Picks and Patterns for Halloween

Hey everyone, it's halloween so we'll have 2 months left to play this game for the year. Let's all help each other and maximize what we can squeeze out of this bull market.

Trick or treat!

Trend Following:

ACR

In hindsight, the correct entry was the breakout of the downtrend line. Currently, doing support at current levels. It is 10% of my portfolio. If my trailing stop is broken, I will sell.

MPI

Was able to ride from buy signal upto the false sell signal. Buy if recent high 4.13 is broken.

BPI

Recently broke from its consolidation and was able to trend further. Still undecided if I'm buying or not.

MEG

Recently signalled a buy but is still consolidating. It is 3% of my portfolio.

DMC - Pennant

Recently broke out its bull 'pennant' and was able to trend up further. I bought some more today and is now 17% of my portfolio.

AP with Bull Flag

Signalled a buy 2 weeks ago and is now forming a bull flag. Should be a buy if the flag is broken to the upside. I am not adding anymore as it is already 30% of my portfolio. :)

Patterns Forming:

FLI - Symmetrical Triangle (Continuation)

Buy if breakout.

GMA7 - Head and Shoulders Bottom (Reversal)

I like the chart but needs to have support from institutions. Volume please.

TEL weekly - Head and Shoulders Bottom (Reversal)

Very bullish chart.

Speculative:

CYBR

Got a few shares for speculation. I want that downtrend line to be broken soon! It is 5% of my portfolio.

Roller Coaster Dow

Ever wonder why the Dow goes down 160+ points one day then goes up to recover those losses the next day? I'm talking about October 19 to 21, 2010. Well, the reason is that the Dow is really moving within a sideways to up kind of trend. In the daily chart, its upward trading channel actually looks narrower than the one below. I used the 2-hour chart to give us a better view of the Dow's move. I think the Dow's range is pretty clear. As of 11:30-ish, Dow is down 131 points. It is retesting its range's support. Shall we see a bounce, Dow? 

When I think of the Dow in relation to the PHISIX, I actually find myself wanting a DOWn. Come on, Dow was up the past few days and nothing much happened with the market. Let's invite the bargain hunters. I always see the intraday chart of the PHISIX opening higher then drifting lower. Iba naman! Gap down tapos rally. Exciting diba? Hahaha! :P 

Naku, Naku, Naku!

Today was the first day of listing for Cebu Air, Inc. (CEB). A client of mine has some shares and is looking to sell so I had to watch the movement of CEB closely. Oh gosh. Nahilo lang ako. It was so volatile! Finally, I decided to give CEB some time. Besides, a 7 peso gain (CEB was trading at 132 that time) is way too thin for my client's "level of greed" (haha!) so seemed like a good move on our part to just hold and watch for now. The price stabilization operations are also still ongoing so, let's see! :) 

What's with the intense selling pressure in JGS?! Hmm.. I didn't get to sell today. It's still moving within a narrow range so I decided to give it one more day. See, last Friday's ought to have been bullish. Apparently, it wasn't as it formed a mean looking long black candle today instead. Now, that's supposed to be bearish right? But if the bullish signal failed the other day, then it's also possible that this one will too, simply because it's moving sideways. Oh my. Stochastics don't look good. :P Anyway, one more day! Maybe I can exit at a better price. I already have another stock in mind to shift to. In fact, I bought my first line today from my AP proceeds. From the way it has been moving the past few days, it looks like it wants to break above 14.

Like I just said, I sold my AP today. I was also very tempted to take my profits in DMC but decided against it. I'll confirm first whether its spinning top does indeed materialize into something bearish. The same goes for AT. Funny story on AT. I decided it was time I start selling the shares I bought near 16. When AT broke below its open of 19.56, that was the trigger for me to sell. So, sell, I did. But I kept on hesitating that I'd first think about it after I've typed in all the necessary information like price, volume, client code that the buyers would be gone by the time I decided to sell down. I ended up selling at 19.40 which was the intraday low. Hahaha! Nakailan na akong ganito? The other day it was AP. :P Anyway, I still have around 5/6 of my total holdings. I'm in the mood to sell half of my total holdings. Hmm.. What are the odds that these three will correct / accelerate to the upside? 

The Original High Fliers

I was finally able to clean my portfolio. For a while now, I've been hitting whatever moved and my portfolio was filled with stocks I bought on impulse. That were okay for a while but I wasn't satisfied with my performance. It felt "kalat" and I don't like the feeling of being all over the place. I bought stocks prematurely, got whipsawed every now and then, and my return wasn't even that good. I was never the "hit whatever moves" kind of gal, afterall. Well, at least, not on the day it moves. I like buying stocks before they develop momentum. I don't necessarily have to hit the bottom but it is important for me to be there before the big move.

