Jollibee Foods Corporation (JFC) went up by 0.90 percent as of closing on July 21, 2020 with a total turnover value of ₱67.4 million. Foreign investors were the main drivers today. However, they only registered a relatively small Net Foreign Buying worth ₱11 million. That’s far from enough to outweigh the five consecutive trading days of Net Foreign Selling.
Did you know that foreign investors closed all months from January to May with a bearish stance (Net Foreign Selling)? They spared June with a Net Foreign Buying worth ₱7.3 million, but can ₱7.3 million do to reverse the prevailing bearish sentiment on this blue-chip stock?
JFC’s main support is near ₱132.30 while its immediate resistance is near ₱151.80. The prevailing price is closer to the immediate support than the immediate resistance. Also, the price is still moving below the 10-day Simple Moving Average (SMA). Those are signs that the downtrend is more likely to re-test the support at ₱132.30.
Watch out for the next support near ₱109.50 once the immediate support is broken down.
I do not see a formation of a bullish convergence or divergence on the histograms of the Moving Average Convergence Divergence (MACD) and Directional Movement Index (DMI). Their downward-sloping direction feeds the bears, so to say.
JFC has a low risk level based on its historical volatility score of 37 percent. This risk level refers to the erraticity of the price – how low or high does the price move historically. The lower the historical volatility score, the gentler the price moves up and down, relatively speaking. I recommend low- to moderate-risk stocks to newbie investors or traders. However, it doesn’t mean you can blindly buy a low- to moderate-risk stock despite the absence of a confirmed buy signal.
You’ll find my complete explanation in the online stock market course that is included in our stock market consultancy service at Equilyst Analytics. Consider subscribing if you want to know how to analyze and execute like I do.
Trade-Volume Distribution Analysis
Last Price: ₱134.70
VWAP: ₱134.68164
Dominant Range: ₱134.30 – ₱135.20
Despite the bearish stance of the foreign investors year-to-date, I’m seeing some bullish signals on today’s price action. The last price of ₱134.70 is higher than the volume weighted average price of ₱134.68. The dominant range of ₱134.30 – ₱135.20 is closer to the intraday high than the intraday low.
Unfortunately, those two bullish signals are not enough to register a bullish Momentum Power Indicator because the last candlestick and the last volume bar are both red. Hence, JFC has a bearish Momentum Power Indicator.
Also, I’m seeing a bearish 10SMACD combo because the last price is still moving below the 10-day SMA and MACD is trading below the signal line. That’s a double whammy of bearish signals, so to speak.
In short, I don’t see a confirmed buy signal for JFC as far as today’s price action is concerned. Realize that this interpretation is subject to change depending on the prevailing price action.
True Market Sentiment
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: ₱134.6738
Top 10 Players’ Selling Average: ₱134.5989
Bonus Info:
12 out of 41 participants or 29.27% of all participants registered a 100% BUYING activity
7 out of 41 participants or 17.07% of all participants registered a 100% SELLING activity
This neutral True Market Sentiment tells me that there’s a chance for the support near ₱132.30 to be respected. Don’t etch that interpretation on the stone, however. I’m talking about probabilities and not guarantees.
UBS Securities is the most aggressive seller of JFC today. Asiasec Equiities saved the day for outperforming the 100 percent selling activity of UBS Securities. JFC would have closed with a negative Day Change if it had not been of the 100 percent buying activity of Asiasec Equities with a total turnover value of ₱17.25 million.
Recommendations
Let everything I will say below be predicted to my data-driven interpretation that JFC has no confirmed buy signal as far as my proprietary methodology is concerned.
Are you planning to add JFC in your portfolio? Let me talk to you first.
Do not rush. It’s not yet the most logical time to buy JFC. If you’re thinking that buying JFC is now makes you buy more for less, can you say that again with conviction if JFC breaks below ₱132.30? Am I guaranteeing that JFC will break below that support level? No. But my data-driven analysis shows that the downtrend is more likely to continue. I did not arrive to that probability by just basing on what I believe, feel, or think. I arrived to that probability after using data.
The logical thing I would recommend you to do is to add JFC in your watchlist (not your portfolio yet) and continue monitoring. If and when its 10SMACD and Momentum Power Indicator become bullish, calculate your reward-to-risk ratio to see if your potential profit is bigger than your potential loss. If you’re happy with your reward-to-risk ratio, identify its dominant range by doing a trade-volume distribution analysis like what I did above. Once identified, that’s where you can do a test-buy. Once your transaction is executed, calculate your trailing stop so that you are not clueless on what to do next whether the reality matches or contradicts your data-driven forecast.
We have the support and resistance calculator, reward-to-risk ratio calculator, trailing stop calculator, and more on the online stock market library of Equilyst Analytics.
Now, here’s my recommendation for you if you already have JFC in your portfolio.
Is your trailing stop still intact?
If you don’t know what a trailing stop is, it means you don’t know where your tolerable risk is and how much risk you can handle.
I hate to say this, but it’s no different than riding a taxi and asking the driver where you’re going. I bet you don’t do in in real life, but why do you do it in the stock market?
There are five services included in our stock market consultancy service. One of them is access to my online stock market course (The Evergreen Strategy in Trading and Investing in the Philippine Stock Market). I will teach you risk management in sixth lesson of this online stock market course. You’ll have access to the Tagalog and English versions of the course.
You’re doing a good job if are aware of the importance of using a trailing stop and if your trailing stop is still intact. If that’s your case, I would recommend that you hold your position. Do not top up yet. Do not waste your buying power. If and when the price draws closer to the support level or your trailing stop, consider reducing the percentage of risk on your trailing stop. I will teach you this strategy in my online stock market course.
Consider topping up within the dominant price range once both 10SMACD and Momentum Power Indicator are bullish.
If you are one of our clients at Equilyst Analytics, you may refer to the INVESTORS tab. That tab has our updates for each of the 30 blue-chip companies in the Philippine Stock Exchange. We update our guide several times a day. You will know which of the 30 blue-chip stocks have a confirmed buy signal and at what price it is most logical to buy. You will also know which signal we’re waiting to reverse so that the stock will have a confirmed buy signal.
Your access to our online stock market course and our investment guide for long-term investors are just two of the five inclusions you’ll get when you avail of our stock market consultancy service at Equilyst Analytics.
Let me know if you have questions. Comment below.
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