Did you notice that Eagle Cement Corporation (EAGLE) has been breaking a resistance level every two months since March 2020?
EAGLE registered its second red candlestick in a row after printing nine green candlesticks from August 25, 2020 to September 8, 2020. EAGLE closed on September 10, 2020 at ₱14.48 per share, down by 0.1379 percent. The total turnover value totaled to ₱42.10 million, with the local investors as the main drivers.
The foreign investors are net sellers year-to-date. I’d say that their participation is relatively insignificant because there’s no regularity on their registration of an 8-digit daily net foreign.
EAGLE broke above the previous resistance, which is now the immediate support, at ₱14.00 three trading days ago. The immediate resistance is now near ₱16.40.
Despite the two consecutive red candlesticks, EAGLE remains trading above the 10-day simple moving average (SMA).
EAGLE’s moving average convergence divergence (MACD) is not only moving above the signal line, but it’s also trading above the zero line. That signifies that the bulls are still surrounding EAGLE, so to say.
EAGLE’s 10-day historical volatility is at 68 percent; therefore, I’d say that this industrial company is a moderate-risk stock. Note that I’m referring to the erraticity of the price action and not to your personal risk tolerance. For new investors, I recommend that you fill your watchlist with low- to moderate-risk stocks. Note that I said “watchlist” and not your “actual portfolio” yet.
Moreover, EAGLE remains bullish in the eyes of the directional movement index (DMI) as the +DMI hovers the -DMI. The average directional index (ADX) is at almost 48 points, which confirms the overall bullish sentiment derived from the DMI.
I know you can’t wait for the answer to this ultimate question, “Is there a buy signal for EAGLE?”
Don’t rush. You need to gently chew what I’ve said above so you’ll know the logic behind my recommendations later. Don’t just inquire as though you’re only interested in getting a straight cut “yes” or “no” answer. You will never learn how to invest independently and trade tactically if that’s your mindset (a lazy investor’s mindset).
As far as my proprietary strategy (The Evergreen Strategy in Trading and Investing in the Philippine Stock Market) is concerned, a stock gets a confirmed buy signal if and when its 10SMACD and Momentum Power Indicator are both bullish.
Once there’s a confirmed buy signal, that’s when you should entertain the idea of buying more shares or doing a test-buy. If you’re yet to have a stock position, you need to calculate your reward-to-risk ratio first. If and when you’re satisfied with the ratio, that’s when you can do a test-buy within the dominant range.
Let’s proceed with my trade and volume distribution analysis so we can finally find out if there’s a confirmed buy signal for EAGLE.
Trade-Volume Distribution Analysis
Last Price: ₱14.48
Dominant Range: ₱14.48 – ₱14.50
I see no confirmed buy signal for EAGLE based on the latest price action on September 10, 2020 for the following reasons:
1. The last candlestick is red.
2. The last price is lower than EAGLE’s volume-weighted average price (VWAP).
3. The dominant range is closer to the intraday low than the intraday high.
4. The last volume bar is red and is higher than the 50 percent of EAGLE’s 10-day volume average.
True Market Sentiment – EOD (September 10, 2020)
True Market Sentiment: BEARISH
5 of the top 10 brokers registered a positive Net Amount
4 of the top 10 brokers registered a higher Buying Average than Selling Average
Top 10 Players’ Buying Average: ₱14.5001
Top 10 Players’ Selling Average: ₱14.5095
7 out of 24 participants or 29.17% of all participants registered a 100% BUYING activity
12 out of 24 participants or 50.00% of all participants registered a 100% SELLING activity
True Market Sentiment – WTD (September 7-10, 2020)
True Market Sentiment: NEUTRAL
6 of the top 10 brokers registered a positive Net Amount
5 of the top 10 brokers registered a higher Buying Average than Selling Average
Top 10 Players’ Buying Average: ₱14.3963
Top 10 Players’ Selling Average: ₱14.4063
6 out of 52 participants or 11.54% of all participants registered a 100% BUYING activity
26 out of 52 participants or 50.00% of all participants registered a 100% SELLING activity
True Market Sentiment – MTD (September 1-10, 2020)
True Market Sentiment: BULLISH
6 of the top 10 brokers registered a positive Net Amount
6 of the top 10 brokers registered a higher Buying Average than Selling Average
Top 10 Players’ Buying Average: ₱14.2320
Top 10 Players’ Selling Average: ₱14.0940
6 out of 55 participants or 10.91% of all participants registered a 100% BUYING activity
24 out of 55 participants or 43.64% of all participants registered a 100% SELLING activity
If you already have EAGLE in your portfolio, and if your trailing stop is still intact, you have the option to hold your position. If you want a data-driven reason to motivate you to hold your position, look at the bullish True Market Sentiment month-to-date. It’s not wise to top up at this point since there’s no confirmed buy signal yet. When there’s no confirmed buy signal, it means the price is more likely to move sideways with a bearish bias. For one, none of the EOD and WTD True Market Sentiments are bullish.
An inexperienced investor or a philosophical person might ask, “Are you sure about that?”
Note that we’re talking about probabilities and not certainties. Even if you use all the data in the world, no analyst can tell with certainty what will happen next, whether about the stock market or something else.
If you don’t have EAGLE in your portfolio, don’t do a test-buy yet. If you want, you may add it to your watchlist if you still have an available slot for the number of stocks you can realistically monitor without getting your eyes crossed.
Do You Want to Learn How to Analyze This Way?
You may already know SMAs, MACD, DMI, VWAP, support, and resistance, but maybe you’re wondering what 10SMACD, Momentum Power Indicator, and True Market Sentiment are. You’ll learn my entire methodology through the online stock market course of Equilyst Analytics. Access to the online stock market course is just one of the six services you’ll get when you subscribe to our stock market consultancy service. Read the details of our stock market consultancy service so you’ll know how I can make you learn how to invest independently and trade tactically.
You will find tutorials about SMA, MACD, DMI, VWAP, support, and resistance on Google or YouTube, but you will never find the methodology of how I mix and match them. My service is not about giving you a lecture about the definition of these indicators. My service is about teaching you my methods on HOW to use these indicators, WHEN to use them, WHY use them, and more.