Selecting stocks to Scan: Where to Begin?

One of the more challenging tasks I encountered when I focused more with Technical Analysis was where to begin my scan selections. By the way, if you're looking to learn the basics of Technical Analysis, check out Ms. Guillen Rocher's blog. Her posts about candlesticks, Stochastics, Support and Resistance, and Moving Averages are great! Check them out.

To date, the PSE has 314 stocks to invest in, give or take a few preferred shares. Doing scans over the weekend is fine, however it cuts into my family and relaxation time (I've yet to watch Deadpool so no spoilers please). Also, what about doing scans mid-week such as Wednesday? I have a day job, so I do not have the time to be scanning all 300 stocks listed!

What do we do? We follow the volume. We look at the most actively traded stocks, or those stocks that have significant amount of volume. I use COLFinancial and Utrade as my online brokers, so I can point where you can get this information if you're also using those brokers. If you're using others, explore the website abit. Each broker typically offers this information.

For COLFinancial, you go to Quotes, then Market Information, then Most Active. I marked them with an orange arrow as 1, 2 , 3 respectively. Please refer to the picture below (click on the photo to enlarge).


For UTrade users, click Quotes, then in the drop-down list, click Most Active.
(click on the photo to enlarge)



Once you have this page open, check the column labeled as Volume. This is the number of shares traded throughout the day. In this case,traded on Feb. 26, 2016. You will want to focus on stocks that have had 1 million traded volume or more.

Based on the above information, we take a quick peek at MPI and see if a trading setup is present.


If a setup is present, note it down for further study later then move on to the next stock on the Most Active list meeting our volume criteria.

Another useful area is the Gainers and Losers tab in COLFinancial. (click on the photo to enlarge)


This tab shows a list of stocks that have had the most significant increase or decrease to their prices on a previous trading day (or during the day itself).

For UTrade users, it is still under the Quotes tab, and right under the Most Active line. I encircled it in orange below. (click on the photo to enlarge).


Instead of Volume, we base our selections on the Value column. The numbers under value are derived by multiplying the total number of shares traded, at the price traded, and getting the sum of those prices (tama ba? hehe).

During a trading day, I often have Gainers and Losers and the Most Active tabs open at a new window or in a new tab (alt + tab is your friend) so I can quickly cycle through my web browsers. This is so I can quickly see if a stock is rising during the trading day, and if a breakout should occur, I can quickly enter when it breaks a resistance line....but thats for another article.

So, when I come home from work, this is how I do my scans. Hope this article will help reduce your scanning time and God bless your investments!

PCOR Analysis with Elliott Wave

I am still continuing with my Charts and Technical Analysis (TA) self-study, and after reading Ms. Guillen Rocher's post about FNI, I wanted to try my hand using Elliot Wave.

You can read Ms. Rocher's post about FNI here: The Story of FNI-ipit (Simple Thesis)

From what I've read in stockcharts.com, the basic Elliott Wave sequence consists of Waves 1, 2, 3, 4, 5, A, B, C. You can read up on it here: Elliott Wave - Stockharts.com

Let's take a look at PCOR's chart. I tried doing the count with the daily time frame but wasn't successful. I switched it to weekly time frame and I think I have the sequence plotted. FYI, Although I have heard of the Elliott Wave pattern before, I never really bothered to use it in my chart analysis until now, so please bear with me. This is not a recommendation to buy or sell PCOR. This is to record my continued studies in using TA when analyzing charts.

Below is a screenshot of the PCOR chart back in late 2001. The waves are marked with text bubbles. (click on the photo to enlarge)



Based on the Guidelines shown in Stockcharts.com, one of the guideline states:

Guideline 2: The forms for Wave 2 and Wave 4 will alternate. If Wave 2 is a sharp correction, Wave 4 will be a flat correction. If Wave 2 is flat, Wave 4 will be sharp.

Also, after viewing some videos at youtube, I found this video particularly helpful: Simplied Approach to Elliott Wave Analysis, I learned that wave 2 usually retraces to 61.8% fibonacci from wave 1. If you look at the picture above, it does indeed touch the 61.8% line. This encouraged me that my count was at the correct area.

Let's continue the count. (click on the photo to enlarge)


Now this is where it gets tricky...I am not confident with my Wave A-B-C pattern. If you look right after the high of wave 5, there is a small rally and I do not know if the count should've begun right after 5, or if I should begin after the rally failed.

The picture below zooms in on the wave C area. (click on the photo to enlarge)



Assuming that the count is correct (yes...it is an assumption so please do not buy PCOR based on this article!), The recent rally ought to be Wave 1. Latest candle shows that the bulls are losing strength, and price should retrace back to 61.8% fibonacci area. The green arrow shows the possible bounce, purple arrow shows the possible breakdown.

Below is a picture of the support areas shown in green-dashed lines. (click on the photo to enlarge)


RSI is currently above 50 but is turning downward. Volume is also declining.

Now all we have to do is sit, wait, and observe what will happen next. If price does indeed bounce off the 61.8% fib retracement, then wave 2 will have been completed and the next one is the big wave 3.

Feel free to comment below. I didn't know that I had it disabled until now.

Caveat!

FLI - sleeper update

Here's the link to the previous article: FLI - sleeper?

Although FLI went down since Monday, it has found momentary support at P1.50 and has not negated the ascending triangle pattern.

I still have my stop loss set at 1.48. RSI 30 still shows a steady increase while Stochastics 14 showed a decline after reaching overbought area.



This play is experimental and I am not encouraging you to try it.

Caveat!

Stock in Focus: FLI - sleeper?

As coined by ZeeFreaks from his blog: Sleeper Plays 101. I would also recommend you read his article about bottom fishing.

I have always wanted to be a pseudo-position trader because I cannot check charts and prices due to my job. After reading this article, it got me to thinking and wanting to try my hand in spotting sleeping stocks.

My conditions were the following:

• Must at least be a 2nd liner.
• Must have good fundamentals with manageable debt.
• Must have good potential projects in development.

My strategic approach will be to employ a cost-averaging method for sleepers and use charts to check if the stock is still going where I want it to go. If not, then cut loss.

I made my first "sleeper play" today with FLI. See the chart below.

Resistance:1.54. Cut loss based on trendline: 1.48. Target Price: Based on trailing stops.

Intrinsic value: 2.44 (based on 10 year DCF with 1st 5-year growth at 10% and next 5-year growth at 5%)
ROE: 6% (yuck)
Total Liabilities payable within: 20 years (di puede 15 years na lang sana?)
Implied P/E at current price of 1.54: 11.7x
Beta: 1.46

This is a testing-phase for this system and I do not recommend you follow it just yet since this isn't tried and test. Caveat!

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