Jollibee Foods Corporation (JFC) closed on July 24, 2019 at 251 per share, down by 7.99 percent. Based on the stats of JFC in my FirstMetroSec PRO account, this stock is down by 10.29 percent WTD, down by 10.93 percent MTD, and down by 13.98 percent YTD.
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If you’re going to zoom in your daily chart for JFC for one year worth of candlesticks, of course, you will see nothing but negative Change %. But if you will zoom out the daily chart for two years or so, you will see that the food company is still in an uptrend direction.
The interpretation of the trend depends on what horizon or time period you’re using.
If someone is asking for your interpretation on whether the stock is bearish or bullish, it’s better to tell your sentiment both in the short-term and long-term scales. Better yet, mention the time period involved so that your readers or listeners know how much historical data is involved.
In the short-term, JFC is already in a bearish zone. Its shorter-term Simple Moving Averages (SMAs) are all moving below the longer-term SMAs.
We’ve warned our Equilyst Analytics subscribers of our bearish sentiment on JFC in the short-term as early as April 12, 2019. That was the day when our 10SMACD combo was invalidated and our Fantastic Four signals disappeared on the daily chart of JFC.
When JFC hit the psychological support at 270, our confirmed buy signals for the short-term re-appeared. That was last May 31, 2019. However, JFC move sideways between 270 and 288.70 since then. On July 17, 2019, our 10SMACD combo was invalidated again.
In other words, those whose trailing stop loss got hit in April 2019 managed to lock in their profits. Also, those who spotted the confirmed buy signals in the first week of June 2019 were warned of a strengthening downward momentum last July 17, 2019.
All of these signals are for the short-term scale, by the way.
If you’re going to check the weekly and monthly charts of JFC, you will see that the last candlestick is still trading above the 200-day SMA on the weekly and monthly. However, it’s at the brink of crossing below the 200-day SMA on the weekly. If and when that happens, I’ll have a bearish sentiment for JFC in the long-term scale also.
Does it mean I advise my clients to buy the dips of JFC just because it’s still technically bullish in the long-term as far as its last candlestick’s position above the 200-day SMA in the daily, weekly, and monthly charts is concerned?
No.
When the short-term rating is bearish, that means the buy signals are nowhere to be found on the chart. So, you have two options:
1. You hold your position without topping up provided the price is still moving above your trailing stop loss.
2.You pre-empt your trailing stop loss by selling a few tranches if the size of your position is worth dividing into a few tranches.
In the case of the performance of JFC today, my advise is to pre-empt your trailing stop loss. That means you should not wait for your trailing stop loss to get hit since the downtrend in price is still more likely to continue.
There’s more to this narrative but I cannot discuss everything here. You should attend my The Evergreen Strategy in Trading the Philippine Stock Market seminar so I can demonstrate the whole idea to you. Click here to register for a chance to get a 69% discount for your ticket.
Foreign investors registered a Net Foreign Selling worth P424 million today. This is their biggest one-day Net Foreign Selling as far as my chart can show all the way to 2008. Foreign investors are net sellers YTD on this stock.
RSI is already inside the oversold territory. Do not interpret this as a buy signal just because you read somewhere that the price is already cheap once its RSI is below 20 percent. Yes, it is relatively cheap but it can get cheaper than where it is. Why don’t you let the dust settle down before you buy the dips?
The risk level of JFC is still low. But with one more dip that is as deep as today’s price action, you can expect JFC’s risk level to jump from low to moderate based on its historical volatility score.
DMI and ADX show that the bears are getting stronger. The -DMI has increased its gap from the +DMI with the former hovering the latter. The ball is in the court of the bears.
Trade-Volume Distribution
Last Price: 251.00
VWAP: 261.1990397
Most Traded: 254 – 265.2
Most Voluminous: 266 – 267
JFC was forced closed at 251 per share during the market run-off or trading-at-last period. How did I know? I saw it on my data when I generated my Trade-Volume Distribution chart. All trades at 251 happened from 3:20PM GMT+8 onwards.
