@myholdings takes on the spotlight for this week’s featured trader as he shares his knowledge and insights on stocks from the PSEI.
In a quote by David Sikhosana, he says “Losses are necessary, as long as they are associated with a technique to help you learn from them”. Given the state of the economy and the many uncertainties in the market, we must be able to anticipate changes and adjust in order to succeed and make money. @myholdings has acted in this way.
Our featured trader gave us his opinions on SMPH, the direction it might be headed in, and the disintegration of the real estate market as a result of high interest rates about 13 days ago. The market’s current state allowed @myholdings to forecast where the price could go.
During this specific trading period, @myholdings has plotted out a simple support line in the weekly time-frame starting from 26 up to 36. We can also see that the price has broken down from its previous support line and that the next possible direction is around 31.43 down to 27.80, as plotted by @myholdings. Typically, breakdowns indicate signs of bearish price action movement which is why @myholdings anticipated a drop in price in the days to come. Take notice also of the fundamental analysis of the stock which is quoted in green text. The P/BV is at 2.8686 meaning that the stock still has potential for future growth. The PE ratio is 40.54 which could be a problem since average PE ratios range from 20-25. Lastly, the Return on equity is 7.29% which is also considered low considering the fact that good ROE’s range between 15-20%.
TECHNICALS OF THE TRADE
Technically, SMPH at the time was losing its uptrend momentum, breaking down from its previous support on the weekly timeframe. We may also see that the RSI, a momentum indicator, has broken down from its 50 levels which indicates that traders are starting to sell their positions considering everything going on in the market. Moreover, if we take a look at its MACD, a trend-following momentum indicator, we can see that it was diverging downwards which is usually a sign of a downward trend movement. All this being considered, @myholdings was able to forecast that the price would continue its downward movement following the recent breakdown in the chart.
FUNDAMENTALS OF THE TRADE
SM Prime Holdings Inc. announced a long-term agreement for the supply of renewable energy with Aboitiz Power Corp. By the end of the year, this long-term agreement will power all SM Prime properties, including its shopping malls, apartments, offices, hotels, and other institutions covered by the Retail Competition and Open Access. According to the deal, AboitizPower would provide SM Prime with electricity from the PV Sinag’s Power Plants, Tiwi and MakBan Geothermal Power Plants, and other facilities run and managed by a subsidiary of AboitizPower called Aboitiz Renewables Inc.
Source: https://businessmirror.com.ph/2022/08/08/clean-energy-to-power-sm-malls/
WHAT SHOULD BE MY NEXT MOVE
In the weekly timeframe, SMPH is seen to be touching previous support levels now turned resistance. This could indicate that the price would bounce back and head downwards. Its current RSI has just recently visited the oversold levels which could mean that prices may start to go back up now. However, if we look at the MACD, it doesn’t seem like it would be the case since there doesn’t seem to be any signs of reversals. Moreover, the price action is very parabolic, meaning that the current green candle that we see could just be a “dead-cat bounce”, a temporary short-lived price recovery followed by a continuous downtrend movement.
With the PSEI and economic status being in a bad state, it is best to be very cautious about your trades and the positions you are holding.
Despite being a blue chip stock, let us not take for granted the fundamental and technical factors that could affect its price in the market. With the given market conditions, it would be best to buy the dips without using too much of your capital. Always stay updated with relevant news for the stock you’ve chosen and practice due diligence.
Once again, KUDOS to @myholdings for being this week’s featured trader! Enjoy your 14-day InvestaPrime Access and continue to be an inspiration to the trading community.
