Will You Wait for the 78.6% Fibo?

I made a wrong call last 22 June. I mistakenly thought that the index would return to its price prior to March 2020 fall due to COVID-19 panic. I was thinking of holding ALI, DNL, and DMC until December. But when I saw the index price action last 13 July, I changed my mind. I immediately disposed all the index stocks that I was holding except for two stocks.

  

Now that I think fear has already tempered much of the bullish sentiment for the past 7 to 8 trading days, I am now waiting for the index to find its low. Once it establishes its low and starts to resume its 25 May rally, I think I will just focus on $DNL. Though this stock is not an index member, its price action usually moves with it. I will just wait if the index will respect its 61.8% Fibonacci @ 6,455 or will it drop deeper to 78.6% @ 6,288?  

Time to Explore the Crypto Market

The first time I saw bitcoin was in 2009. I thought it was token for video games. Following a gold bug like Gary North, though I saw it soar few years after, I never bother to dig into the crypto market except just having a superficial information about it. However, two weeks ago when I went home to Quezon City, my eldest son asked me 7,000.00 for his Axie Infinity account. I told him that I don't have the amount and besides I don't want to risk money into something I do not understand. And then he talked about SLP (Smooth Love Potion). I didn't know that time how the two connect. 

Being a stock trader, my instinct was to search for both Axie Infinity and Smooth Love Potion in crypto market. Observing their charts, I told my son that if ever he was considering to enter either of the two, I would suggest SLP instead for at that time, 03 July, the price of Axie Infinity was already high and as for SLP, it was just starting to rise after a two month consolidation. I only realized later that what I was telling my son about trading Axie and SLP didn't make sense to him, for he was talking about a different way to earn from these names, and that is by playing the game. 

And so I started searching the web only to find our later that the two names were actually joined in one game. And what surprises me is that this game is connected to crypto market. And so we have two trending things here combined into one, gaming and crypto currency. 

In the following days, many of my friends were asking me question about Axie Infinity. I just shared with them my initial understanding, but I also told them that I still didn't know many things about this phenomenon. 

And so as I researched on the subject, these are the things I found out:

1. It went viral first in the Philippines in Cabanatuan due to COVID-19 and the lockdown. People were desperate looking for alternative source of income. It so happened that one guy stumbled with this game and shared it to his relatives and friends. 

2. Among 300,000 players all over the world, half of it are Filipinos. It was even reported that gamers are raking 2B just in one month. That is equivalent to average total remittances of all OFWs living in Hong Kong.

As I dig deeper into crypto currency, the name Ethereum came out. I was reminded early in 2012 when a master trader in one FB group was promoting it, but I dismissed it. And then came DeFi, Polkadot, Caradano, Solana, CryptoPunk, Sorare, Hashmasks, and among them Axie Inifnity. And so I decided to study these names and post my findings on this blog. From this time on, my trading focus will no longer be just on the Philippine stock market, but the crypto market.    

Selected Uptrending Stocks and Watch List

 Stock                                          Value                Entry Price

$ABA                                        14.66M

$ACEN                                     87.99M

$ALI                                         69.35M

$ALLHC                                  22.12M

$APO                                          9.09M 

$BHI                                        96.31M

$CHP                                         7.76M

$CPG                                       24.07M

$DFNN                                      8.28M

$DMC                                      97.73M

$DNL                                       19.16M

$EVER                                     92.38M            0.4550 to 0.4650

$GREEN                                  72.63M

$HLCM                                    13.13M

$HOME                                    51.98M

$NIKL                                      36.09M 

$PHES                                      18.53M

$PX                                           14.04M

$RLT                                           2.97M

$TBGI                                        4.64M            0.45

$ZHI                                           8.15M            0.23

WATCH LIST

$APL                                        21.02M

$BSC                                        24.68M

$DITO                                     61.47M

$FLI                                          2.59M

$FNI                                          3.64M

$FRUIT                                     6.87M

$MAC                                      13.39M

$MEG                                      53.62M

$MM                                        26.37M

$NOW                                      43.40M

$PCOR                                     22.78M

$PHA                                        10.01M            1.57

$SSP                                          36.45M

$DNL Consolidating for 24 to 26 Weeks

Sometimes it's really interesting to observe similarities in preceding price action of a particular stock. Take $DNL for instance. You will observe that it took the stock around 26 weeks to consolidate starting from 27 April up to 19 October 2020 before exiting its Darvas box. In its current breakout from its box, the stock took 24 weeks to exit after consolidation from 11 January to 14 June. 

