BDO Technical Analysis: Buy More Shares or Patience?

BDO Unibank (BDO) Technical Analysis

BDO Unibank, Inc. closed on Wednesday, November 4, 2020, at ₱90.50 per share, up by 0.56 percent. Are you wondering why the last candlestick’s red even if the price went up by 0.56 percent? It’s because BDO’s closing price of ₱90.50 is lower than its opening price of ₱91.00.

The total turnover value reached ₱374.50 million. The local investors were still the main mover of the price, which is not normal for an index or a blue-chip company. This phenomenon shouldn’t surprise us because the foreign investors’ participation in the entire Philippine Stock Exchange Index (PSEi) is only 35 percent today. As I mentioned in my previous posts, the normal range of foreign investors’ participation is between 55 to 65 percent. Of course, we should expect this below-normal participation of the foreign investors to manifest in their participation among individual blue-chip stocks.

Today’s the 6th consecutive day of Net Foreign Selling if we are to consider October 28, 2020 as a Net Foreign Selling day. The foreign investors are net sellers year-to-date.

BDO’s immediate support sits near ₱85.00, while its immediate resistance is near ₱97.00. It’s been almost four months that BDO’s price has been moving sideways within this range.

Furthermore, BDO is still moving below the 10-day simple moving average (SMA). This automatically makes my 10SMACD combo bearish, which, in turn, makes the confirmed buy signal absent for this banking company, as far as Equilyst Analytics’ methodology is concerned.

What makes its 10SMACD all the more bearish is the MACD line moving below the signal line. I do not see a formation of a bullish convergence between the MACD line and the signal line, by the way. The price is more likely to continue moving sideways with a bearish bias.

On the other hand, BDO remains a low-risk stock due to its 10-day historical volatility score of nearly 41 percent. This low-risk level means its price does not fluctuate erratically as far as its 10-day average Day Change is concerned.

Let’s take a look at BDO’s directional movement index (DMI). While BDO’s +DMI is hovering the -DMI, this is not yet a confirmed strong upward momentum because its average directional index (ADX) is still below 25 points. This ADX score is more likely to touch the 25-point level once the price breaks above the resistance near ₱97.00.

Trade-Volume Distribution Analysis

Last Price: ₱90.50
Intraday Low: ₱90.20
Intraday High: ₱91.15
VWAP: ₱90.73
Dominant Range: ₱90.50 – ₱91.00
Momentum Power Indicator: Bearish

It’s not enough that the dominant range between ₱90.50 and ₱91.00 is closer to the intraday high than the intraday low. The three other elements of BDO’s Momentum Power Indicator must be bullish. Unfortunately, the last price of ₱90.50 is lower than the volume-weighted average price of ₱90.73, the last candlestick is red, and the last volume bar is red, too.

As a result, the overall Momentum Power Indicator of BDO is bearish. There are two reasons why there is no confirmed buy signal for BDO. Firstly, its 10SMACD combo is bearish. Secondly, its Momentum Power Indicator is bearish. I’m not saying that the price will surely go deeper. I’m saying the price is more likely to move sideways with a bearish bias. Our topic is about probabilities and not certainties.

True Market Sentiment – EOD (November 4, 2020)

True Market Sentiment: NEUTRAL
7 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: ₱90.7241
Top 10 Players’ Selling Average: ₱90.7753
21 out of 60 participants, or 35.00% of all participants, registered a 100% BUYING activity
5 out of 60 participants, or 8.33% of all participants, registered a 100% SELLING activity

True Market Sentiment – WTD (November 3-4, 2020)

True Market Sentiment: NEUTRAL
5 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: ₱90.4375
Top 10 Players’ Selling Average: ₱90.3860
24 out of 73 participants, or 32.88% of all participants, registered a 100% BUYING activity
6 out of 73 participants, or 8.22% of all participants, registered a 100% SELLING activity

True Market Sentiment – MTD (October 1, 2020 – November 4, 2020)

True Market Sentiment: NEUTRAL
7 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: ₱91.2498
Top 10 Players’ Selling Average: ₱91.0597
11 out of 117 participants, or 9.40% of all participants, registered a 100% BUYING activity
4 out of 117 participants or 3.42% of all participants registered a 100% SELLING activity

The True Market Sentiment of BDO across three timeframes (end-of-day, week-to-date, month-to-date) seconds the motion on my forecast that the price is more likely to continue moving sideways with a bearish bias. This consistent neutral True Market Sentiment across three timeframes is a strong sign of indecision among this banking company’s top 10 participants. When the situation is like this, I imagine that the deep-pocketed top 10 participants are eaves-dropping on each others’ movements.

So, if we, retail traders, have pockets that are nowhere near the depth of these big players’ pockets, it’s all the more that we should be more prudent, cautious, conservative, and patient with our next step, especially if you are a low-risk or a new investor.

Recommendations

Suppose you already have BDO in your portfolio and your trailing stop is still intact. If that’s your case, I recommend that you hold your position for now regardless of whether you’re a low-risk or a high-risk investor. Consider adding more shares when your buying power permits if and when the 10SMACD combo and Momentum Power Indicator of BDO are both bullish.

Suppose you don’t have BDO yet, and you have the buying power to buy a few board lots. If that’s your case, I still find it prudent to wait for its 10SMACD and Momentum Power Indicator to become bullish. I wouldn’t waste my buying power on a stock that’s more likely to move sideways with a bearish bias.

If you’re one of our clients, you may ask for our latest analysis and recommendation for BDO in our Private Clients Forum when you see significant changes in its price and volume.

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Jaycee De Guzman

Founder and CEO at Equilyst Analytics

Experience the expertise of Jaycee De Guzman, the brain of Equilyst Analytics, renowned for his unique data analysis. He is a computer scientist and a self-taught digital marketing strategist and agriculturist. Since Equilyst Analytics’ founding in 2012, over 10,000 local and foreign clients have consulted with Jaycee de Guzman on crypto and stock investments.

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