Good day, traders and investors. Today is Monday, March 11, 2019. Welcome to the fourth episode of our EquiTalks.
What is EquiTalks? EquiTalks is a program where I discuss one stock every trading day. I give you my technical analysis, my overall sentiment, and my trade setups.
What Are Trade Setups?
These are recommended positions or action plans for traders or investors who may already have a position in the stock that I’m going to discuss. These setups are also for those who are still in the planning stage on whether or not they will trade the name.
For those who are new to this program, I would advise that you visit our website www.equilyst.com and hover your cursor over the Learn menu. You will see the EquiTalks Video, Audio, and Note.
If you are watching this video, my team and I also convert the same video in MP3 or audio format so that you can still hear about the stock analysis while you’re driving or on a bus back home.
For visual learners, you can watch this video. Just click on EquiTalks Video.
For those who don’t want to use headsets, you can just read the summary or the transcribed version of this video. You will find it inside the EquiTalks Note.
FB Dividend Announcements
For today, I would like to talk about FB or San Miguel Food and Beverage, Inc. Before we discussed the chart of FB, I want to let you know if there are any dividend announcements.
FB had one dividend announcement but with an ex-dividend date of February 15, 2019, at 0.40 per share. By now, your cash dividend should have already been credited into your account. If not, contact your online stock brokerage firm.
My FB Stock Analysis
San Miguel Food and Beverage, Inc. or FB is currently moving at PHP109.90 per share. It broke above its previous resistance at PHP 4.00 last Thursday.
What I like about this breakout is that it happened with a substantial volume in favor of the bulls. How do I know if the volume is strong? Are there certain levels I check for me to use the adjective weak or strong?
For me, the volume is strong if it’s moving above its 10-day volume average. That’s why on FB’s volume chart, I set up my moving average (MA) length to 10. By default, I think this is set to 9.
I’m using ten because I would like to know if the current volume is moving above or below the 10-day volume average of the stock.
Based on my studies and proprietary methods, if the volume is moving above the 10-day moving average of the stock, it will be more likely for whatever direction the stock is currently moving in to continue.
For example, if we see a green candlestick and the volume is above the 10-day volume average of the stock, then for me, that ascent in price is more likely to continue. There is sustainability.
Same way, if it’s a red candlestick and the volume is above the stock’s 10-day volume average, for me, the descent in price will probably continue.
Moving Inside the Bullish Territory
As of the time of speaking, FB is already moving above the 10-day simple moving average. MACD is still enjoying its position above the signal line.
What does this mean? This is now a confirmation that FB is moving inside the bullish territory, as far as short-term time scale is concerned.
Is it also bullish in the long-term scale? Yes, it is. How did I know? I knew because the price is moving above the 200-day SMA, which is the blue line.
FB is a confirmed bullish stance both in the short-term and long-term scales because the shorter-term moving averages are all above the longer-term moving averages.
We see the yellow line first, which is above the 50-day simple moving average. The 50-day SMA is above the 200-day SMA. I am using 10, 50, and 200.
The acting support is now the previous resistance, which is at PHP 104.00. But before it broke above 104, the previous support was at 98.60.
For sure you’d like to know where do I see the psychological resistance. Why psychological and not historical?
I don’t think we can get a historical resistance above PHP 110.00 right now so we can only get psychological resistance.
What did I do to get the psychological resistance of FB? I plotted Fibonacci on my chart. The origin is on the strong support near PHP 80 per share. I extended it until the previous resistance at PHP 104.00.
The psychological resistance is now positioned at PHP 119.00 per share. That is 161.8% of the Fibonacci extension, which is considered as the Golden Ratio — 61.8% above 100.
Don’t Look for Sure-ball
Am I insinuating that FB will reach PHP 119.00 per share? I am not saying it will, but it might. We aren’t talking about guarantees in the stock market; we are talking about probabilities. Don’t look for “sure ball.”
Based on the Up Fibonacci extension, we got the psychological resistance at PHP 119.00. Its acting immediate support is now PHP 104.00.
Should it decide to bounce away from its current level, we can then expect the stock to retrace or retest the previous resistance at PHP 104.00. If it does not hold above PHP 104.00, then expect it to challenge the older support level at PHP 98.60.
A Pretty Strong Volume
However, by the looks of the direction of the price movement, we’ve already got a pretty strong volume. Today’s volume is just a few numbers of shares away from registering a whole-day volume above its 10-day volume average.
I really like the volume of FB for the past three trading days. If you have been searching for some analysts’ point of view, FB is actually one of their stock picks. Majority of the analysts believe that FB is one of the companies that would benefit in this election period since it’s in the consumer industry.
Bars Pointing North
Let’s take a look at the net foreign trade. Based on the sizes of these net foreign trade bars that we see, I think more or less, FB is in a net foreign buying state.
I see more bars pointing to the north than to the south. The bars pointing northward are taller than the ones pointing southward. I think it’s safe to estimate that FB is in a net foreign buying status year to date.
MACD is bullish, which confirms the short-term bullishness of FB as well. For the risk level with the volatility score of 46%, I’m going to assign a low-risk level on FB.
How do I know the risk levels just by checking the historical volatility of the stock?
Based on my studies:
– Low-Risk Level = volatility score is 50% and below
– Moderate-Risk Level = volatility score is 51%-70%
– High-Risk Level = volatility score is 71%-100%
– Extremely High-Risk Level = volatility score is anything above 100%
That is historical volatility, not implied volatility. If you want to know the difference, Google can answer that.
Now, let’s talk about the volume review. It is vital to check on a stock’s price-volume distribution Whenever I guide our clients here at Equilyst Analytics, I tell them, “If you came from another stock market consultancy provider who loves to give you some buy-below prices or they are a strong fan of the peso cost averaging method, take note that we hate the word buy at “any price.”