Observe also the length of the rally after the breakout. The stock was in an uptrend for 8 to 11 weeks gaining around 42.13%. If similar movement will follow the recent breakout, expect that the stock will have a more or less 8 weeks or 2 months run. A price target of 11.29 will give you similar 42% gain as the previous breakout. However, in order to achieve that, the immediate resistance @ 9.72 must first be broken. For long-term holders, watch out for the resistance @ 12.02.   

 

Enter $DITO @ 8.56

 

$MEG

 

A candidate for trend reversal? Or will it revert to its previous base? Note that the stock keeps on making a series of higher lows and higher highs for 5 consecutive days despite strong foreign selling.  

It's Index Play!

Last week of May was the beginning of index play! If you were not able to catch up with that 3 week rally, you now have your second chance to join the resumption of the run. After 3 to 7 day correction depending on your preferred stock, it appears that the index stocks are preparing to resume its uptrend. 

 Taka a look @ $ALI's weekly chart, the stock after rallying for 9 months from March to December 2020, it retraced for 5 months until May 2021 and bottomed @ close to 50% Fibonacci @ 30.77. 

Turning to its daily chart, the 3 week rally encountered resistance @ 38.35 and retraced near the 38.2% Fibonacci @ 35.70. Resuming the uptrend, we are now anticipating that after breaking 38.35, the next resistance will be @ 42.30. 

As for the second stock in my Watch List, $DNL, the exit from the Darvas box was confirmed last 16 June. If this breakout is legitimate, most likely the price will return to its pre-pandemic level. Resistance 1 is @ 9.72. Resistance 2 will be @ 12.02. If you were able to enter this stock between 7.94 to 8.00, that is already ideal. 

As for $DMC, you will see that the stock is in an uptrend. However, after breaking the 6.27 resistance and touching 6.70, the stock retraced for 2 to 3 days and bottomed @ 6.02. As you can see, the stock is trying for the second time to break the 6.27 resistance. Once successful, the next target will be to revisit 6.70 again. Resistance 1 @ 7.20 and resistance 2 @ 9.31. 

Finally, as for $MEG, the stock is still in a downtrend line. After revisiting its support @ 3.01 yesterday, today it made a higher low and a higher high. Support 2 is @ 2.59. The stock has to break that trendline between 3.27 to 3.20 for it to have a confirmed trend reversal. Once broken, immediate resistance is @ 3.77 area. Decision for now is just to stand by and wait for an entry point. 

Changing My Outlook on PSEi

 Ending 2020, I had a very bearish view on PSEi. I was expecting that the index would even fall below the 4,000 low of March 2020. But after reviewing my chart, I had a change of mind. Perhaps, this change is secondarily for technical reason and primarily due to the change in market sentiment. 

As you can see in this 6-month chart, it seems that cycle Wave II had already been completed last March 2020 and PSEi now is forming Cycle Wave III. By the way, I failed to include in my chart that the January 2018 high @ 9,000 where Wave 5 ended is part of Cycle Wave I. Cycle Wave II ran for 27 months from January 2018 to March 2020. And so if this analysis is correct, we are now witnessing the early stage in the formation of Cycle Wave III. 

In this weekly chart, you will observe three things:

• Support @ 6,200 area
• Resistance 1 @ 7,400 area, and
• Resistance 2 @ 8,400 area.

As you can see in this monthly chart, the current trend is shifting from a downtrend to an uptrend. For this analysis to be valid, PSEi must break that January 2021 high @ 7,468. 

This weekly chart shows that the rally from March 2020 to January 2021 retraced only down to 38.2% Fibonacci close to 6,100 area. If this analysis is correct, we are now witnessing the formation of Primary Wave 3 within the Cycle Wave III. 

