Sentimental and Technical Analysis for Megaworld Corporation (PSE:MEG)
Let me start this off by asking, “How was your blood pressure this morning with Megaworld’s price action?”
You know what I mean if you are monitoring or if you’ve been trading Megaworld Corporation (MEG). A BIR Media Advisory requesting media coverage is circulating online about the alleged Issuance of Closure Order Against Megaworld Corporation scheduled on May 18, 2022.
Image Source: https://www.manilatimes.net/2022/05/17/news/bir-poised-to-shut-down-megaworld/1843979
Meanwhile, Megaworld Corporation released its official statement based on the disclosure published on edge.pse.com.ph with a circular number C03634-2022. The statement says, “We got hold of the media advisory regarding the closure order. We are currently verifying and clarifying this with the Bureau of Internal Revenue.”
Source: https://edge.pse.com.ph/openDiscViewer.do?edge_no=8c1d4876633231ef3470cea4b051ca8f
This event made Megaworld the sixth (6th) most active stock today, May 17, 2022, according to total turnover value with a traded value worth P381.6 million. It also traded at an intraday low of P2.47 before it closed at P2.80, which is also its intraday high. It ended up 2.94% higher than its previous closing price.
As of the time of writing, I don’t see an updated disclosure on edge.pse.com.ph about this news aside from the report with circular number C03634-2022. News websites also haven’t published any article that discloses the reason for this closure order.
It seems insiders picked some good news, however. Otherwise, this stock won’t recover by 13.36% from its intraday low of P2.47 to its closing price of P2.80.
MEG’s immediate support is pegged near P2.45, while its immediate resistance is near P2.90.
As of today’s closing, Megaworld’s 10-day simple moving average is the same spot as its closing price. It must have been delighting for the traders of Megaworld to see that its last price is higher than its volume-weighted average price of P2.66.
Megaworld is still not out of the woods, though. It’s still trading inside the downtrend channel after its glory days in 2019.
I want to share additional statistics that can help you form a data-driven decision:
- 25 of the 71 participating brokers, or 35.21% of all participants, registered a positive Net Amount
- 18 of the 71 participating brokers, or 25.35% of all participants, registered a higher Buying Average than Selling Average
- 71 Participating Brokers’ Buying Average: ₱2.61821
- 71 Participating Brokers’ Selling Average: ₱2.67787
- 11 out of 71 participants, or 15.49% of all participants, registered a 100% BUYING activity
- 9 out of 71 participants, or 12.68% of all participants, registered a 100% SELLING activity
Foreign Investors
The intraday recovery of Megaworld didn’t positively influence the foreign investors’ mood since they registered a net foreign selling of P83.1 million.
In case you’re not aware, foreign investors have been bearish on Megaworld for six consecutive days already.
Volume
A bullish volume backs today’s recovery. I see an engulfing bullish volume bar, the highest daily volume since May 28, 2021. If today’s recovery weren’t backed by a volume that’s at least higher than 50% of Megaworld’s 10-day volume average, I’d say that its recovery might be withdrawn by the next trading day.
I want to emphasize that today’s volume is not a spectacular phenomenon. For one, Megaworld’s daily volume has not been lower than 50% of its prevailing 10-day volume average for the past 10 trading days. So, volume-wise, Megaworld has no volume-related issues.
Moving Average Convergence Divergence
Today’s recovery in the intraday price of Megaworld is a big factor in why its moving average convergence divergence (MACD) line has bent toward the northward direction today. It still has a lot of work to do, however. It’s still trading below the signal line, after all. We might see a golden cross once the price breaks above the immediate resistance at P2.90.
Still a Newbie-friendly Stock?
Megaworld maintains its low risk level due to its 10-day historical volatility (HV) of 40.6%. If we see another incident with a 10 to 15% gap between its intraday low and high, its HV score might cross the 50% mark, raising the flag for the moderate risk level.
Is There a Confirmed Buy Signal?
Let’s 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, 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: NO
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) above its signal line?
Answer: NO
Parameter 4: Is its last price equal or higher than its volume-weighted average price?
Answer: YES
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.
Need Help?
Attend my stock market seminar to learn the following lessons:
- Lesson 1: how to find the stocks that you should add in your watchlist
- Lesson 2: how to look for a confirmed buy signal through the combination of 4 universal indicators and my 2 proprietary indicators
- Lesson 3: how to buy logically and strategically using my trailing stop and reward-to-risk ratio calculators
- Lesson 4: how to sell with calculated risks, with more logic, and less emotion using my trailing stop calculator and 2 proprietary indicators
Click here to register for my Evergreen Strategy in Trading and Investing in the Philippine Stock Market.
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