Good afternoon, traders and investors. We are back in our EquiTalks program. This is the eighth episode and today is March 14, 2019, Thursday.
What do we have today? For sure, you would want to know what do analysts think about MWC.
If I remember it correctly, MWC is currently on a negative percentage change. I’ll give you my technical analysis for MWC then let’s see what my overall sentiment be and what kind of trade setups that I can recommend for you.
I’m going to cite two scenarios when I give you my recommended trade setups. One situation is if you already have a position and another is when you’re just thinking of trading the name.
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Let’s take a look at MWC or Manila Water Company, Inc.
The news about the shortage of water in Metro Manila is all over the place. I am one of the fortunate people here in the Philippines who thankfully is not affected.
I am going to give you my technical analysis for Manila Water Company, Inc.
It has one, but the ex-dividend date is March 11, 2019. It announced a cash dividend worth 0.4551 per MWC common share.
Many people still ask, “Sir, if I buy before, on, and after, will I still get dividends?” or “If I sell before, on, or after the ex-dividend date, will I get the dividends as well?”
I will answer those two questions from the vantage point of a buyer and a seller.
If you buy before the ex-dividend date, then those shares will be counted in the calculation for the dividend.
However, if you will buy either on or after the ex-dividend date, then those shares will no longer be calculated for dividends.
Now, if you will sell before the ex-dividend date, sorry, those shares will no longer be entitled to receive the dividends.
But if you will sell either on or after the ex-dividend date, then those shares will still be counted for the dividend. This is regardless if it’s cash, stock, or property dividend.
Please share this video so that other traders and investors would be educated when it comes to that topic about the dividends.
MWC Stock Chart
As of this time of speaking (3:27 PM), MWC is trading at 26 per share. It already broke down below the support near 26.40.
The breakdown came with super bearish volume. It’s more than just above the 10-day volume average.
I think this bearish direction of the price of MWC is driven by the water shortage issue in Manila. It goes to show that customers and the traders, in general, are not happy with the situation.
The Philippines is a relatively small index or exchange. Our market is still heavily influenced by the sentiment of traders.
Fundamentals do not have some “fangs” in the Philippine market. We are in a market that is still heavily influenced by the “technicals” or psychological sentiments of the people. That’s why one bad news will surely move the price around.
Immediate Support and Immediate Resistance
Now that the previous support broke down, the acting immediate support is positioned near 25 per share. If it breaks down further, that will make 23.4 as major support.
The acting immediate resistance is the previous support, which is 26.40. If it bounces away and regains its position above the past support, then it will make 28.25 as the immediate resistance once again.
But for now, it’s tough to say that MWC will regain its position about 26.4 by the size of this bearish volume bar. This is the situation unless a strong, positive catalyst will appear on TV tonight, which may reverse the negative sentiment coming from traders and make into a positive one.
If there’s none, the probability for the price to continue its down aggression is more likely to happen.
Net Foreign Trade
The net foreign trade for the 2019 year to date is net foreign selling still.
MACD already crossed below the signal line since the price started to bow down below the 10 SMA on March 11, 2019. Expect MACD to increase the distance below the signal line as the rate continues to go lower. That’s automatic; there’s nothing magical about that.
MWC has a low-risk level because of its historical volatility score of 28%. Again, not because it has a low-risk level, it means you should buy it right away. I strongly suggest that you should evaluate the situation.
Not because you see a big dip, it is an automatic buy right away. You have to analyze first: can the stock price go lower from here?
If you see a significant probability for the price to go lower than where it is at the moment, then postpone your plan to buy right away. Wait for the price to draw closer to that support level. Once it hits that support level, re-evaluate the situation.
When you re-evaluate, don’t just look at the daily chart, the net foreign transactions, MACD, or historical volatility. I suggest that you add on your list the price-volume review. This is what I call Price-Volume Distribution Analysis.