As for the daily chart, we can see the immediate support @ 38.2% Fibonacci @ 6,674. Checking the Fibonacci indicator on the left side, you will observe that the resistance for PSEi is at 61.8% Fibonacci @ 6,920, but the actual resistance is at 7,000 area. Learning Fibonacci not only in terms of retracement, but also in terms of setting target for taking profit, the indicator though not exact, it is at least close to the actual resistance. Checking the Fibonacci indicator on the right side, you will see that PSEi's actual retracement is @ 23.6% Fibonacci exactly @ 6,798. That's impressive! If this support will be respected, then we will see that after three days of pullback, the bulls are anticipating the resumption of an uptrend.

What is the meaning of these charts in you portfolio? This to me means that I should devote greater amount of my buying power more in trading index stocks than the penny and speculative ones. If you are not an active trader, then just park your money with solid issues such as $ALI, $DNL, $DMC, and $MEG. You can also consider $MBT, $AP, $JFC, $MONDE, and $MPI. Both the technical and fundamental analysts of COL Financial are very positive on these stocks.     

12 Most Requested Stocks

Just finished attending a webinar hosted by COL Financial. What I like the most in this webinar is the discussion on 12 most requested stocks. The reason I like it is due to the way these stocks are evaluated both from the technical and fundamental perspectives. Six stocks that are included in the most requested stocks are part of PSEi: MEG, ALI, MBT, AP, JFC, and MPI. The remaining six are popular in the market, which include ACEN, DITO, MM, DDMPR, MONDE, and APL. During the Q & A, DNL was added that both the technical and the fundamental analysts would consider it in their top three stocks. 

Both analysts are positive on the following stocks: ALI, MBT, AP, JFC, MONDE, MPI, and DNL. On the other hand, they don't like DITO, MM, and APL. The technical analyst is positive on both ACEN and DDMPR, but the fundamental analyst doesn't like them. As for MEG, basing on its current chart, the technical analyst is negative, but the fundamental analyst considers it very attractive. 

With all of these insights, I am updating my Watch List: ALI, DNL, DITO, MM, APL, and MEG. I agree with the insights of the analysts concerning ALI and DNL. As for DITO, MM, and APL, considering the warning of those experts, I think, I will still trade them, but I will be extra cautious. As for MEG, it appears to me that fundamentally, the stock is solid, but technically, I need to wait for the right time to buy.  

   

$ALI

$ALI @ 31.70
 

$PSEi - Supports

Support 1 - 6,251

Historical Support 1 - 6,194

38.2% Fibonacci - 6,136

Support 2 - 5,890

50% Fibonacci - 5,724

Historical support 2 - 5,678

Historical Support 3 - 5,396

61.8% Fibonacci - 5,323

How to trade these supports? Consider these supports if you plan to pick up any index stock. Or better check the chart of the specific stock you want to pick and study its supports. This is where patience is tested. There are only 30 stocks in PSEi. Choose the one that outperforms the others. Potential candidates include $AGI, $FGEN, $ICT, and $LTG.  

 

$RCI

 

Analysis:

A/D - The price is static at the floor and at the same time A/D seems stable at the high. Does this suggest an existence of an ongoing accumulation?

PEI - Static too

RSI - Very weak @ 37.88

MACD - Also static

As for relevant information from public disclosure: 

• RCI signed a put option agreement for a maximum commitment of 800M as a fund-raising option.
• Restructuring existing loan agreements totaling 2.9B to provide stability and working capital for operation.
• Quarantine facilities.
• Coconut subsidiary achieved double digit revenue for the 3rd straight year.
• In organizational or leadership transition.

$FRUIT

 

Analysis:

EWT - Forming Wave 3

OLHC - With higher low and higher high

Volume - 8.02 million higher than previous trade

Psychology - No euphoria yet. 

One of the Keys to Profitable Trading

 "You've got to know when to hold 'em
Know when to fold 'em
Know when to walk away
And know when to run" - Kenney Rogers 

Is it now time for gold stocks to resume their rally?

 Looking XAUSD from weekly chart, the price bar is now entering the floor of the uptrend channel:

And at the same time, looking at it from daily chart, the price is not about to exit the downward channel:

$PHES and others

 $PSEi - First pull back, after three consecutive days of making green candlesticks.