Are you a subscriber of Equilyst Analytics? I hope you are because I need you to post a request for the latest Trade-Volume Distribution and True Market Sentiment charts of JFC in our Private Clients Forum if and when it starts at a price higher or lower than the range between 251 and 255 tomorrow. This is very important so we can tell you if you’re better off being in a wait-and-see mode or buying the dips.
True Market Sentiment
True Market Sentiment of JFC as of Jul-24-2019 at 03:30PM, with a last price of 251.00.
4 of the top 10 brokers registered a positive Net Amount
4 of the top 10 brokers have a higher Buying Average than Selling Average
True Market Sentiment: BEARISH
Top 10 Players’ Buying Average: 259.1642
Top 10 Players’ Selling Average: 260.7324
Bonus Info:
63 out of 105 participants or 60.00% of all participants registered a 100% BUYING activity
3 out of 105 participants or 2.86% of all participants registered a 100% SELLING activity
The bearish true market sentiment my proprietary chart generated clearly shows that the top 10 brokers didn’t translate the drop in price as an opportunity to buy – at least, not yet. That was a good decision.
Now, I am very interested to pay extra attention on the price movement of JFC tomorrow because of these relatively smaller brokers’ fearless stance in terms of registering a 100 percent buying activity on JFC today.
You might want to ask, “If 60 percent of the 105 brokers who traded JFC today did nothing but to buy the stock, why did JFC end up in the red zone?”
JFC still ended in the red territory because the total turnover value of the bearish brokers outnumber the total turnover value of the bullish ones.
But, again, tomorrow’s an exciting trading day for JFC. If these 63 (out of 105) brokers will carry over the same sentiment tomorrow and influence the majority of the brokers tomorrow, JFC might register a green candlestick.
This is the reason why I’ve advised Equilyst Analytics subscribers to post a request for JFC’s latest Trade-Volume Distribution and True Market Sentiment charts in our Private Clients Forum as soon as the price starts lower or higher than the range I mentioned above.
Recommendations
Foreign investors are bearish on JFC due to its acquisition of a business with revenue losses in its financial books for 2017 and 2018. They didn’t like that because they know it’ll negatively impact the overall financial statement of JFC upon acquisition.
Of course, I know that the $350 million acquisition of JFC for Coffee Bean & Tea Leaf (CBTL) is on a debt-free basis, which means that it’s guaranteed that CBTL won’t have debts once JFC fully acquires it. Apparently, foreign investors did not care whether the acquisition is on a debt-free basis or not. It seems that their ultimate question is, “How can CBTL contribute to the growth of the net income of JFC if the former has not been generating a positive net income for the past two fiscal years?”
I’d like to categorize investors into two. One is the value investor. The other one is the growth investor. Value investors focus on the present stance of the company’s financial statements. Growth investors focus on the future value of the company. Today, foreign investors chose to be value investors. Meanwhile, Tony Tan Caktiong, JFC Chairman, appears to be a growth investor.
I already gave my recommendations and suggestions above.
Support is near 242. Resistance is near 270. While the descent in price is more likely to continue, I suggest that you also consider those data-driven probabilities I mentioned above.
If JFC breaks below 242, the next support will be near 210 as a precursor to 180.
As far as our clients are concerned, they know that we have had a bearish short-term rating on JFC.
If you’re planning to enter a new position, do not hurry. Let the decided sellers vomit everything they want to vomit. Give them time.
There are ways to know if the price is poised for a rebound even before it actually rebounds. I taught those techniques as Lessons 2 to 5 in my The Evergreen Strategy in Trading the Philippine Stock Market seminar. Why don’t you register for a chance to get a 69% discount on your ticket for this seminar? I’ll be in Davao this coming Saturday, July 27, to deliver this seminar. After Davao, I’ll be in Iloilo, Cavite, Makati, Baguio, Pampanga, and Cebu.
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