Stock in Focus: MCP possible iH&S

Todays movement of MCP has possibly formed the right shoulder for the inverted Head and Shoulders Pattern which is bullish.

Neckline is at the 2.35 area while the "shoulders" are nearly aligned at 1.86 for both Dec. 22,  2015 and today's candle.

I am weary of this particular iH&S because of the small consolidation slightly above the left shoulder.  This would indicate that if the neckline is broken at 2.35, price will bounce once before continuing the breakout of the 2.55 resistance (small arrows in Possible Scenario). The other scenario is a straight break out through 2.55 with a new resistance of the 38.2% Fibonacci retracement at the 3.55 price area.

Caveat

Stock in Focus: MCP

MCP showed a reversal candle today after a series of down days. Bought at 1.95. Set cut loss at 1.84. 

Resistance: 2.35

Support: 1.85-2.00 area.

This will be a swing trade. Caveat.

Stock in Focus: LC

Despite PSE diving 127 points, Lepanto Consolidated Mining A (LC) rose 48.35%. LC opened at the low of  0.191 and closed at a high of 0.27 with 237.85 million in volume. This is a 162% increase in volume versus an average of 112 million in volume for the past 10 trading days. The surge of LC could be attributed to the rise of gold prices which has risen by more than 12.5% since the start of the year.

In analyzing LC's chart, we will look at it from a Weekly and Daily perspective.

Weekly Chart:

Likely major resistance will be at the 61.8% fibonnaci retracement levels or 0.33 centavos. Increase in volume indicates that this is a strong upward trend due to the 162% increase versus the average past 10 days. Stochastics and RSI have yet to reach oversold levels.


Daily Chart:

In the daily chart, Stochastics and RSI are already within the oversold levels. Based on your trading strategy, you can opt to view charts at weekly ticks rather than daily ticks.

If you wish to join the trend, allocate a spot buy portion (20% of cash) for a test buy. Set cut loss at 0.17 which is a few ticks below today's long candle.


Caveat Emptor.

DNL

DNL traded with 18 million in volume last friday. Since Monday was a holiday (Happy Chinese New Year!), S&P's -35 point drop might slightly affect this uptrend. If the 8.40 price is broken, next resistance will be at the 9 peso level which is 50% of the fibonacci retracement.

Stochastics is nearing oversold territory however RSI still has to catch up.

Caveat Emptor.

Been Awhile...Posting the Graham Number and ROE of PSE's Index stocks

Hello All,

My sincerest apologies that I have not been posting. I've been quite busy with work and still trying to find that "Holy Grail" of investing. When I began this blog, I was sorely focused in using fundamental analysis when analyzing stocks in the Philippine Stock Exchange.

Lately, I've been studying Technical Analysis and see if the "Holy Grail" was there. Alas, it wasn't. I know many of you will think that value investing is the true grail, but I need to face the music...I suck at discounted cash flows. I can never stick to what percentages to use as growth rate. When I do, I then second-guess myself until I become paralyzed in my analysis.

Anyway, back to basics. I'll be posting summarized data for you such as the Graham's Number for Stocks and a complete ROE list for all stocks in the PSE. For now, this post will only cover the 30 stocks in the PSE index. Below is the screenshot:



The Graham Number's formula is the square root of (22.5*EPS*BVpS). I'm sure you have heard of Bo Sanchez and his Truly Rich Club.The number by itself should not be construed as the "end-all" intrinsic value of the stock since there are other factors that need to be considered. Such factors include debt management, ROE, growth in earnings year-on-year, management honesty and such.


The purpose of my using the Graham Number is to do a quick-scan of potential inexpensive stocks. I then review the company's ROE and benchmark it against other company's in that industry.

I'm sure you have heard of Bo Sanchez and his Truly Rich Club(TRC). It was in TRC that I learned of the concept of the Buy Below Price(BBP). I consider the BBP as a cushion or my own margin of safety(MoS). I know that Benjamin Graham meant other factors when he wrote about MoS, but as I mentioned already, this is for the purpose of doing my quick-scans.

