Showing posts with label Stock Market Analysis. Show all posts
Showing posts with label Stock Market Analysis. Show all posts

Friday, February 7, 2025

Strategy for Those Accumulating MER Inside the 460–500 Consolidation Range & Why We Are Not Following It

Key Highlights of the Post:

🔹 Why some traders buy inside consolidation ranges.

🔹 The risks of accumulating before a confirmed breakout.

🔹 Why we follow a breakout strategy—waiting for price confirmation.

🔹 How to decide which strategy best suits your trading approach.

When a stock remains in a tight consolidation range, some traders and investors choose to accumulate shares at support levels in anticipation of a future breakout. In the case of Manila Electric Company (MER), the stock has been trading between 460 and 500 for months, leading some market participants to buy near the lower range (460–470) and sell near resistance (490–500).

While this range trading strategy can be effective for certain traders, we strictly follow a breakout trading approach, meaning we do not enter a position until MER decisively breaks above 500 with volume confirmation. In this post, we’ll discuss:

🔹 Why some traders prefer accumulating inside the range.
🔹 The risks of entering too early before a confirmed breakout.
🔹 Why we wait for a breakout before committing capital.

By understanding the differences between range accumulation vs. breakout trading, traders can better align their strategy with their risk tolerance and market approach.

Ambiance at the Micro Stock Trader place, highlighting the comparison between "Breakout Trading" and "Accumulation Inside the Range

Accumulation vs. Breakout Strategy – What’s the Best Approach for Micro Stock Trader BETA Portfolio


1. The Accumulation Strategy Inside the Range

Some traders and investors choose to accumulate shares while the stock is still trading within a consolidation range (460–500 for MER). This approach is commonly referred to as:

✅ Range Trading (Buying Near Support & Selling Near Resistance)

  • Traders buy at the lower boundary (460–470) and sell near the upper boundary (490–500).
  • This strategy works if the stock remains inside the range for an extended period.
  • Key Risk: If a stock breaks down below the lower range (460), range traders may get trapped in losing positions.

✅ Accumulation Before Breakout

  • Some investors accumulate shares in anticipation of a breakout, assuming institutional buying is happening inside the range.
  • These investors typically have a longer-term horizon and are willing to hold through volatility.

2. Why We Are Not Following This Accumulation Strategy

We are strictly following a Breakout Trading Strategy, meaning:

❌ No Entry Until a Confirmed Breakout

  • Price must clear 500 with volume confirmation before entry.
  • Buying inside the range means taking on risk without confirmation, which goes against the Hybrid 10-Step Trading Strategy.

❌ Avoiding False Signals & Range-Bound Movements

  • MER has failed multiple times to break 500, meaning buyers inside the range may face extended holding periods or capital stagnation.
  • We prioritize momentum trades, where we enter only when strong demand pushes price into a new uptrend.

❌ Risk Management & Efficiency

  • Buying inside the range requires setting a stop-loss below 460, which increases the risk of getting stopped out.
  • Our breakout approach minimizes unnecessary trades, ensuring we deploy capital efficiently only when a high-probability breakout occurs.

Final Takeaway: Breakout Trading vs. Accumulation Inside the Range

📌 Breakout Traders (Our Strategy) → Wait for price to break 500 with strong volume.

📌 Range Traders → Accumulate near 460–470 and sell at 490–500.

We avoid buying inside the range because we are not speculating on accumulation—we are waiting for confirmation of a strong move above 500 to enter with momentum and reduced downside risk. 🚀

Disclaimer: This post is for informational purposes only and should not be considered financial advice. Always do your own research before making any trading decisions.


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Stock Price Review: Manila Electric Company (MER) Daily Chart as of February 6, 2025 – Is a Breakout Forming?

Contents:

  • Introduction
  • Technical Analysis: Price and Trend Overview
  • Volume Analysis: Institutional Interest or Just Noise?
  • Breakout Trading Strategy: What Really Matters?
  • Trading Recommendations Based on the Hybrid 10-Step Strategy
  • Final Thoughts

Introduction

Manila Electric Company (MER) closed at 488.60 on February 6, 2025, gaining +3.60 (+0.74%) for the day. While MER has been consolidating within the 460–500 range since December 2024, a recent increase in volume raises questions about whether a breakout is forming. This review will assess MER’s price action, volume trends, and breakout potential using our Hybrid 10-Step Trading Strategy.

A stock chart of Manila Electric Company (MER) showing technical indicators, price action, and moving averages.

