What's keeping it from appreciating?

So we've looked upon the positive side of the story. So whats keeping the good side of the story from being realized?

A couple of things are blocking the way:

1. Resistance Lines

Resistance lines are areas of Major Supply. These are lines where selling is greatest. A couple of resistance lines are blocking the way for the price to further appreciate. At the following price levels you may enounter heavy selling: 0.12, 0.15, 0.17. These are just some of the resistance lines that can be easily identified.
You might ask why are those price levels blocking the appreciation of the stock price? The simple aswer is that many may have bought at those levels. So if most holders bought at those levels, there is a possibility that they might want to sell at the same price and just absorb the transaction costs.
Why would they want to sell at that level when it is clear that prices are starting to rise? Many factors may influence the holders of this stock to sell at that level and not wait for the stock to appreciate further. One reason is that they got severely burned by the drop in prices that they just want to be out of the stock at an acceptable level of loss.

2. Liquidity problem

As I have mentioned in my earlier post, this stock is not that liquid. Meaning there is not much shares being traded. Lack of number of tradeable shares means lack of players and a lack on the number of possible buyers of the stock.

3. Lack of positive news

The last bad news that came out last Dec gave a hard blow on the price of the stock. It needs a positive news like the one announced last Sept. So expect positive or negative news to come out during the quarterly reporting of financial statements.

And so thats it....never imagined it would be a 4 part posting. Whew!

My last recommendation is that, if you dont have patience better get out of this stock. But also, many rewards might await for those who are patient. Hehehe im trying to be the angel and the devil at the same time =p. But then again, its up to you on how risk averse you are.

My last general warning: Play the stock market only with money you can afford to loose.

The good part of the story

As I have said in my previous post that the stocks story is not that all bad news.

Ill try to enumerate the little positive things that can be seen on the chart.

1. It might have reached its bottom.
According to the chart, this stock has formed a descending triangle(right triangle). You can see in the chart a blue line sloping downwards from the middle of Sept to Dec and a horizontal line at 0.17 level. Both line forms the descending triangle. Based on technical analysis, the descending triangle suggests a bearish movement. A lot of holders are selling at lower prices, while the demand stays the same. It would come to a time when the market is swamped with sellers at a lower than low price making a break down of prices. This is what happened last Dec 12, when the price brokedown the demand line. As technical analysis suggests, this downward movement would continue up until a comfortable price level where most buyers would come in and start buyng again. This level was forcasted (see the blue dotted lines) at 0.10 level. And true enough, the downward movement stopped at that level. From that level prices has again started to move up which means buyers are now willing to buy up the price of the stock. Thats just one of the good news.

2. Its MACD line has already crossed the signal line.
Check the line graph above the chart, as you can see there are 2 lines criss-crossing each other. The blue line is an MACD line while the red dotted line is signal line. A blue line crossing above the red line means that the stock is now on the upbeat and futher confirms that buyers are starting to come in the picture. This is evidenced by the price of the stock rising which means they are willing to buy up the stock price. Demand is starting to pickup. Good news number 2

3. Volume is slowly increasing.
The average volume for this stock is around 1M shares traded. As of Jan 12, 2006. Volume was at about 800T shares traded, this means a lot are starting to buy this stock. Hopefully this increase in volume would mean also increase in price.

Next post....What is keeping this stock from appreciating?

The BIG DIP!

As metioned on the previous post, here is my analysis for our company's stock:

As what my instructor told me, lets try to discover the story of this stock before we try to see where it is going.

This stock is highly illiquid as I have observed that there are days when there were zero trades.

Obviously this stock did not have a grand start as it slid way below IPO price from 0.20 down to 0.13 last Aug 2005, the only consolation here is that it went down with low volume.

Come Sept it did make a strong come back as it went up to the 0.20 price in just a few days and went as far as 0.245 with strong volume. I remembered that Sept was the time when the company posted its 12% increase in profits.

But by mid Sept, some of the investors had already started cashing in on the profit as it again slowly went below 0.20 and settled for a long time at the 0.17 level. Notice that volume was not that significant, which means most of the holders are still waiting for it to bounce back. Perhaps they are expecting the stock to rise come Dec and January. Most stocks usually bounce up a significant amount during those days.