$PHES - COL now has become a big net buyer buying 24.5 million shares @ 0.53 after being a net seller for five consecutive trading days. Buyers and sellers of this stock are very weak since 23 March, but it has a sudden and unexpected turn today. See what an SRO disclosure can do!

"Despite the negative economic effects of the pandemic, there will be continued demand for housing as the vaccine rollout is made. Hence, Philippine Estates Corporation aims to expand its inventory of projects through the acquisition of land in selected areas where economic growth is expected to show resiliency (i.e. Bulacan and Cavite). In this regard, the board of PHES has approved to undertake a Stock Rights Offering ("SRO") to raise capital for land acquisition." Source: PSE Edge

Only Goldstar is the solid buyer purchasing 3.8 million shares @ 0.54. Both Triton and HDI are net sellers selling 7.3 million shares @ 0.55 and 4.2 million shares @ 0.55 respectively. 

The stock opened @ 0.50 but ended exactly at the low @ 0.4750 after climbing up to 0.60, a typical "pump and dump." 

If you want to enter this stock, you have three options: (1) Wait @ 61.8% Fibo = 0.4650, (2) Wait @ 78.6% Fibo = 0.43, and (3) Wait @ Support 1 = 0.3950. 

$FRUIT - This one really looks good and very promising. The price now is at MA 200 with a volume of 9.06 million higher than the previous trade. All four indicators seem to point at the continuation of a long-term uptrend. 

$RCI - This stock looks very silent. The price is tight and the volume is drying up, 962 thousand lower than the previous trade. 

Looking Good So Far

Looking at PSEi from four different technical indicators, its movement seems to indicate a reversal in trend. That doji two days ago appears to be a reliable signal. This time, I want to take a look at PSEi and two other stocks on my watch list using Accumulation/Distribution Indicator (A/D), Price Exhaustion Indicator (PEI), Relative Strength Indicator (RSI), and Moving Average Convergence Divergence (MACD) Indicator. 

PSEi looks good in all four indicators mentioned above. 

In the case of $FRUIT, the volume is not impressive, but at least it made a higher high today. Its A/D looks good too, as well as its PEI, RSI, and MACD.  

How about $RCI? Its A/D appears static, but the PEI, RSI and MACD are promising. Add to it that the stock today made a higher high @ 1.10 and with a volume 3.15 million higher than the previous trade. 

A Potential Bullish Abandoned Baby in the Making

This Investopedia article describes a bullish abandoned baby with the following characteristics:

1. It is a pattern consists of three price bars that indicate a trend reversal.

2. The first price bar is red showing a huge sell-off.

3. The second price bar is a doji formed from a gap down indicating indecision.

4. The third price bar is green showing that the bulls have regained control.

5. However, some technical analysts allow variations in this pattern such as:

        a. The doji did not gap down

        b. The appearance of more than one doji

If PSEi will have a green price bar tomorrow, that will complete the pattern and that would signal that the current sell-off is about to reverse.  

How about $BSC, $PHA, and $APL? Though their price bar today isn't a doji, could they pass the test of variations?

Reasons Why I am Buying $FRUIT

The technical reasons why I am buying $FRUIT:

1. The price now is at its Support 1 and 200 MA. 

2. There is an A/D divergence. Though the price is still in a downtrend, there is an ongoing accumulation or a buying pressure and I am expecting a potential price reversal to the upside is coming.

The fundamental reasons why I am buying $FRUIT:

The company published a press release last 16 March containing the following positive reports:

1. Despite the challenges caused by the pandemic, the company is determined to keep its aggressive product expansion and community store rollout.

2. "The number of its community stores is expected to reach 50 within a month, on track to hitting 100 before the end of 2021."

3. The company "also recently launched its line of Fruitas Pure 100% Cold Pressed Juices naturally made from fresh fruits and vegetables that contain high amounts of nutrients, vitamins, and minerals." In short, they want to "amplify the health benefits" of their key products.

4. "Within the next few weeks and even with the surge in a number of COVID cases, the company will open Soy & Bean community stores in the cities of Las Piñas and Marikina and its first franchised community store in Rizal." 