MER Daily Chart Analysis – February 6, 2025

Technical Analysis: Price and Trend Overview

1. Current Price Action

  • MER closed at 488.60, up +0.74% for the day.
  • The short-term trend (20-MA at 481.15) is acting as immediate support.
  • The long-term trend (200-MA at 426.54) remains significantly lower, confirming a strong uptrend in the bigger picture.

2. Key Resistance and Consolidation

  • MER has been ranging between 460–500 since December 2024.
  • 500 remains the key breakout level, while 475–480 serves as near-term support.
  • Despite a recent rebound from lows, the price remains within the consolidation zone, meaning no confirmed breakout has occurred yet.

Volume Analysis: Institutional Interest or Just Noise?

Recent Volume Comparison

  • Closing Volume on February 6, 2025: 0.32M
  • 65-Day Volume Average (+20%) as of February 5, 2025: 0.27M
  • 30-Day Volume Average (+20%) as of February 5, 2025: 0.26M

The 0.32M volume is above historical averages, suggesting increased trading activity. However, higher volume alone does not confirm a breakout—price action must also validate the move.

Breakout Trading Strategy: What Really Matters?

A breakout strategy prioritizes price first, with volume acting as confirmation. Here’s how to analyze MER’s current setup:

  1. Breakout Occurs Only When Price Clears 500

    • Price must decisively break above 500 to confirm a bullish breakout.
    • Until then, MER is still inside the 460–500 consolidation range.

  2. Volume Confirms the Move

    • Ideal breakout volume should exceed 0.40M, significantly higher than today’s 0.32M.
    • If volume is low during a price breakout, it could be a false breakout, meaning the price could quickly reverse back inside the range.

  3. No Entry if Price is Not in the Sweet Spot

    • Even with higher volume, if the price is still below 500, the breakout is not valid.
    • Decision: WAIT for the price to break above 500 before considering an entry.

Trading Recommendations Based on the Hybrid 10-Step Strategy

🔹 Short-Term Traders (Swing & Momentum)

  • Wait for a confirmed breakout above 500 before entering.
  • If MER tests 490–500 with volume exceeding 0.35M, a breakout is more likely.
  • Support at 480–475 should hold; a breakdown below 475 could signal weakness.
  • Stop-loss at 475 for any short-term buy trades.

🔹 Long-Term Investors

  • MER is above both the 20-MA and 200-MA, confirming a long-term uptrend.
  • Best accumulation zone: 460–470, where price has found support multiple times.
  • Holding is recommended unless the stock breaks below 450, which could indicate a deeper correction.

🔹 Existing Holders

  • No immediate exit needed, but if volume weakens and MER fails to break 500, expect continued consolidation.
  • Consider partial profit-taking at 500–510, as this level has acted as resistance.
  • Use a trailing stop at 475–470 to protect gains.

Final Thoughts

MER is currently in a consolidation phase between 460 and 500, with a potential breakout forming. The increase in volume is encouraging, but price confirmation is still required before entering new positions.

🚨 Final Takeaway: Wait for MER to break 500 with volume exceeding 0.40M before confirming a breakout. No entry until price is in the sweet spot! 🚀


NOTES ON OUR BREAKOUT TRADING STRATEGY

How We Arrived at the 0.40M Volume Recommendation for MER’s Breakout Confirmation

The 0.40M volume threshold for confirming a breakout above 500.00 in MER was determined based on historical volume trends, breakout theory, and institutional activity requirements. Below is a breakdown of how we arrived at this figure.

1. Historical Volume Analysis

Volume Data as of February 6, 2025:

  • Closing Volume: 0.32M
  • 65-Day Volume Average (+20%): 0.27M
  • 30-Day Volume Average (+20%): 0.26M

💡 Interpretation:

  • The 0.32M volume on February 6, 2025, was above both the 30-day and 65-day volume averages, indicating increased trading activity.
  • However, it was not enough to push the price beyond the 500 resistance level, meaning more volume is needed for a confirmed breakout.

2. Breakout Volume Rule of Thumb

A valid breakout should have at least 1.5x to 2x the stock’s average volume, ensuring that the price movement is backed by strong institutional participation and not just retail trading.

🔹 Applying This to MER:

  • 65-Day Adjusted Average Volume: 0.27M
  • Target Volume for Breakout Confirmation:
    • 1.5x of 0.27M → 0.40M
    • 2.0x of 0.27M → 0.54M

Since MER is consolidating within 460–500 and has attempted to break out multiple times without success, the minimum volume threshold for a breakout should be 1.5x the adjusted 65-day average, which equates to 0.40M.