To demonstrate, I bought AP last October 14 at 25.25. After I bought, it fell back to 25 or even below that. I remember asking myself if I made the right choice in buying. What made me buy in the first place? Well, I saw that AP was then consolidating around its new support at 24. If it is able to hold around this level, I could see AP accelerate to the upside. The day before, AP retested 24 and it was able to bounce from there. I completed my first line of buying. AP closed at 25.30. The next day, AP traded above yesterday's high of 25.40. Breakout! So, I completed my whole buying order. AP then consisted 25% of my portfolio. I sold the next day at 26.45 when it traded below the open of 26.50. I was tempted to buy back when AP went back to my cost. I could already hear my mentor before saying he bought back his shares simply because it went back to his cost already. I didn't though because I wasn't sure yet that it would be able to bounce from there. Buying support was confirmed when the Papa Securities and some other foreign broker bought AP and it consequently rallied to close the day at 26. I bought back my shares starting 25.75 to 25.90. I made a selling boo boo the next day. I was impatient and sold AP and this time, I almost caught the intraday low of 26.40  as I sold at 26.45. I tried to buy it back. I got it at 26.85 and another one at 27.85 the next day. I didn't get to buy back my whole position. That's what I get for being too "makulit". I forgot my target which was 28.50, at least.

I believe I mentioned before that my lousy trade in AP spoiled my mood a little bit. Haha! Anyway, no use in dwelling on it. I looked for other stocks and guess what I found? DMC and JGS. I bought DMC at 33.50 and 34.80; JGS at 24.80 and 25. Last Friday, when I bought JGS, I even forgot that Cebu Pacific will be listed the next week...this week. Tomorrow to be more specific. I was just looking at JGS' setup and its inability to break 23.90. 

AP, DMC, JGS. 

The original high fliers. 

I hope I'm right on JGS. :P 

Atlas Mine Visit

Check out the pictures of the Carmen Copper Corporation (CCC) Operation of Atlas Consolidated Mining and Development Corporation (AT) in Toledo City, Cebu here in my facebook. (Feel free to add me up as well) :-)

Security Reasons

If you don't already know, trading was halted today for security reasons. Now, what does that mean? When I first read the notification regarding the halt, I really had no idea what the 'security reason' possibly be. This is the first time I encountered that. It is usually for network problems. Apparently, Tower One had a bomb threat and everyone had to evacuate the trading floor and the whole building for that matter. This was at 10.20am. Whether trading would be extended, we weren't really sure so some of the traders in the office just left. I heard the traders from the floor disbursed to neighboring establishments like Starbucks upon exiting the building. With the sweep taking at least an hour, the likelihood trading will resume before 12 is slim. Good thing I decided to stay behind because trading resumed at 1 pm. We haven't had lunch so we decided to just order from MCDO. Funny, it turns out, our friends from downstairs also had their lunch in MCDO. Apir! :)

I remember I mentioned before that buying/selling behavior changes whenever the market is halted. The real trend usually manifests itself immediately as orders are sent out sooner rather than later. Basically, I see the halts as a catalyst for momentum to kick in. Today, the behavior showed a little variation but was essentially the same. We first had a shallow correction, which is understandable given the bomb threat but apparently, that was short-lived as we rallied soon after. Of course, the 129 point gain in the Dow contributed to the market's enthusiasm but the halt made the eventual rise more urgent. To tell you the truth, I got dizzy this afternoon as almost all of the stocks on my watchlist were moving! I felt the urgency. And those that lacked that urgency fell, which only makes the lack of buying pressure more obvious as compared to normal trading when it can be hidden by keeping prices at a certain level. This is all just intraday tough. Tomorrow could be different. Just keep in mind that the index is still moving sideways and we are now back closer to resistance at 4,253. 

Today was a bit frustrating for me. I sold AP too soon at 26.45. Talk about intraday lows! I was supposed to buy back when the market resumed but I chickened out when prices suddenly corrected. It snapped back up but it was only upon break of 26.80 that I decided to buy back. AP closed 2 flucts above my cost but you know what keeps appearing on my mind? A consolidation at current levels in the next couple of days. Maybe I'm just "praning". Also, I had a buy posting of PNB at 65. I didn't get to cancel it upon resumption of trading and my order got hit. PNB closed at 64.30. Selling AP early and the matching of my order for PNB spoiled my mood a little. 

The superstar today was RFM. Drool.  

:P 

Think like a Jockey

As a trend follower, I am supposed to buy breakouts right? However, if a stock is jockeyed and is prone to whipsaw losses, what should one do to have an edge? Of course, we have to think like we're the jockey!

Using the price/volume analysis below, we could see that it is not profitable to buy long white candles with relatively high volume - the jockey is obviously selling to the public. It's pretty obvious in the chart that one should use a contrarian style to be profitable.

Buy during shakeouts, sell during hypes or breakouts. Let's see what happens next.

