Megaworld Corporation (MEG) Technical Analysis
Megaworld Corporation has struggled to get past its 10-day simple moving average (SMA) for the past 21 trading days. However, I don’t see any concern on its daily volume since it regularly registers a daily volume higher than 50 percent of its 10-day volume average.
The foreign investors influence this downtrend by a certain degree since there are only 17 trading days for the past 87 trading days this 2021 that they registered a net foreign buying by the end of the trading day. They’re net sellers year-to-date.
Despite staying in the downtrend channel, Megaworld Corporation maintains its low erraticity level due to its 10-day historical volatility score of 40 percent. But let me remind you that having a low erraticity level is not a signal that automatically makes the stock buyable.
There are 6 parameters that I check when I look for a confirmed buy signal regardless of whether we’re talking about a blue-chip or index stock, or a non-index stock. So let’s find out the status of these six parameters according to my Evergreen Strategy 2.0.
Parameter 1: Megaworld’s last price is moving below its 10-day SMA. That’s bearish.
Parameter 2: MEG’s moving average convergence divergence (MACD) is moving below its signal line. That’s bearish, too.
Parameter 3: The last price of ₱2.82 is lower than Megaworld’s volume-weighted average price of ₱2.8817. Again, that’s bearish.
Parameter 4: Megaworld’s last volume bar is higher than the 50 percent of its 10-day volume average. That’s bullish.
Parameter 5: MEG’s Dominant Range Index is bearish.
Parameter 6: MEG’s Market Sentiment Index is bullish.
Dominant Range Index
Dominant Range Index: Bearish
Last Price: ₱2.82
Intraday Low: ₱2.8200
Intraday High: ₱2.9900
VWAP: ₱2.8817
Dominant Range: ₱2.82 – ₱2.86
Market Sentiment Index
Market Sentiment Index: BULLISH
66 of the 87 participating brokers, or 75.86% of all participants, registered a positive Net Amount
55 of the 87 participating brokers, or 63.22% of all participants, registered a higher Buying Average than Selling Average
87 Participating Brokers’ Buying Average: ₱2.88377
87 Participating Brokers’ Selling Average: ₱2.89868
45 out of 87 participants, or 51.72% of all participants, registered a 100% BUYING activity
6 out of 87 participants, or 6.90% of all participants, registered a 100% SELLING activity
Synthesis
Megaworld Corporation did not get a perfect all-bullish rating for the six parameters I mentioned. The bullish volume and Market Sentiment Index cannot salvage them all.
So, what should you do if you already have MEG in your portfolio? First off, check if your trailing stop is intact. If it is, you have the option to hold your position as long as the stock has not shown a bearish Dominant Range Index and bearish True Market Sentiment Index (again, as long as your trailing stop remains intact) for three consecutive trading days. Save your buying power for now. Use it once there’s a confirmed buy signal. You may ask for MEG’s latest Dominant Range Index and Market Sentiment Index in our online discussion board on our website so you can synthesize on your own if you’re one of our clients.
On the other hand, should you enter a new position now if you don’t have it yet? Do not hurry. The downtrend is still more likely to re-test the immediate support near ₱2.50. For me, it’s better to wait for MEG to recover some more above its immediate resistance near ₱2.90. Once it breaks out from that resistance, re-check if all six parameters have turned bullish.
Remember to review the course manual of my Evergreen Strategy in Trading and Investing in the Philippine Stock Market 2.0 because there are processes you need to do before you buy within the dominant range once a confirmed buy signal is spotted. In addition, there are flowcharts in that manual that you can easily follow.
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