Converge (CNVRG) Technical Analysis: Imitate or Ignore the Buying-spree of UBS Securities?

Converge ICT Solutions, Inc. (CNVRG) Analysis

Converge ICT Solutions, Inc. (CNVRG), the newest Initial Public Offering (IPO) stock in the Philippine Stock Exchange, debuted in the local market on October 26, 2020, Monday. Converge started trading at ₱16.80 per share at the opening bell. Unfortunately, CNVRG was met with a bearish sentiment as the price steadily dives within the first 60 minutes of trading. It seemed to have wanted to recover until around 11:10AM, but the sellers continued to dominate the trading of CNVRG. It dropped by 9.40 percent.

Seven out of seven 7-digit (in terms of volume) one-time transactions were bought by UBS Securities, a foreign stockbroker. It didn’t come as a surprise that this broker became the number one player of Converge on its IPO day. You’ll see this in my True Market Sentiment chart below.

COL Financial, which is usually the number one player of most stocks, only came in the fifth spot of the top 10 players’ list. You’ll see also see this in my True Market Sentiment chart.

Converge registered a total traded value of ₱3.60 billion today. Foreign investors were its main driver, but they ended up with a net foreign selling worth ₱94 million.

Converge: Trade-Volume Distribution Analysis

Last Price: ₱15.22
Intraday Low: ₱14.92
Intraday High: ₱16.80
VWAP: ₱15.89
Dominant Range: ₱15.00 – ₱15.42

The Momentum Power Indicator of CNVRG is bearish. Its last price of ₱15.22 is lower than its volume-weighted average price of ₱15.89. The dominant range between ₱15.00 and ₱15.42 adds more pain to the injury because it’s closer to the intraday low than the intraday high.

Converge: True Market Sentiment – EOD (October 26, 2020)

True Market Sentiment: BEARISH
2 of the top 10 brokers registered a positive Net Amount
2 of the top 10 brokers registered a higher Buying Average than Selling Average
Top 10 Players’ Buying Average: ₱15.6019
Top 10 Players’ Selling Average: ₱15.7647
12 out of 113 participants, or 10.62% of all participants, registered a 100% BUYING activity
17 out of 113 participants, or 15.04% of all participants, registered a 100% SELLING activity

I do not see any strong appetite among the top 10 players to collectively buy the dips. For one, their cumulative buying average is lower than their cumulative selling average. Also, only 10.62 percent of the 113 trading participants (brokers) registered a 100 percent buying activity on CNVRG.

If UBS Securities continues to be the only interested and significant buyer of the dips, this IPO stock will likely continue to dig lower prices by the next trading day. I said “likely” and not “surely”. Sentiments change when events change.

Recommendations

There’s no better advice than to say that you should use a trailing stop and respect it. I fervently hope that you didn’t buy CNVRG based on pure hope (without any due diligence, research, or study) that it’ll do you favor through a ceiling play. If hope is your only reason when trading or investing, you’re in a perfect setup for frustrating and stressful trading or investing experience. I hope that’s not your case.

Suppose you don’t have CNVRG in your portfolio yet. In that case, I suggest that you wait for the last price to be higher than its volume-weighted average price, the dominant range to be closer to its intraday high than its intraday low, and the True Market Sentiment to become bullish before you entertain the idea of doing a test-buy. Also, remember to calculate your reward-to-risk ratio first before you do a test-buy within the dominant range. Don’t buy at any random price that you see under the Ask column.

You can use our reward-to-risk ratio calculator and trailing stop calculator on the TOOLS tab of our online stock market library for free.

Here are some related articles that you may find helpful. I suggest that you read them all with comprehension. Ask in the comments section of each article if you have questions.

Bakit Kailangang Gumamit ng Trailing Stop-Loss at Paano ang Computation Nito?

4 Reasons Why You Must Stop Using a Buy Below Price and a Target Selling Price

If you want more, please visit our online stock market library and use the Search box to find other topics relevant to our discussion. I’ve already written more than a thousand articles on our online stock market library.

What’s Next?

Feel free to ask for our latest analysis and recommendation for Converge ICT Solutions, Inc. (CNVRG) in the Stock Analysis Requests section of our Private Clients Forum, if you’re one of our clients, so we can guide you as trading happens. You can ask for our latest Trade-Volume Distribution and True Market Sentiment analyses.

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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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