%. Over the last six months, while in the green zone, PDD shares have gained 48.9%.

Candlestick Chart Breaks Down:

PDD Holdings (PDD) shares were under accumulation from May to December of last year, more than doubling off a low near $60.00 until finally running into resistance and peaking just short of the $150.00 round number. Following a big jump in November, upward momentum slowed as $150.00 resistance approached and held through several tests.

Last week, support started to give way, and this week the shares have broken down decisively starting with a breakaway gap downward, snapping an uptrend line and taking out the $140.00 and $130.00 round numbers.

Next potential downside support appears at a previous breakout point near $110.00, then $100.00 where an uptrend support line and a round number converge. Initial resistance appears near $135.00, a recent breakdown point.

Point and Figure Chart Turns Sharply Downward:

After staging a big November rally where the shares gained nearly 50%, upward momentum slowed over December and into January. The shares finally encountered resistance in the $150.00 to $151.50 area. Resistance has turned into selling pressure recently with the shares snapping an uptrend line and completing bearish Double Bottom and Spread Double Bottom breakdowns to signal the start of a new downtrend.

Next potential support appears near $114.70 and $111.35 based on horizontal counts, followed by a previous breakout point near $109.15. Initial resistance on a bounce appears near $130.60 based on a 3-box reversal.

With a bullish SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) falling to 6 out of 10, PDD is exhibiting short-term strength against the asset classes. Two days ago, PDD had an SMAX score of 10 so this has weakened significantly and any further declines to 5 or lower would become a bearish signal of relative weakness.

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