3. Institutional Accumulation Requirement

  • For large-cap stocks like MER, institutions (fund managers, investment firms, and big traders) tend to build positions gradually.
  • A sustained volume surge above 0.40M would indicate strong institutional interest, reinforcing that the breakout is not a false move.

4. Previous Failed Breakout Attempts

  • If past breakout attempts at 500 occurred with volume lower than 0.40M and failed, it confirms that higher volume is needed to sustain a move above 500.
  • MER’s previous range-bound trading suggests that resistance remains strong, requiring significantly higher participation to break through.

Conclusion: Why 0.40M is the Key Breakout Volume Threshold

  • It is 1.5x the 65-day volume average, aligning with breakout theory.
  • It is higher than previous failed breakout volumes, indicating institutional confirmation.
  • It ensures MER’s breakout above 500 is sustainable, avoiding false breakouts.

🚨 Final Takeaway: A breakout above 500 will require volume exceeding 0.40M to be considered valid. If volume remains below this level, the breakout is at risk of failing. 🚀

Disclaimer: This post is for informational purposes only and should not be considered financial advice. Always do your own research before making any trading decisions.


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Saturday, February 1, 2025

BETA Portfolio Rebalancing: February 2025 Strategy Amid PSEi Bear Market

Contents:

  • Introduction
  • PSEi Market Situationer: February 2025 Outlook
  • Current BETA Portfolio Analysis
  • Recommended Adjustments for February 2025
  • Final Portfolio Strategy for February 2025

Introduction

The Philippine Stock Exchange Index (PSEi) has officially entered bear market territory, declining by 22.4% from its recent high of 7,554 in October. This downturn is attributed to disappointing macroeconomic data and a major index rebalancing, leaving investors searching for catalysts to revive the market.

In light of these developments, it's crucial to reassess our BETA Portfolio to ensure it remains resilient and well-positioned for future market recoveries. Our strategy this month focuses on optimizing growth stock allocations, adjusting REIT positions, and maintaining defensive dividend stocks.

BETA Portfolio rebalancing strategy for February 2025, focusing on stock adjustments and risk management.

Optimizing the BETA Portfolio amid PSEi market downturn


PSEi Market Situationer: February 2025 Outlook

As of January 31, 2025, the PSEi closed at 5,862.59, marking its lowest level in over two years. This decline reflects the impact of a slowing economy, persistent inflation, and recent storms. Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., noted, "We were affected by sticky inflation, the impact of the storms and there appears to be no clear positive support for growth in 2025, except for the infrastructure spending of the government."

The recent index rebalancing, which saw the inclusion of China Banking Corp. and AREIT Inc., also contributed to market volatility. AP Securities Inc. research head Alfred Benjamin Garcia explained that the combined free-float weighted market capitalization of these new entries required adjustments across all index stocks.

Given these factors, opportunities will be selective. It's essential to focus on growth stocks demonstrating technical resilience, defensive dividend stocks for stability, and maintaining liquidity to capitalize on potential bullish reversals.

Current BETA Portfolio Analysis

Our BETA Portfolio is currently 98% invested, with only 2% held in cash, limiting our flexibility for opportunistic trades. The current allocations are:

  • Growth Stocks: 32% – Positioned for long-term appreciation but lacking confirmed breakouts.

  • REITs: 39% – Providing passive income but overweighted in a market where capital appreciation is uncertain.

  • Dividend Stocks: 27% – Defensive holdings offering stability amid PSEi volatility.

To optimize risk exposure, increase liquidity, and reallocate capital to high-conviction trades, we recommend the following adjustments.

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Thursday, January 23, 2025

Live Testing the Hybrid 10-Step Trading Strategy – Day 4, Week 4: Evaluating URC, MONDE, ALLHC, DDMPR, and RCR for Potential Trades

Contents:

  • Overview: Entering Day 4 of Week 4 in Phase 2 of Our Live Testing
  • Stock Evaluations Using the Hybrid 10-Step Trading Strategy
  • Final Thoughts – Are We Entering Our First Trade Today?


Overview: Entering Day 4 of Week 4 in Phase 2 of Our Live Testing

As we progress into Day 4 of Week 4 in Phase 2 of live testing our Hybrid 10-Step Trading Strategy, we are still on the hunt for our first trade under this phase. The objective remains the same—identifying high-probability trade setups while ensuring strict adherence to risk management.