5. The company is also "using its community store network to expand its delivery service, making CocoDelivery available through its Soy & Bean community store in McArthur Highway, Angeles City, Pampanga to serve the city and neighboring towns."

From Business World: Fruitas rolls out new product lines and community stores

Applying A/D Indicator to PSEi and Stocks in My Watch List

What is the A/D indicator? What does it tell us?

In this article from Investopedia, here are the key takeaways you can learn from the A/D indicator: 

1. A/D uses volume and price to determine whether a stock is being accumulated or distributed.

2. How will you know that the volume and price indicate either accumulation or distribution?

3. When the price is rising but A/D is falling, it suggests that there is not enough accumulation or there is a selling pressure or distribution going on. This indicates that a possible decline or price reversal is approaching.

4. On the other hand, when the price is falling but A/D is rising, it suggests that there is an ongoing accumulation or a buying pressure and a potential price reversal to the upside is coming.

5. Another way of describing the relationship between volume and price as indicated by A/D is that this indicator shows the influence of supply and demand on price movement.

6. Moreover, A/D is an indicator to identify divergence between the price of the stock and volume. As such, this indicator helps identify the trend, its strength, and potential reversal.

7. Ideally, a rising price should be accompanied by a rising A/D to indicate a confirmed uptrend whereas a falling price accompanied by a falling A/D indicates the continuation of a decline.

8. When the price closes near the high and has a high volume also, A/D will have a big jump.

9. However, if either the price closes near the high but the volume is low or the volume is high but the price closes near the low, A/D will not move as much.

10. A/D as an indicator for a forthcoming reversal requires the use of the chart itself. On its own, it is not that reliable for anomalies in price action happen most of the time such as a gap down with large volume but closing near the high. In such cases, the indicator gives a false signal of an uptrend while in reality, the stock has gapped down.

If we will apply the above insights to PSEi, this tells us that though the price of PSEi dropped 2.94% last Friday, its A/D is still up but showing weakness. Could this indicate a resumption of a decline?

In the case of $PHES, the A/D indicator shows that both the volume and the price are moving in the same direction. We still need to wait for a divergence to indicate a potential reversal. 

How about $LODE? This stock too based on its A/D, both the price and the volume are moving down. 

How about the two gold stocks, $PX and $APX? Both their A/D are flat at the low. Based on the relationship between volume and price movement, these two stocks are more positive. The only difference is that $PX price is consolidating at the middle of its price range while $APX is still in a downtrend. A potential divergence could appear any time soon. 

Among the stocks in my watch list, based on the A/D indicator, $RCI & $FRUIT are the most promising. Though their prices are still in decline, their A/D indicators are consolidating to the upside.  

Lastly, let us take a look @ $BHI. If its A/D indicator is really reliable, it shows a divergence between its rising price and its falling A/D line. This suggests that there is not enough accumulation to support its price increase. There is a selling pressure or distribution going on. A possible decline or price reversal is approaching.

So based on the above analysis of the A/D indicator, as a trader, I would avoid index stocks, for now, wait for $PHES and $LODE to stop falling, wait for $PX and $APX for its A/D line to start moving upward, look for an entry point to both $RCI & $FRUIT, and avoid $BHI. 

$PHES $LODE

 

Entry Price: Choose between 0.42 or 0.3950

As a result of 29 January disclosure, the price of the stock shoot up 49.46%. After a month and 19 days, the price retraced back to 1.02, just a 0.09 higher than that price the day the stock flew. I think the most important part in that disclosure is this statement:

"Lodestar is in pursuit of viable businesses that will give it substantial returns. It is looking to incubate enterprises that will take advantage of current market demands such as, but not limited to, information technology."

Then last Friday, 19 March @ 3.40 pm there was a follow up disclosure to that of 29 January. I think the most important contents are item 1 and the concluding statement:

"After the conduct of due diligence, Lodestar is at the stage of finalizing the terms and conditions of its planned investment in one or several companies that may be engaged in Information Technology, Gaming, Digital Entertainment, and/or Financial Technology."

"Lodestar intends to have a formidable stake in companies that will revolutionize gamified entertainment in the Philippines, integrating digital, mobile and payment gateways."

