MerryMart Consumer Corp. (MM) dropped by 1.09 percent at ₱2.73 on Thursday, August 6, 2020. MerryMart recorded a total turnover value worth nearly ₱96.50 million with the local investors as the major price movers.
Despite closing in the red zone, foreign investors managed to register a Net Foreign Buying (NFB) worth ₱5.7 million, which is their biggest one-day NFB since June 25, 2020. However, they remain net sellers year-to-date. Their participation is not as significant as their trades on blue-chip companies, though.
I do not see a pressing volume-related concern since MerryMart continues to register a daily volume higher than the 50 percent of the stock’s 10-day volume average.
MerryMart tested the resistance near ₱2.75. It managed to break out of that resistance and hit an intraday high of ₱2.87, but it failed to sustain its position above the resistance level. Profit-taking is a common scenario whenever a stock breaks out above its immediate resistance. This is why I highly recommend using a trailing stop, whether you’re into short-term trading or long-term investing. It would help if you considered a broader percentage of tolerable risk when you calculate your trailing stop for long-term investing.
The immediate support of MerryMart stays near ₱2.00, while the resistance is still pegged near ₱2.75. You’re not going to get an attractive reward-to-risk ratio at the moment because the prevailing price of MerryMart is already closer to its immediate resistance than its immediate support. That’s the case if you’re following my style in calculating the reward-to-risk ratio of a stock. You’ll have a 360-degree understanding of my methodology when you use the stock market consultancy service of Equilyst Analytics.
MerryMart has an extremely high-risk level due to its 10-day historical volatility score of 100.50 percent. The erraticity of the price action caused this since it IPO’d on June 15, 2020. In my words, the historical volatility of this stock has not “normalized” yet. Give it until the end of August 2020 to see a more equalized historical volatility. By the way, low- to moderate-risk stocks are what I consider as newbie-friendly stocks.
Trade-Volume Distribution Analysis
Last Price: ₱2.73
VWAP: ₱2.80428
Dominant Range: ₱2.73 – ₱2.76
My trade-volume distribution analysis shows the dominance of the selling pressure. I’ll tell you what made me say that. Firstly, the last price is higher than MerryMart’s volume-weighted average price (VWAP) of ₱2.80. Secondly, the dominant range is closer to the intraday low than the intraday high. Thirdly, the last candlestick is red. Fourthly, the last volume bar is red even if it’s higher than the 50 percent of MerryMart’s 10-day volume average.
In short, I see a bearish Momentum Power Indicator for MerryMart. I see no confirmed buy signal for MerryMart even if its 10SMACD is already bullish. I only issue a confirmed buy signal when the 10SMACD and Momentum Power Indicator of the stock are both bullish.
True Market Sentiment – EOD (August 6, 2020)
True Market Sentiment: NEUTRAL
6 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: ₱2.8063
Top 10 Players’ Selling Average: ₱2.8120
Bonus Info:
7 out of 49 participants or 14.29% of all participants registered a 100% BUYING activity
11 out of 49 participants or 22.45% of all participants registered a 100% SELLING activity
True Market Sentiment – WTD (August 3-6, 2020)
True Market Sentiment: NEUTRAL
6 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: ₱2.7004
Top 10 Players’ Selling Average: ₱2.6899
Bonus Info:
7 out of 83 participants or 8.43% of all participants registered a 100% BUYING activity
14 out of 83 participants or 16.87% of all participants registered a 100% SELLING activity
My EOD and WTD True Market Sentiment charts and statistics show that there’s still a tug-of-war among the top 10 brokers who have been trading MerryMart this week. Suppose MerryMart registers a bullish True Market Sentiment and a bullish Momentum Power Indicator on Friday. In that case, it’ll be more likely for this stock to sustain its ascent above the resistance at ₱2.75. Understand that I gave you a conditional statement.
Recommendations
If you already have a position on MerryMart, I’d like to assume that your trailing stop is still intact. Otherwise, I don’t see a logical reason why you’re still holding a stock that’s already beyond your tolerable loss.
I would recommend that you hold your position. If and when MerryMart doesn’t hold above ₱2.75, consider reducing the percentage of risk on your trailing stop. Make an upward adjustment on your trailing stop each time the price goes up so you can lock more gains. You can use my trailing stop calculator from the TOOLS tab of the online stock market library of Equilyst Analytics.
You’ll find my detailed instructions on how to calculate a trailing stop, how to make an upward adjustment, how to reduce the percentage of risk on your trailing stop, and more on my online stock market course. It’s one of the six inclusions of our stock market consultancy service at Equilyst Analytics.
Are you only in the planning stage of entering a new position on MerryMart? Wait for both the 10SMACD and Momentum Power Indicator of this stock to become bullish. Once both are bullish, calculate your reward-to-risk ratio. If you’re satisfied with the calculated ratio, ask us to post our latest Trade-Volume Distribution analysis of this stock in our Private Clients Forum (for clients only). We can give you the dominant range where it is most logical to do a test-buy.
Read the details of our stock market consultancy service, so you’ll understand how we will teach you how to invest independently and trade tactically for a year.
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