Diamond in the Rough

Because of the new fluctuation rule, any advance or decline seem more dramatic since the smaller increments make prices more volatile. In the old system, once a stock crosses 10 pesos, instead of 10 cents (fluctuation rule for 5 to 9.9 price range), it will move by 25 cents. In the new system, it will move by 1 cent either way. So, in a day, what used to be a boring 1 fluct move is now an exciting 25 fluct leap. What am I getting at? If you look at the general market, we are merely moving sideways but if you check your holdings and watch them in the ticker, you will feel your heart flutter every time your stock breaks each fluctuation. Just an observation based on personal experience. Haha!

I didn't go to the office today because it was raining when I left for work. I stood outside the gate for a while then decided I didn't want wet shoes and pants. I retreated, waited for 9 am and watched the market at home. Ang galing ng MEG! My sister will be very pleased with me when she finds out I'm praising her stock. Since nothing much is happening with FPH, I think she switched loyalties for the time being. While the whole market was going down, MEG was going up. Sure, it reacted  and went as low as 2.44 but it still closed at the high of 2.59. Now, that's what I call strength! Aside from a range breakout, it also broke out from a flag. I have a short-term target of 2.75 to 2.80. I'm looking to buy the dips but as always, open to the possibility of a bull trap. Ideally, it should no longer fall below 2.55. But suppose it does, 2.44 should be the next support. If that still doesn't hold, I will assume it will continue its range. For now, it looks like it wants to trend up. Let's go bulls! Ay, wait, I don't have MEG yet... Wait for me! ;) 

Philippine Energy Demand

This is the reason why one cannot go wrong by betting on energy stocks like AP, AEV (which is 80% composed of AP), SCC (The only large-scale Coal producer in the country), EDC and FGEN. AP is more favorable in times of power crisis since they have a much higher exposure on the WESM compared to EDC which is involved in long-term. fixed-price supply contracts. Here are some of the important points in the $155 “Philippines Power Report 2010” from Business Monitor International.

Philippine Energy Demand

§ The country’s power consumption is expected to increase by 23% from 2010 to 2014.

§ Population is expected to expand from 91.4 Million to 100.1 Million over the period

§ GDP per capita and electricity consumption per capita to increase by 46% and 10% respectively by 2014

§ Projections suggest 5.0% average annual growth in overall power generation between 2010 and 2014

§ Philippine Energy Demand is forecasted to grow by 45.6% from 2012 to 2019

§ Between 2010 and 2019, Philippine electricity generation is forecasted to increase 59.9%, which is around the middle of the range for the Asia Pacific Region. (30.3% in 2014-2019, and 22.7% in 2010-2014)

§ An increase of 25% in hydro-power use during 2010-2019 is a key element of generation growth

§ Thermal Power generation is forecasted to rise by 66% between 2010 and 2019

On Coal

§ The Philippines has a high coal import dependency and also relies upon imported oil, as its domestic production is insufficient to meet national needs

§ Coal accounts for 24% of energy demand in 2010

§ The country relies on imports for much of its coal consumption, primarily from Indonesia, China, and Australia

§ In 2008, the country consumed 9.3mn tones, (up more than 50% since 2000), while producing only 3.3 mn tonnes.

§ Emerald Energy Corporation, the Philippine subsidiary of French utilities player GdF Suez announced it is backing down from a multi-million dollar agreement for the acquisition of the Calaca coal-fired power plant citing a deterioration in the physical condition of the plant since it won the bid 16 months ago.

§ The Philippines’ coal consumption is forecasted to increase from an estimated 6.2mn to 8.4mn by 2014. This equates to a rise in demand from 9.3mn to 12.6mn tonnes of hard coal

Renewable Energy

§ Projections suggest that by 2014, the share of usage of renewable energy will increase from 6% to 10%. A very good improvement compared to the negative growth of Oil, Flat growth of Coal, and a slight increase of hydro-electric.

§ The Philippines is the second largest producer of geothermal energy in the world behind the US, with around 2GW of installed geothermal capacity. The government had originally set a goal of increasing this figure to 3.1 GW within a decade, which would have made the Philippines the largest geothermal energy producer (This coincides with EDC’s goal of becoming the number 1 geothermal producer in the world).

§ The Renewable Energy Act provides fiscal incentives for potential investors in renewable energy such as tax credits, lower taxes on machinery, and tax exemption of carbon credits, and other non-fiscal incentives

§ The BOI is proposing a package of tax incentives for the power generation sector in an effort to reduce shortages in some provinces suffering form power blackouts due to droughts.

§ RE Law also includes a Renewable Portfolio Standard requiring the country’s electric utilities to obtain a certain portion of their electricity from clean, indigenous renewable energy sources.

§ The Philippines ranks third in the region for the proportion of renewable in the power mix

PHISIX Update

The index is showing signs of a waning momentum and would possibly move sideways for now.