CP stands for Current Price. The IF-ELSE statement in the spreadsheet will automatically tell me if the current price is below my MoS or BBP with a simple Yes or No.

I am slowly doing the entire list of PSE stocks but it might take awhile. Please note that the data used in this spreadsheet is for the 3rd quarter of 2015.

I will also begin to post technical analysis on "hot stocks" and where their possible supports and resistances may lie.

Thats all for now and as always Caveat.

~Crimson

Food for Thought

"What! No E-mail?"

An unemployed man goes to apply for a job with Microsoft as a janitor. The manager there arranges for him to take an aptitude test (Section: Floors, sweeping and cleaning).

After the test, the manager says, "You will be employed at minimum wage, $5.25 an hour. Let me have your e-mail address, so that I can send you a form to complete and tell you where to report for work on your first day."

Taken aback, the man protests that he has neither a computer nor an e-mail address. To this the MS manager replies, "Well, then, that means that you virtually don't exist and can therefore hardly expect to be employed."

Stunned, the man leaves. Not knowing where to turn and having only $10 in his wallet, he decides to buy a 25 lb. flat of tomatoes at the supermarket.

Within less than 2 hours, he sells all the tomatoes individually at 100% profit. Repeating the process several times more that day, he ends up with almost $100 before going to sleep that night. And thus it dawns on him that he could quite easily make a living selling tomatoes.

Getting up early every day and going to bed late, he multiplies his profits quickly. After a short time he acquires a cart to transport several dozen boxes of tomatoes, only to have to trade it in again so that he can buy a pick-up truck to support his expanding business.

By the end of the second year, he is the owner of a fleet of pick-up trucks and manages a staff of a hundred former unemployed people, all selling tomatoes.

Planning for the future of his wife and children, he decides to buy some life insurance. Consulting with an insurance adviser, he picks an insurance plan. At the end of the telephone conversation, the adviser asks him for his e-mail address in order to send the final documents electronically.

When the man replies that he has no e-mail, the adviser is stunned, "What, you don't have e-mail? How on earth have you managed to amass such wealth without the Internet, e-mail and e-commerce? Just imagine where you would be now, if you had been connected to the internet from the very start!"

After a moment of thought, the tomato millionaire replied, "Why, of course! I would be a floor cleaner at Microsoft!" Moral of this story:
1. The Internet, e-mail and e-commerce do not need to rule your life.
2. If you don't have e-mail, but work hard, you can still become a millionaire.
3. Seeing that you read this story via the internet, you're probably closer to becoming a janitor than you are to becoming a millionaire.
4. If you do have a computer and e-mail, you have already been taken to the cleaners by Microsoft.

Stock Update as of November 24, 2013

Wow…the PSE has been like a roller-coaster ride recently, and this has caused many of us to panic and want to sell. I don't blame you. After seeing your port go red and the image of that negative balance lingering in your head just won't go away.

My advice to you is to compartmentalize it, but its gonna be tough. You must make a conscious effort of not to think about it. Find a distraction or discipline your mind. Always remember that you are investing for the long-term. From the beginning of the PSE until today, if you had been invested, you would have had an annual growth of 12% even through the Asian Financial Crisis, and the global financial crisis in 2008.

Keep that in mind and stop looking at your portfolio everyday!

Last Friday we saw the PSE plunge from 6,165 to 6,085 at the close.

For the stocks that is on our list, see the table below:

As you can see, I've added the P/E ratio for your guidance. The lower P/E or Price-Earnings Ratio, the better, but this only applies if the company has a steady growth in sales, earnings per share, and has manageable debt.

From the list, we can see that now is a good time to buy MBT (with a P/E ratio of 6.5) and CPG (P/E of 7), but remember…the stocks highlighted in yellow should be the stocks you prioritize when doing your Peso Cost Averaging.

Let's see how this plays out and remember that we are investing for the long-term.

May God bless your investments,

~Crimson