We don’t buy at any price. We buy at regular intervals but not at any price. Check specific price points.
These price points should be the ones that got the most significant volume and the highest number of trades. When you look at the bid-ask spread, you don’t buy at that price that’s at the very top of the spread. You have to check first.
What’s good about FirstMetroSec Pro is that it already automates the price-volume distribution analysis for you. In this case, we can see that the 109.00-109.10 range got the biggest volume and the highest number of trades as trading happens.
That means your order will be more likely to be processed if you’re going to position within that range instead of you trying to place your buy order at 105.00. If you don’t check price-volume distribution, you might end up positioning your buying price at an unrealistically high or low price point.
You increase the chance of maximizing your potential gains towards that stock when you know where the action is happening. If the biggest volume and the highest number of trades are happening between 109.00 and 109.90, the chances of your buying price positioned at 106.00 flat are less likely to be executed.
But if you have visibility and you know how to do price-volume analysis, then you will be advised on what to do.
In the same way, if you’re on a selling mode and you are unrealistic because you want to sell FB at 115.00,
If you could see on the volume review tab, FB has never gone above 109.9 yet. So you are unrealistic when you are setting selling price too high or remarkably higher than the intraday price of the stock.
When you are too optimistic, that decreases the chance of that transaction getting executed. So, you want to maximize your gains while being realistic at the same time. That’s one of the reasons I am a strong advocate of teaching price-volume distribution analysis to my clients.
Now, you should know why I hate the word “any” when it comes to the definition of peso-cost averaging, which is “buy regular shares of stocks at regular intervals at any price.” This definition is excellent up until “at regular intervals.”
No, we don’t at any buys. We are not blind traders. There’s a way how to identify the best ranges or price points where you should park your buying and selling price points.
Here’s another thing I like about FirstMetroSec Pro. You can see the real-time net foreign trade. With other brokers, you will have to wait until the end of the day. I think they are reliant on the EOD report of PSE as well.
Currently, FB has garnered PHP 52 Million worth of net foreign buying. That’s an extra point for the bulls. By the way, VWAP is at 109.33.
It’s a classic belief that mutual fund managers buy at the Volume Weighted Average Price or VWAP so as they do not disrupt the “organic” movement of price points.
For Equilyst Analytics subscribers, there is already a video where I explained nothing but market depth. Just log into your account and go to the Videos tab and type in Market Depth. For sure, after watching that video, you should have a data-driven basis to come up with a projection on whether the price is more likely to go up or down.
My Overall Sentiment on FB
Overall, I am bullish on FB. I would suggest that instead of relying on pure hope and prayer that the stock may hit 119.00 per share, use a trailing stop loss system on your trades.
I use the trailing stop loss strategy all the time. It gives me less stress when it comes deciding on whether I should sell now or hold some more. Go to www.equilyst.com, search for Trailing Stop Loss. Feel free to share those articles, too, if you think they are helpful.
For those who already have a position on FB, my suggestion is that you use a trailing stop loss. If you entered your position on FB below 98.6, you should already be a net gainer by now. Just make sure you know how much percentage you are willing to risk.
If your average price is higher than the current price of FB, calculate your trailing stop loss from your average price. Is that possible right now? Of course, it isn’t. But I just gave you that information in case you are trading stocks and your average price happens to be higher than the current price of the stock.
What if your average price is less than the current price of the stock? Let’s say in the case of FB; you bought below 98.00. Therefore, your average price is surely below or lower than 109.6. You should calculate your trailing stop loss from the current price of the stock.
Wait for Pullbacks
What if you don’t have a position on FB yet? Is it okay to chase the stock now all the way to 109 or anywhere near 109 apiece? For the relatively new traders, my evergreen advice for you is to just stick with the “buy-near” support strategy.
Wait for some pullbacks. Stick with low-risk stocks for the meantime. Low to moderate-risk stocks do not fluctuate like they are about to give you a heart attack.
You might say, “But, Jaycee, I heard you awhile back that FB has a low-risk level.” I know, but here’s the thing: it’s already in a game of registering an all-time high. So I would suggest you buy on pullbacks.
Now, if you are a relatively experienced trader, you can do some test buys if the volume continues to register the same heaviness or the same level of volume by the next trading day.
PVD is King
Some may ask, “What if I just buy once it breaks out above PHP119.00?” You can consider doing that for as long as you still see a heavy volume once it breaks out above 119.
If there’s a substantial volume, it means to say people are still interested in buying the stock up. But once it inches closer to 119 per share and you start to notice that volume is starting to get thinner and thinner each day, it means to say that they are already eavesdropping with each other and observing who among these traders or brokers are still interested in buying the stock at a higher price.
You know what? You can take a look at the psychology of traders by just looking at the volume and the price. That’s why price-volume distribution is king to me.
Equilyst Analytics Services
Did I say this is free? Oh yeah, you will get more when you subscribe to Equilyst Analytics.
What do you get when you subscribe to the services of Equilyst Analytics? I got you covered whether you are a short-term trader or a long-term investor or you just want to be mentored for now:
– Trade Setups for Short-term Traders
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You will have direct access to me. That’s why, for those who are sending me personal messages, know that I do my best to respond to all of you, but of course, I have to prioritize my paying customers. But as soon as I’m done with my subscribers, I answer as much as I can.
I’d also like to give you an informal announcement that we will be hiking rates soon. I think for the amount of effort that we do and that we will be doing in the coming days for our clients, I think we can only sustain our service at this level and higher if we make an upward adjustment on our subscription fees.
My goal for you here at Equilyst Analytics is for you to know how to trade independently and invest profitably.
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