MWC’s current price is 26 per share, down by 3.70%. It has a net foreign selling worth PHP 52 million. Even foreign investors are not happy with MWC.
Intraday low is at 25.5; intraday high is at 27 per share. Take a look at this: the current price is at 26. Did you know that the current price got 70% of today’s volume? It looks like 26 is an in-demand price point, unfortunately, when it comes to selling.
The next price points that got relatively sizeable volume are 25.9 and 25.95. If you’re going to combine those three price points to form a range, then I would say keep an eye to the 25.9 to 26 range.
If we will calculate the percentage of volume registered within that range, that’s 90% of today’s volume.
Evaluate and Re-evaluate
Am I saying that you should buy within that range? No, not yet. As I’ve said, you have to re-evaluate the situation.
For example, during tomorrow’s open, if you see that the price of MWC starts at 26 per share, then you still observe. If you see that the price is going down from 26 to 25.95, then I would say you make a downward adjustment on the range you have to monitor.
So, if you are one of our clients at Equilyst Analytics, you can post a request in our Private Clients Forum for the latest Price-Volume Distribution chart and analysis and the most recent reading on your Top 10 Players’ Sentiments.
That’s how we evaluate and re-evaluate the situation. We don’t buy just because the support has been hit or because everyone translates the dips as buying opportunities.
Yes, they could be, but we want to increase the probability of us to profit more than the profit that buy-below price fanatics would get.
Buy Regularly But NEVER at Any Price
Here, we do not follow the Buy-Below Price strategy. We are also not a fan of the Peso-Cost Averaging. We like buying at regular intervals when it comes to long-term investing, but we don’t buy at any price.
We regularly buy on long-term investing, but I don’t tell my clients to buy at any price because we know how, why, and where to ask the price-volume distribution so we can identify the price range that got the biggest volume and the highest number of trades.
I would advise that you check out EquiTalks Episode 7. I put in more time discussing the relevance of buying within a certain range instead of whatever price you see on the Ask spread.
I also discussed why you might be able to earn more than those investors who are following the Buy-Below Price strategy or Peso-Cost Averaging.
Aside from that range, I would also recommend that you wait for a pullback near the immediate support at 25. I did not say buy at that level.
My overall sentiment for MWC is bearish. If you don’t have a position on MWC yet, well done. Don’t rush, wait near 25.
If you already have a position on MWC, let’s say you entered the position when the price was below 25, and you have a trailing stop loss system, then you should have already locked in your gains.
If you have a 5% risk tolerance, you should have already sold on December 28, 2018, when MWC hit a high of 28.25. Let’s say you have a risk tolerance below 5%. When MWC hit 26.8, you should have already sold your position last January.
That’s the right thing about a trailing stop loss. Your gains are locked in, your risk is calculated, and you don’t trade more than what you cannot afford to lose. That keeps your capital intact.
I always say that the trailing stop loss does three Ps for you:
- Preserves your capital
- Protects your gains
- Prevents unbearable losses
For our Equilyst Analytics subscribers, I have recorded a video, and I have written a newsletter in Filipino explaining what the trailing stop loss is. I also gave the screenshots on how you use it in actual trading. I hope you review that. You will see all those things when you log into your account.
What if you bought MWC was at above 27? I still hope you have a trailing stop loss strategy. I know you will be selling at a loss, but at least, you are not going to incur losses more than what you can handle.
Every Day Is Not Christmas
Risk management — trading is not always about winning. That explains why Christmas day is only on December 25. It isn’t Christmas every day. That’s part of being a profitable investor.
Becoming a profitable investor or trader does not mean having profits every single trade. Being profitable in trading and investing means still having some losses but your gains outnumber, outpower, outweigh your losses.
I do hope you’ve learned something from my technical analysis on MWC.
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I’ve made it a point that every single word here is written in layman’s terms. Just in case our version of layman is still not layman to you, do not hesitate to send us an email or to contact us on Facebook. You can ask us questions.
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