In today’s episode, I’ll be talking about ItalPinas Development Corporation or IDC.
As of 2:17 PM, March 7, 2019, Thursday, IDC is moving at 5.28 per share with an intraday high of 5.46 and an intraday low of 4.82.
The green candlestick partners with a bullish volume that moves the 10-day volume average. I like this combination because this is an indication that the ascend in price is well received. It is also well supported by the traders.
Psychologically speaking, traders think that it is worthy to buy IDC above 4.80. When you see a green candlestick in a towering volume that is above it’s 10-day volume average, I translate that as a sign that there’s a strong probability for the price to continue its ascent.
Price Closer to Resistance Than Support
The immediate support of IDC is positioned at 4.5, while its immediate resistance is pegged near 5.65. The current price of IDC is closer to its immediate resistance than to its immediate support.
If we continue to see volume not bigger than today’s but still in the average, you might see IDC piercing or breaking out above 5.65. But again, we prefer to see the ascend in price coupled by a strong volume.
How Strong is Strong?
A strong volume should be above the 10-day volume average. That’s how I measure if the volume is relatively significant or not. Anything below the 10-day volume average, especially if it’s below the 50% of the average, is relatively weak.
In connection to the alignment of the moving averages, I prefer to see IDC breaking out above 5.65. When that happens, perhaps these shorter term simple moving averages will cross above the longer term ones.
Right now, it’s the exact opposite of what we hope to see. I’m referring to the alignment of the moving averages.
Price Ascends if it Breaks Out Above 5.65
We prefer to see the blue line below the red line and the red line below the green line. I think that will only happen if the price breaks out above 5.65.
If and when that happens, coupled with volume, then there is high probability for the price to continue its ascent near the next resistance at 7.60. Otherwise, if we will continue to see green candlesticks but volume is relatively weak or low, then there’s a probability for the price to just bounce away from 5.65 and retrace or retest its support at 4.35.
When that happens, we might just see IDC continue to just trade the range.
What range is that? That’s 4.35 and 5.65. Mind you, IDC has just been playing within this range since December 2018.
IDC’s Risk Level
In technical analysis, we say history repeats itself. So, if you are holding a position in IDC, you should be more cautious now that the price is much closer to 5.65 than to its support at 4.35.
As far as the risk level of this stock is concerned, I can say that IDC is a moderate-risk stock because of its volatility score of 25%. MACD is already moving above the signal line.
It is bullish in a short term but we want to see a break out from the resistance so that the bullish conviction will be higher.
Now, if you are trading this name, I would like to give you my volume review.
Looking at my account with FirstMetroSec Pro, you will see the price points, the biggest volume, and the highest number of trades. In this case, if there’s a price range that I think you should watch out for, it should be between 5.30 all the way to 5.40.
Based on what I see, it’s a strong range because that’s the range that got the biggest volume and the highest number of trades.
But considering the fact that IDC currently trades at 5.28, it would be more prudent to be risk averse on the range of prices we want to monitor. While the price is below 5.30, I would recommend that you monitor the price below 5.25.
By the way, 5.25 got six percent of today’s volume. It also got 85 trades. If the price continues to go up especially once it touches the 5.30 level again, then I would suggest that you monitor 5.30 to 5.40.
On a Net Foreign Selling Status
As of the time of reporting, IDC has a net foreign selling of PHP 1.2 million. Speaking of which, IDC is on a net foreign selling status year to date.
My overall sentiment for IDC is neutral to bullish. I am not completely bullish yet because of the probability for the price to just bounce away from 5.65 once it draws closer to 5.65.
But that is subject to change. Once it touches 5.65 and we still see a strong volume, then perhaps I would consider changing my overall sentiment from neutral bullish to completely bullish. I still have some reservations.
Trailing Stop Loss
If you have a position in IDC, this is my suggestion. First, which is higher, your average price or the current price of IDC?
If your average price is higher than the current price, I would suggest for you to base the calculation of your trailing stop loss from your average price.
On the other hand, if your average price is lower than the current price, then you have to recalculate your trailing stop loss from the current price of the stock. You have to do that for you to get a bigger amount from your trailing stop loss.
Remember, your trailing stop loss does three Ps for you:
1. It PRESERVES your capital.
2. It will help you PROTECT your gains, if there’s any.
3. It will help you PREVENT unbearable losses.
Test Buy When Your Risk Level is Moderate to High
What if you don’t have a position on IDC yet? Is it “okay” to enter a new position on IDC?
If you are an experienced trader and your risk level is from moderate to high, I would suggest that you do a test buy between the ranges mentioned above.
But if you are a relatively new trader and your risk profile is on a low level, try to find other stocks or wait for IDC to retrace closer to its support near 4.35.
Mind you, IDC now has a moderate-risk level because of its volatility score of 75%.
I hope you’ve learned something on the second episode of EquiTalks. If you like to learn more about our services, please visit www.equilyst.com.