Jollibee Technical Analysis: Buy on Breakout Above ₱186.20?

Jollibee Foods Corporation (JFC) Analysis

Jollibee Foods Corporation (JFC) continues to walk closer to its immediate resistance at ₱186.20 as it closed at ₱179.00 per share, up by 4.99 percent, on Friday, October 23, 2020. This positive Day Change is JFC’s 12th streak of closing with a green candlestick and its 8th streak of closing with a net foreign buying. The total turnover value reached ₱415 million.

The local investors were still the main buyers and sellers of Jollibee on Friday’s trading. The foreign investors registered a net foreign buying, but it only amounted to ₱13 million. The foreign investors’ daily net foreign buying has been in a downtrend since October 20, 2020.

I don’t see a pressing concern on the daily volume of Jollibee. Its daily volume has been overarching the 100 percent of Jollibee’s 10-day volume average for five consecutive trading days.

Jollibee’s 10SMACD combo is bullish. We will find out in my trade-volume distribution analysis if its Momentum Power Indicator is also bullish. If it is, Jollibee gets a confirmed buy signal, as far as my Evergreen Strategy in Trading and Investing in the Philippine Stock Market (online stock market course/methodology) is concerned.

Meanwhile, Jollibee is a moderate-risk stock because its 10-day historical volatility score is already at 55 percent.

The bullish directional movement index (DMI) conforms with the bullish 10SMACD combo since the positive DMI line hovers the negative DMI line. Also, the average directional index (ADX) is already above the 25-point line.

Jollibee’s immediate support is at ₱151.00. If it breaks this immediate support level, ₱125.80 will be the next support. If Jollibee breaks above the immediate resistance at ₱186.20, the next resistance will be ₱234.35.

Trade-Volume Distribution Analysis: Jollibee

Last Price: ₱179.00
Intraday Low: ₱171.90
Intraday High: ₱179.00
VWAP: ₱176.53
Dominant Range: ₱179.00 – ₱179.00

All four elements of my Momentum Power Indicator are bullish. Therefore, the overall rating of my Momentum Power Indicator is also bullish. Watch again the Tagalog or English version of our online stock market course (if you’re one of our clients) if you already forgot what those four elements are.

Keep an eye on the range between ₱177.50 and ₱178.50 and the other range between ₱174.40 and ₱175.00 because these are the second and third dominant ranges, respectively. It’s not far from impossible that Jollibee will revisit these two other dominant ranges as trading resumes on Monday, October 26, 2020.

Like what I said above, there’s a confirmed buy signal when the stock’s 10SMACD combo and Momentum Power Indicator are bullish.

However, let’s see first if the True Market Sentiment supports this presence of a confirmed buy signal.

True Market Sentiment – EOD (October 23, 2020): Jollibee

True Market Sentiment: BEARISH
3 of the top 10 brokers registered a positive Net Amount
4 of the top 10 brokers registered a higher Buying Average than Selling Average
Top 10 Players’ Buying Average: ₱175.7733
Top 10 Players’ Selling Average: ₱176.4789
5 out of 62 participants, or 8.06% of all participants, registered a 100% BUYING activity
22 out of 62 participants, or 35.48% of all participants, registered a 100% SELLING activity

True Market Sentiment – WTD (October 19-23, 2020): Jollibee

True Market Sentiment: BEARISH
3 of the top 10 brokers registered a positive Net Amount
4 of the top 10 brokers registered a higher Buying Average than Selling Average
Top 10 Players’ Buying Average: ₱168.6346
Top 10 Players’ Selling Average: ₱169.4383
5 out of 101 participants, or 4.95% of all participants, registered a 100% BUYING activity
29 out of 101 participants, or 28.71% of all participants, registered a 100% SELLING activity

True Market Sentiment – MTD (October 1-23, 2020): Jollibee

True Market Sentiment: BEARISH
5 of the top 10 brokers registered a positive Net Amount
4 of the top 10 brokers registered a higher Buying Average than Selling Average
Top 10 Players’ Buying Average: ₱159.0689
Top 10 Players’ Selling Average: ₱160.5710
7 out of 105 participants, or 6.67% of all participants, registered a 100% BUYING activity
19 out of 105 participants or 18.10% of all participants registered a 100% SELLING activity

The True Market Sentiment of Jollibee on three timeframes is a kill-joy to the bullishness of its 10SMACD and Momentum Power Indicator. This contradicting sentiment reminds us to be logical and tactical but not overly emotional in our next decision. I’ll give you the significance of this True Market Sentiment’s rating in my recommendations.

Recommendations

This recommendation is for you if you have Jollibee and if your trailing stop is still intact. You may buy more shares within the mentioned dominant ranges. Do not use your buying power in a “one time, big time” fashion if it’s relatively sizable. Buy in tranches.

Would you like to know how I divide my buying power into tranches? If I have ₱1 million, I divide it into 5 to 10 tranches. If I have ₱100,000.00, I divide it into two tranches. There’s no universal or standard size for a tranche. The division is always done subjectively.

I don’t recommend buying at any random price under the Ask column. Ask any of our clients. They know that very well and why. The rationale is explained in our online stock market course.

On the other hand, it’s also logical to hold your position and not buy more shares if you’re a low-risk investor. Why is this still a logical option? It’s because the True Market Sentiment across three timeframes is bearish. I’m not saying it’ll surely happen, but the bearish True Market Sentiment in all three timeframes is a data-driven reminder for the possibility of profit-taking near ₱186.20. If you’re a new and low-risk investor, you don’t want to buy your first shares near the resistance, especially when those who entered earlier than you are already preparing to sell. Again, I’m not saying that’s what is happening or will happen. My speculation is data-driven. Data-driven speculation has more integrity than a baseless forecast, after all.

Now, if you don’t have Jollibee in your portfolio yet, you may also consider the pieces of advice I gave to those who already have JFC. However, before you buy your first shares (if you’re yet to enter a new position), you must calculate your reward-to-risk ratio. The reward-to-risk ratio calculation is always that one extra process you need to do if you’re to buy your first shares. You don’t need to do this calculation if you’re only topping up (buying more shares in addition to what you already have).

The rationale is this: you want to make sure that the potential gain you’re vying for is bigger than the potential loss. For new and low-risk investors, I recommend that you buy when your entry price (within the dominant range) is closer to the immediate support than the resistance. You can use our reward-to-risk ratio calculator (and other calculators) in the TOOLS tab of our online stock market library for free.

What’s Next?

Are you one of our clients at Equilyst Analytics? You’ll see our updated recommendation for Jollibee in our Investment Guide for Long-term Investors table. You may also ask questions in the thread of Jollibee in our Private Clients Forum. We’ll guide you as trading happens. Our analysts are on stand-by for you.

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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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