|DURATION||DISCOUNTED RATE TODAY - October 21, 2019||REGULAR RATE|
In today’s episode, the first stock that we will be talking about is Metro Pacific Investments Corporation or MPI.
Let’s find out what I see on the chart of MPI so you can play this stock should you want to trade MPI. This way, you will have a data-driven basis regarding your investment decision for MPI.
Today, MPI closed at 4.96 with an intraday high of 5.04 and an intraday low of 4.76. I like this ascent in the price of MPI because its volume is way above its 10-day volume average.
What’s Good About It
When I see green candlesticks coupled with a towering volume, it tells me that the ascending price is highly likely to continue. Finally, after two weeks, we are seeing it above the 10-day simple moving average.
However, as far as the alignment of these moving averages is concerned, I think MPI still has a lot of things to do. Why? It is because the longer term moving averages are still above the shorter term ones.
We want to see the opposite if we want to see MPI continue moving inside the bullish territory based on both long-term and short-term perspectives.
Although it is bullish in the short term, MPI has to pierce or break out above 5.08 for its bullish ascent to become sustainable. But, of course, I want its ascending price to always have a volume that is above its 10-day average if possible.
Another good thing that I see on the price action of MPI today is the positioning of the MACD line. I think it is already poised to cross above the signal line.
When the price is above the 10-day simple moving average and MACD crosses above the signal line, it’s an indication that MACD is confirming the short-term bullishness of the price of the stock. Right now, a bullish formation is spotted on the histogram of MACD.
MPI’s Historical Volatility
Looking at the historical volatility of the stock, I can tell that MPI still maintains its low-risk level. Its volatility score is about 48%. The moment the volatility score goes beyond 50%, then I would say MPI would have a moderate-risk level. If it goes beyond 70%, that’s already a high-risk level.
Anything above 100% is an extremely high-risk level. Right now, MPI is in the low-risk level status.
Net Foreign Buying
Let’s notice the participation of the foreign investors on MPI. Today, foreign investors registered a significant net foreign buying amount of PHP 102 million.
It’s good to see that after two months, MPI is one of those stocks that was battered by the outflow of foreign funds. I think this is the biggest net foreign buying registered on MPI year to date. The second biggest occurred on January 14, 2019, which totaled to PHP 97 million.
On the second week of January 2019, we see three tall net foreign buying bars. However, the following week showed topsy-turvy participation coming from foreign fundees. More or less, it’s a net foreign selling for MPI year to date.
But it is hard to tell by just looking at the net foreign trade histogram. That’s where we are at as far as today’s net foreign trade is concerned — it’s a net foreign buying day today.
The major support on MPI’s chart is at 4.56 while the immediate resistance is at 5.08. Should this ascend in price continue, it would increase the likelihood of breaking out above 5.08, which is a precursor to 5.53. The line, which is close to 4.8 or 4.85, is the intersection between those three simple moving averages. These are the 10 SMA, 50 SMA, and 200 days SMA.
Most Voluminous Range Yet
Let’s take a look at the volume review of MPI. Why do we want to see this? This is for us to have a data-driven basis on which particular price point or range of prices we should be monitoring MPI. In this price-volume distribution analysis, I discarded those huge cross trades.
In today’s trading, the most voluminous range is between 4.94 and 5.0. Remember, MPI closed today at 4.96. If you would like to consider trading the name tomorrow, I suggest that you monitor 4.9 to 5.0. Again, this range got the biggest volume and the highest number of trades today.
The volume-weighted average price (VWAP) is at 4.95, which is very close to its closing price of 4.96. For non-Equilyst Analytics subscribers to understand, it is a common practice of mutual fund managers to buy near the VWAP, if not on the VWAP itself. This is so as not to “pollute” the organic movement of the prices during the day.
Stock’s Cash Dividends Update
Now, let’s take a look at the dividends. There is a cash dividend worth PHP 0.076 per share with an ex-dividend date of March 15, 2019.
Usually, traders and sellers ask me, “Will I get dividends if I buy or sell on, before, or after the ex-dividend date?” Here’s the thing: every single MPI share you buy before March 15, 2019, is entitled to the cash dividend. Now, if you will buy on or after the ex-dividend date, all of those new MPI shares will no longer be entitled to this cash dividend.
How about the sellers? If you will sell before March 15, 2019, those shares you will sell are no longer entitled to receive the cash dividend. However, if you will sell the shares on and after the ex-dividend date, those MPI shares will still get cash dividends.
Overall Sentiment on MPI
My overall sentiment on MPI is actually bullish. My main catalyst for this bullish sentiment is the support coming from the volume and the strong buying appetite from the foreign investors. Another catalyst is the position of MACD, which is now poised above the signal line coupled with that low-risk level of MPI with its volatility score of 48%. It is still a low-risk stock.
Trade Setup Recommendations
If you have MPI and your average price is lower than 4.96, I would suggest that you calculate your trading stop loss with the current trading price. However, if your average price is higher than 4.96, then I would suggest you calculate your trading stop loss from your average price.
What if you don’t have a position on MPI yet? Is it “safe” to play this stock by the next trading day?
There is no such thing as “safe,” not just in the stock market but also in any type of investment. I think it’s better to ask: if I will enter a new position on MPI, is my risk level aligned? Am I happy about the reward-to-risk ratio that I’m seeing right now?
If you would like to bank into my bullish sentiment on MPI, then my recommendation is that you just do a test buy or buy a small trench first. Never go all in.
If you will do a test buy in MPI tomorrow, monitor the stock’s price movement within the first 15-30 minutes. Don’t just buy at any price. You have to monitor that range I have mentioned a while back, which is between 4.94 and 5.0.
This is not a stock recommendation. This episode is for informational purposes only.
I am Jaycee De Guzman, founder and Chief Executive Officer of Equilyst Analytics, Inc. My mission is to simplify stock trading and investing in the Philippine Stock Exchange using my proprietary evergreen strategy in stock trading and investing. My vision is to level up at least 1,000,000 Filipino stock traders and investors by 2030. I will make it happen.
|DURATION||DISCOUNTED RATE TODAY - October 21, 2019||REGULAR RATE|