MerryMart Consumer Corp. did a ceiling play when it debuted in the Philippine Stock Exchange last June 15, 2020. It did a repeat of its ceiling play on June 16, 2020 with a total turnover value of ₱301,217,460.00.
Local investors were the main players. Foreign investors only registered a Net Foreign Buying worth ₱2,172,780.00.
With an unserved bid volume of 156,173,000 shares at ₱2.25, it’s more likely for the local investors to push MerryMart Consumer Corp. toward ₱3.37.
Trade-Volume Distribution
Last Price: ₱ 2.25
VWAP: ₱2.12336
Dominant Range: ₱2.25 – ₱2.25
I’m giving this bullish forecast not just because of the relatively sizable number of unserved bids at ₱2.25 as of market closing on June 16, 2020, but also because of the position of the dominant price point. ₱2.25, which was the intraday high on June 16, was the dominant price point. That means that’s the price that got the highest number of trades and biggest volume last June 16, 2020.
Also, the closing price of ₱2.25 is higher than the volume weighted average price of ₱2.12 as of closing on June 16, 2020.
True Market Sentiment
True Market Sentiment on MM as of Jun-16-2020 at 01:00PM with a last price of ₱2.25
True Market Sentiment: NEUTRAL
8 of the top 10 brokers registered a positive Net Amount
5 of the top 10 brokers registered a higher Buying Average than Selling Average
Top 10 Players’ Buying Average: ₱2.1208
Top 10 Players’ Selling Average: ₱2.0994
Bonus Info:
3 out of 98 participants or 3.06% of all participants registered a 100% BUYING activity
26 out of 98 participants or 26.53% of all participants registered a 100% SELLING activity
Despite this bullish forecast based on the number of unserved bids, the position of the closing price above the volume weighted average price, and the position of the dominant price, my True Market Sentiment gives me a neutral rating because of the tug-of-war between the members of the top 10 participants with a bigger buying average than selling average.
This poses the possibility of not seeing a third ceiling play in a row.
Recommendations
If you already have MerryMart Consumer Corp in your portfolio, and if your trailing stop is still intact, you may still top up at or near P2.25. However, I don’t recommend going all-in with your buying power. Buy in tranches if you have a relatively sizable buying power. For example, I would divide a P100,000.00 buying power into two if I had a buying power allocated for a top-up on MerryMart Consumer Corp.
Some of you might be asking, “Why not divide your P100,000.00 by 8 because of the 8K rule?” I suggest you read the article below so you’ll understand why the 8K rule is non-sense to me.
Read: May Sense ba ang ₱8,000 Rule When You Buy or Sell Stocks?
I am recommending topping up in tranches not just because of the neutral True Market Sentiment, but because it’s also part of my risk management.
Now, what do I advise if you don’t have MerryMart Consumer Corp. yet?
Please don’t jump the gun without asking yourself if you have the time to monitor the movement of the price of MerryMart Consumer Corp. by the second. Ask yourself if you already have the discipline to respect your trailing stop just in case the price goes south. If availability and discipline are not an issue, you may do a test-buy at or near P2.25. Buy in tranches if you have a relatively sizable buying power. There’s no universal practice that defines how many tranches you should divide your buying power. It’s up to you, but consider the 8K-rule article I stated above.
Understand that we have very limited historical data that can be used to analyze an IPO stock.
To summarize, these are my steps when trading an IPO stock:
- I do a test-buy when the stock debuts in the Philippine Stock Exchange. I buy in tranches.
- I top up only when the last candlestick is green and when the last price is above the volume weighted average price.
- I top up within the dominant range generated by my Trade-Volume Distribution chart. Also, it would be better if the True Market Sentiment is bullish.
- I monitor my trailing stop because I want to preserve my capital, protect my gains, and prevent unbearable losses.
- I reduce the percentage of risk applied in my trailing stop when the last candlestick turns red and when the dominant range is already closer to the intraday low than the intraday high, especially when the True Market Sentiment becomes bearish.
- I sell when my trailing stop is hit.
Feel free to use my online trailing stop calculator. You’ll find it in the TOOLS tab of our online stock market library.
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Good morning sir MM How long Will this trend be…2 what price can it Go High?
No one can tell. After reading my analysis, you need to decide based on your personal financial DNA (investment horizon and risk tolerance).