Unfortunately instead of bouncing up for the holidays, it dived to 0.15 level and made a big big gap down to 0.10-0.12 level. This was actually a big shock for me and ofcourse probably a lot of stock holders were left out during the gap down. In just a day, the stockprice went nearly 50% below IPO price. My colleague was just scratching his head at the current situation.

Ofcourse the big question was why did it nose dived ? What was happening with this stock? In a bid to help my colleague understand what happened to the stock, I searched SGX for some published disclosures. And true enough, there was a profit warning for half the year ending Dec 31, 2005. The disclosure was posted Dec 16, 2005 in the SGX website. The profit warning was all about our company not achieving a profit for the same term year over year.

what was very surprising, is that the stock started to drop convincingly on Dec 12, but the announcement was released on Dec 16. The sell down starting Dec 12-16 was accompanied by considerable volume trades. Which could mean that even before the announcement was published, some stock holders were already aware of it and started to sell ahead of the others.

The announcement, compounded with the date it was released (friday 6pm) worsened the situation. Panick may have set in on current holders that prompted them to sell down come monday.
The volume trade on monday's opening was high, but started to decline on the next days. Which means a considerable number of stock holders were able to get out on monday, but a lot were still left holding on to the stock. Probably they were not able to react immeaditely as the gap down probably prompted a shock to the holders.....and ofcourse common market psychology may have set in that the holders would rather hold on to the stock tight rather than sell, on hopes that it could still come back to a level where they could call it even.

On the next post, I will try to analyse where the stock may go. The stock's story is not that all bad news, will try to tell you some good news on the next post.

Not all that glitters...uses Johnsons wax =p

Our office had an IPO last June 2005 in the SGX market. I think a lot of my officemates subscribed to the IPO at SGD 0.20 per share. Some of my colleagues from the Singapore office were given stocks for free, so that the company could make it up to them for the time that the company was down and they did not receive any increase.

The IPO, honestly, was very enticing, ofcourse, why not ...its an IPO! Most of the investors think that IPO is a good deal, as stock prices of most of the IPOs after the opening day, sky rocketed. Just look at Google, it had its IPO last Aug 19, 2004. IPO price was at $85, if you are still holding on to that stock now Jan 10, 2006, the stock is now worth $466.9001. You'd drool at the current price! Its 5 times the IPO price, thats 500% increase in just 1 year, its like winning the lottery.

But ofcourse not all IPOs have a happy story to tell. In the local stock market, 2 very prominent companies had their IPO last year. Manila Water Company (MWC) and SM Investments Corp (SM). MWC had an IPO price of P6.50 while SM is at P250. Both IPOs were oversubscribed. The two IPOs were from the best of the business industry: MWC by the Ayala's and SM by the Sy's. I expected both stocks to skyrocket at the first day of trading and continue with its progress, but the sad thing is, it did not.

For MWC it did reach a high of 7.60 but has started to go as low as 5.60 and has since been fluctuating above and below the IPO price (most of the time it was under the IPO price).

For SM, it opened below IPO price, slid down to 216 level in a few days and has never gone far beyond 260 level. Most of the time it was under the IPO price.

Good thing I was late in subscribing to MWC shares, if I did made it in time, I would have been holding this stock for nearly a year now, and still no significant increase from the IPO price. That's why when the IPO offer was announced in our office, I immediately remembered MWC and SM and so I declined the option to buy the stock. Fortunately enough, when I checked the condition of our office's stock price recently, it has already dropped nearly 50% from the offer price. Imagine that!... the money that you invested last june has now decreased by half! (Its like a mid year 50% off sale on the price of the stock!).

For those of my officemates who are holding on to this stock, all I can is say that we could hope that "patience" will have its rewards, but if you do not have patience, I suggest you immediately exit this stock once it bounces back to a level where the profit can cover for your expenses.

I will be posting my analysis on this stock in the next blog entry. Watch for it!

Links Links Links!!!

o Just a compilation of links. Enjoy!

Finance

Tsupitero.com
(www.tsupitero.com)
-site owned by Miko Sayo. This site is updated weekly and features technical analysis of selected stocks in the PSE. So if you would want to know what stocks to buy, you can check out Miko Sayo's website for buy and sell recommendation. I sometimes try to validate my analysis with his findings to see if other analysts are also seeing the same thing that im seeing in the charts.