Will this latest disclosure cause again another run? Well, let's just wait and see. If you want to enter this stock, you can choose between 0.88 or 0.79. But if you can't wait, you can enter the stock at any price at your own risk. 

Watch List

$PX @ 3.78

$PHES - wait for its floor. Same thing with $CLI. 

$DAVIN - Wait for this wild horse to calm down. 

LRW @ 1.31

$RCI @ 1.07

$APX @ 1.23

$DITO @ 8.89

$BHI @ 0.056

$MM @ 4.47

Technical and Fundamental Analysis on Apex Mining Company, Inc.

Nature of Business

Apex Mining Company, Inc. (APX) was incorporated on February 26, 1970 primarily to carry on the business of mining, milling, concentrating, converting, smelting, treating, preparing for market, manufacturing, buying, selling, exchanging and otherwise producing and dealing in gold, silver, copper, lead, zinc brass, iron, steel and all kinds of ores, metals and minerals. The Company's operation is situated in Maco, Compostela Valley.

The Company's mine produces bullions containing gold and silver. All of its production, as well as the incidental production of its wholly-owned subsidiary, Itogon-Suyoc Resources, Inc. (ISRI), were smelted and refined by Heraeus Ltd. in Hong Kong. APX obtained full ownership of ISRI in August 2016. ISRI owns the mill and production facilities of the Sangilo and Suyoc mines in Itogon, Benguet.

In October 2014, APX acquired 100% ownership of Monte Oro Resources & Energy, Inc. (MOREI), and Prime Metroline Holdings, Inc. and other MOREI shareholders used the proceeds of the sale of their shares in MOREI to subscribe to new shares in the Company and in the process acquire control of the Company, diluting to a small minority the ownership of Mindanao Gold Ltd. and Mapula Creek Gold Corporation.

Source: PSE Edge

Fundamental Analysis

Market Price: 1.51

Book Value: 1.10

Earnings per Share Trailing 12 Months (EPS TTM): 0.19

P/E Ratio TTM: 7.95

EPS YTD: 0.18

P/E Ratio YTD: 8.38

Price to Book Value Ratio: 1.37

Return on Equity (ROE): 23.86% (Source: investagrams)

ROE Previous Year:  4.47%

ROE Current Year: 5.09%

Important Notes on Public Disclosure as of 14 December:

We would like to inform the Exchange that as of this writing, sixty-nine (69) employees and contractors of Apex Mining Co., Inc. (“Company”) working in Maco Mine, Davao de Oro have been found COVID positive.

The Mine has been reinforcing all its safety protocols as contained in the Company’s COVID-19 Emergency Response Plan. All offices and work areas of the identified COVID-19 patients were temporarily closed and disinfected. The Company’s Polyplex Dormitory and Senior Staff House were placed on a lockdown and have been designated as a quarantine house to prevent any further spread of the virus. The Company has temporarily suspended communal eating in the site and all food is being delivered to employees’ respective rooms.

With a part of its work force in quarantine it is expected that the Maco Mine underground operations and mill plant will operate at a reduced capacity. The mine will return to normal capacity only after the minesite is declared Covid-free. Alternative work arrangement for the office employees has been implemented to minimize the disruption of support activities.

Technical Analysis

61.8% Fibonacci: Entry Price @ 1.23.

Support 1: 1.48

Support 2: 1.36

Resistance 1: 1.56

Resistance 2: 1.65

Moving Averages

MA 20: 1.56

MA 50: 1.66

MA 100: 1.72

MA 200: 1.52

Volume: 5.68 Million lower than the previous day as of 07 March

A/D: Negative

PEI: Negative

MACD: Negative

Momentum: Negative

RSI: 39.13

Market Sentiment: Silent and taken for granted evident in low volume during its last trading day. 

Gold Price in US Market and EWP

Last 15 February, I published this chart: 

Now, 07 March, after 20 days, it appears that XAUUSD is about to complete its Wave II correction. Possible floor is @ 1,620 area.

 

$XAUUSD

 

$ACEN

Offer Price: 2.37

Listing Date: 29 January

Source: https://www.bworldonline.com/ac-energy-sets-earlier-date-for-stock-rights-offering/