Sentimental and Technical Analysis for Manila Electric Company (PSE:MER)
Meralco started the year bullishly after moving in a sideways pattern in the last quarter of 2021. Just in two months, Meralco broke two resistance levels, P329.00 and PP355.00, respectively. Meralco is now targeting the next resistance near P395.00. That’s the sentiment within a 5- to 6-month period.
Now, let’s see the intraday’s sentiment for Meralco. Macquarie Securities is leading the 51 participating brokers in trading Manila Electric Company (PSE:MER) as of the time of reporting. However, this leading participating broker has only registered a net buying amount worth P4 million out of its total turnover value of P33.4 million.
Meanwhile, 17 out of 52 participating brokers (32.69%) registered a positive net amount, while 22 out of 52 (42.31%) participants printed a higher buying than selling average as of the time of reporting. Furthermore, all 52 participating brokers registered a higher selling than buying average as of the time of reporting also. On the other hand, 12 out of 52 brokers (23.08%) registered a 100% buying activity, while 21 out of 52 brokers (40.38%) opted to have a 100% selling activity as of the time of reporting.
The melancholic sentiment of the participating brokers is mirrored in the trade and volume distribution of Meralco, too. I see on my proprietary charts that the price points that got the biggest volume and highest number of trades are closer to the intraday low than the intraday high. That validates the kind of sentiment you get from the participating brokers’ transactions.
Foreign Investors
The foreign investors have been supporting the ascent in the share price of Meralco. The foreign investors have registered 14 consecutive net foreign buying days. It’s the longest consecutive net foreign buying, at least, since 2020. However, the 8 most recent foreign investors’ transactions may look astonishing, but the month-to-date and year-to-date foreign investors’ net amounts aren’t really that significantly impressive. January 2022’s net foreign was only at P29 million, while February 2022 was at P30 million. If the prevailing daily net foreign buying amount will continue for the rest of March 2022, we might see a month-end net foreign buying 50 times that of February 2022’s.
Volume
Volume is not a concern for Meralco, which is a major contributing factor for its price’s ascent.
If you’re trading Meralco, I want you to pay attention to the correlation between its price and volume. If you see a red candlestick with a volume higher than the 100% of its 10-day volume average, it’ll be more likely for the selling pressure to continue. Should you be alarmed? Well, not if you know where your trailing stop is and why you should use one.
Moving Average Convergence Divergence
Meralco’s MACD dove below its signal line already. That’s a bearish signal by classical interpretation. More than just focusing on MACD, I’d like you to pay more attention to the price-volume distribution (like I already said above).
Still a Newbie-friendly Stock?
Meralco has a very low erraticity level due to its 10-day historical volatility score of 11.70%. Although I still classify this stock as a “newbie-friendly” stock, that’s not a signal to buy it right away.
Is There a Confirmed Buy Signal?
Let’s take a look at the ratings of the six indicators that compose my proprietary methodology called The Evergreen Strategy in Trading and Investing in the Philippine Stock Market. If all of them are bullish, then, there’s a confirmed buy signal.
Once there’s a confirmed buy signal, you need to calculate your reward-to-risk ratio and initial trailing stop. Do a test-buy or top-up on your existing shares if and when you’re satisfied with the ratio.
Parameter 1: Is its last price moving above its 10-day simple moving average (SMA)?
Answer: YES
Parameter 2: Is its last volume bar higher than 50 percent of its 10-day volume average?
Answer: YES
Parameter 3: Is its moving average convergence divergence (MACD) moving above its signal line?
Answer: NO
Parameter 5: Is its Dominant Range Index bullish?
Answer: Login to your account and ask for the DRI of this stock.
Parameter 6: Is its Market Sentiment Index bullish?
Answer: Login to your account and ask for the DRI of this stock.
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