The Metropolitan Bank and Trust Company (MBT) registered its main support near 63.80 while its major resistance is positioned near 84.60. On the other hand, there seems to be a build-up of a mid-term support at 70.40, which was formed in third week of May 2019.
If you will stretch your daily chart farther to the left, you will see that it has been moving in a downtrend channel since the opening of 2018. It made a rebound in November 2018 but the farthest it reached was somewhere near 84.60.
The last time I saw the foreign investors doing some aggressive accumulation of MBT was in December 2018. If not because of the Net Foreign Buying worth P7 million that was registered last May 20, 2019, the foreign investors would have been on their 42nd day of consistent Net Foreign Selling. Needless to say, these deep-pocketed investors are not interested on MBT at this time.
The three simple moving averages on my chart (10, 50, 200) are bearishly aligned also.
If there’s anything that’s “good” on the chart of MBT, that’s the low-risk level that I see from its historical volatility score of 24 percent.
This low risk level does not automatically mean that long-term investors can jump into the idea of buying the stock.
Forget About Buy Below Price and Peso-Cost Averaging
I don’t know with other stock market mentors who basically rely on Buy Below Price and peso-cost averaging, but as far as I am concerned, I don’t encourage blindly entering a new position in any stock just because it has a low-risk level.
You got to check first if a potential rebound is already in place or the downtrend in price is still more likely to continue.
If the risk level of a stock is low based on its historical volatility but the descent in price is still more likely to continue, why would you buy now?
If that doesn’t make sense to you, I don’t know what will. This is the reason why I passionately encourage my subscribers to challenge what they learned about peso-cost averaging and Buy Below Price.
Peso-cost averaging and Buy Below Price do not care about the likelihood of a sustainable descent in price – and that’s what I don’t like about these two.
So, is the descent in price more likely to continue?
Continue reading to find out.
Trade-Volume Distribution Analysis
It’s a red candlestick today. The closing price is below the volume weighted average price of 71.77. It’s a red volume that’s higher than the 10-day volume average of MBT. The dominant range is closer to the intraday low than the intraday high. These four criteria confirm the bearishness of today’s price action and the likelihood of seeing a continuation in MBT’s descent in price.
Most Traded Prices: 72, 72.05, 72.1, 71.5, 71.95
Most Voluminous Prices: 71.5, 72, 71.6, 72.05, 71.95
Market Sentiment Analysis
You might be wondering, “Oh, so nearly 40 percent of today’s brokers had a 100% buying activity on MBT? Then why did this stock plummet?”
Spend 1 to 2 more minutes on my Market Sentiment Analyzer chart. The answer to your question is biting you on the nose and you don’t even notice.
Yes, 17 out of 45 trade participants registered a 100% buying activity on MBT today but only 2 out of 17 made it in the top 10 players’ list. The other 15 have an individual total turnover value that is less than the individual total turnover value of the ones in the top 10’s list. That’s why their bullishness was out-powered by the bearishness of the big ones in the top 10 players’ list.
What only matters to me is the overall activity of the top 10 trading participants when it comes to doing a market sentiment analysis. In this case, I would say that the top 10 trading participants don’t have a consensus agreement yet that it’s time to significantly buy the dip.
If these big boys are not in a hurry to buy the dips, it’s all the more that most of us should not hurry, too.
Am I making sense, folks?
Don’t answer. It’s a rhetorical question. 🙂
Trading participants of MBT with a 100% Buying and Selling Activity as of Jun-11-2019 at 03:30PM:
17 out of 45 participants or 37.78% of all participants registered a 100% BUYING activity
7 out of 45 participants or 15.56% of all participants registered a 100% SELLING activity
Top 10 Players’ Buying Average: 71.8164
Top 10 Players’ Selling Average: 71.7490
Overall Sentiment and Recommendations
I am bearish on MBT in the long-term.
Technically, MBT looks bullish to me in the short-term because the conditions of my 10SMA-MACD combo have been satisfied (the price is above the 10SMA and MACD is above the signal line). But since the 4 criteria that I monitor (which I mentioned above) are all absent on MBT today, I don’t recommend entering a new position yet. I need my 4-point criteria to re-affirm the bullishness of my 10SMA-MACD combo for me to have a high-conviction call to enter a new position on MBT.
Now, if you bought MBT sometime in the last quarter of 2018 when it was trading near P63.00 per share, your trailing stop loss should have already been hit by now.
Whether you do short-term trading or long-term investing, you must be using a trailing stop loss.
If you don’t have MBT but are planning to have it, I suggest that you calculate your reward-to-risk ratio first before you decide to do a test-buy within the most traded and most voluminous prices.
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