Finance Manila
(www.financemanila.net)
-site owned by bruce. This site is one of the convergence site for traders. Expect heavy discussion on local stocks and current stock market situations. If youd like to know whats up with you favorite stock, you can check out the specific entry of your stock in the forum.

Accord Capital
(www.accordcapital.ph)
-site owned by accord capital. This is the website of the broker firm that sponsored the location for Bonner and Danny's Technical Analysis seminar. I frequent this site for Bonner Dytoc and Ron Rodrigo's analysis of the market. They are also in the process of providing online trading system for their clients. So do check out their system.

Investopedia
(www.investopedia.com)
-This is the site where i go to when I would want to know a financial term that i've read somewhere. They also have series of different articles on technical analysis as well as fundamental analysis. Their article collection is a treasure trove of financial knowledge.

Stock Charts
(www.stockcharts.com)
-On times when i forget the criteria for a valid chart pattern, i usually check out this website and re-orient myself on the patterns. Ofcourse this site do contain other stock analysis articles as well.

History

Walk this way
(www.celdrantours.blogspot.com)
- Blog site owned by the streetwalker Carlos Celdran. Saw him on a tv show in abs-cbn and I was very much entertained by the way he conducted the museum tour in San Agustin Church. His way of delivering the story behind the historical exhibit makes you fully understand the "how" and "why"....not just knowing the usual "what" info. Checkout his blogsite for the schedule of tours. Will try to catch one of his tours in the near future.

Religion

Know Ur Guardian Angel
(www.viloria.com/viloria/adi/guardian.shtml)
-Want to know your guardian angel? Try this website.

Fun

ipod flea commercial
(too long to write down =p so just click the link)
-IPod craze showcases the smallest ipod ever. If you think ipod nano or the ipod shuffle was the smallest ipod ever, check out the ipod flea!


Will post some other links in the future =).

Unknown Device Identifier

Went to my wife's hometown last week to spend the new year at their house. They had an old AMD-K6 being used by my brother-in-law. The set-up was so slow as it was sporting a Windows ME OS and it had a difficult time loading the OS. Took nearly 30 mins to load the desktop. So I volunteered my services to re-format and downgrade the OS to Win98.

Created a boot diskette and started formatting. I was able to install the Win98 SE completely until I found out that my brother-in-law doesn't have the supporting drivers for the cards. It was a big problem as I was responsible for formatting the PC. I should have checked first if the drivers were available. So off I went scouring for a computer shop that could help me. Fortunately, I was able to find one.

The technician used a software called Unknown Device Identifier. It was able to identify the computer parts model numbers and vendors. And with the help of the internet, the technician was able to download the proper drivers for the PC setup. It was a close call for me, I thought I will be spending thousands of pesos to replace all the cards. =p

Here is the site where you can download the software Unknown Device Identifier, its a freeware!

Once you have identified your device, here is one of the sites where you can download the drivers http://www.driverguide.com/

StockWatch (Jan 05, 2006)

My first post for this year. Looks like the market is in an uptrend mood this week. Lots of people are cashing in on this rally.

Again, im posting a disclaimer

DISCLAIMER: I am not liable for your sleepless nights should my analysis prove to be wrong and prices heads south =p

JFC
Still trading in an upward channel. Good buy at around 40 level or below. But still watchout for this stock as MACD is still below signal line and may still test support at 39. In general this stock looks good as the 3 MAs are all below the price and MACD is still on the positive side.

GLO
bounced off the support line at 700 last Dec, but still no clear reversal signal. Price may start to go down as it has already reached 130day MA. Previous attempts to break the 130day MA all failed. So this is a wait and see if it would still fail to break this level of resistance. If it fails, we can expect prices to go down to the 700 level

FLI
Trading within a narrow symmetrical triangle. Price has already gone beyond 3 MAs and is now a wait and see if it would be able to break the 1.50 resistance level.

ALI
Broke out of an ascending triangle at 10, but with little volume. Am not sure if ALI can sustain its upward move given the small volume since November last year. But on the otherhand Ali is still bullish. Maybe the reason for such a low volume since November is that a lot of pipol are still holding on to this stock till it reaches the 11-12 level.