Bollinger Bands Narrowing and Bearish Marubozu on Team's 15min Chart

Our team has observed a notable trend in the 15-minute chart, which indicates that the magnitude of stock price fluctuations has decreased. This is characterized by the narrowing of Bollinger Bands and the appearance of a bearish Marubozu candlestick pattern at 08/13/2025 15:00. This suggests that sellers are currently in control of the market, and the bearish momentum is likely to persist.

NetEase (NTES) surged 3.85% in pre-market trading on August 14, ahead of its Q2 earnings release. The stock's performance is driven by elevated earnings expectations and alignment with Peter Lynch’s Growth at a Reasonable Price (GARP) strategy. Analysts project a 10% revenue increase to $3.86 billion and a 23% EPS growth to $2.04, fueled by strong gaming performance and diversified revenue streams [1].

The stock's PEG ratio of 0.96 and a 22.50% ROE further validate its appeal as a growth-at-a-reasonable-price candidate. NTES’s 3.85% surge reflects a confluence of earnings optimism and fundamental strength, with the stock trading at a discount to its growth potential. The intraday range of $135.99–$139.22 underscores volatility ahead of the earnings catalyst, while technical indicators suggest a short-term bullish bias [1].

While NTES surged, the sector leader Electronic Arts (EA) declined -0.26% intraday, highlighting divergent momentum. NTES’s outperformance stems from its diversified revenue model and stronger earnings guidance compared to EA’s reliance on cyclical gaming titles. The sector’s 34th percentile Zacks ranking underscores NTES’s leadership in a competitive but fragmented market [1].

Technical indicators suggest a short-term rebound from oversold RSI levels, with key resistance at $140.02 and support at $130.22. The 3.85% intraday gain aligns with a bullish breakout scenario. Two options stand out for leveraged exposure: NTES20250919C135 and NTES20250919C140. The former offers high leverage and gamma to capitalize on a post-earnings rally, while the latter balances leverage with a higher strike, ideal for a breakout above $140 [1].

The backtest of NTES's performance following a 4% intraday increase shows no specific strategy return, benchmark return, excess return, or CAGR data. This indicates that such a strategy, although it might appear attractive due to the 4% surge, does not provide any additional returns or benefits over a longer period [1].

In conclusion, NTES’s 3.85% pre-market surge reflects a compelling mix of earnings optimism and GARP fundamentals. Key levels to watch include the 52-week high of $141.45 and the 200D MA at $106.51. Sector leader EA’s -0.26% decline highlights NTES’s relative strength. Investors should prioritize the NTES20250919C135 for leveraged exposure if the stock breaks above $140. Action: Target $140.02 breakout for a bullish trade, with stop-loss below $135.99 intraday low [1].

References:
[1] https://www.ainvest.com/news/ntes-surges-3-85-pre-market-earnings-anticipation-garp-allure-drive-momentum-2508/