Despite multiple evaluations over the past weeks, no setup has met our strict entry criteria for initiating a position. This disciplined approach ensures that we do not force trades in unfavorable market conditions. Today, we are revisiting five stocks—URC, MONDE, ALLHC, DDMPR, and RCR—to evaluate their potential trade setups based on our Hybrid 10-Step Trading Strategy.

Stock chart of RCR from January 22, 2025, with key technical indicators and trading signals.

January 22, 2025, closing chart of DDMPR analyzed under the Hybrid 10-Step Trading Strategy.


Are We Any Closer to Finding Our First Trade?

Today’s post will break down:
✅ Key technical insights from each stock’s January 22, 2025 closing chart.
✅ Buy and sell signals we are looking for today (January 23, 2025).
✅ Recommended stop-loss levels and profit-taking zones.
✅ Our overall game plan moving forward.

The analysis will determine if any of these stocks present a solid trade opportunity or if we continue to wait for better setups.

Stock Evaluations Using the Hybrid 10-Step Trading Strategy

1. URC (Universal Robina Corporation) – Bearish Continuation with No Clear Reversal Yet

Market State & Trend Context (Step 1)

URC remains in a strong downtrend, consistently making lower highs and lower lows.

  • The 200-day moving average (97.59) is trending downward, confirming long-term bearish sentiment.
  • The 20-day moving average (74.90) is also declining, acting as dynamic resistance.
  • URC closed at 64.50, significantly below both moving averages, reinforcing continued weakness.

Position, Location & Key Retracement Zones (Step 2)

  • Major resistance is at 75.00, near the 20-MA rejection zone.
  • Immediate support at 64.00 - 60.00 remains key for potential stabilization.
  • A break below 64.00 could open the door for further downside toward 58.00 - 60.00.

Power Bars & Retracement Strength (Step 3)

  • Recent red power bars with increasing volume suggest strong selling pressure.
  • No green power bars have emerged, meaning buyers are not stepping in aggressively yet.

Buy and Sell Signals We Are Looking for Today (January 23, 2025)

  • Buy Signal: A green power bar closing above 66.00 with volume could indicate a potential short-term reversal.
  • Sell Signal: A break below 64.00 would confirm continued bearish momentum.

Risk Management

  • Stop-Loss Level: 60.00, ensuring risk control if the decline continues.
  • Partial Profit-Taking Level: 70.00 - 72.00, where resistance may emerge.

👉 Verdict: No trade setup yet. We need confirmation of a reversal before considering a long trade.

2. MONDE (Monde Nissin Corporation) – Signs of Stabilization, but Not Ready for a Long Entry

Market State & Trend Context (Step 1)

MONDE is still in a downtrend, though it is showing early signs of stabilization above 7.00.

  • 20-MA (7.72) is a key resistance level to break before a bullish move can be confirmed.
  • 7.00 is acting as strong support, with buyers attempting to defend this level.

Buy and Sell Signals We Are Looking for Today (January 23, 2025)

  • Buy Signal: A break above 7.50 with volume, indicating bullish momentum toward 7.72 - 8.00.
  • Sell Signal: A failure to break 7.50, or a red power bar near this level, could lead to a retest of 7.00 - 6.80.

Risk Management

  • Stop-Loss Level: 6.90, protecting against downside risks.
  • Partial Profit-Taking Level: 7.80 - 8.00, aligning with resistance.

👉 Verdict: No trade yet. We need a strong breakout above 7.50.

3. ALLHC (AyalaLand Logistics Holdings Corp.) – Holding at Support, but Resistance is Strong

Buy and Sell Signals We Are Looking for Today (January 23, 2025)

  • Buy Signal: A breakout above 1.75 with volume, confirming a potential reversal.
  • Sell Signal: A failure to break 1.70, signaling continued weakness.

Risk Management

  • Stop-Loss Level: 1.60, limiting downside risk.
  • Partial Profit-Taking Level: 1.80 - 1.85, where resistance may emerge.

👉 Verdict: No trade yet. We need to see confirmation of a breakout.

4. DDMPR (DDMP REIT Inc.) – Attempting to Hold Support, but Lacks Strength

Buy and Sell Signals We Are Looking for Today (January 23, 2025)

  • Buy Signal: A bounce off 1.05 with a strong green power bar, indicating buyers stepping in.
  • Sell Signal: A break below 1.05, signaling further downside risk.

Risk Management

  • Stop-Loss Level: 1.03, keeping losses minimal.
  • Partial Profit-Taking Level: 1.08 - 1.10, aligning with 200-MA resistance.

👉 Verdict: No trade yet. Needs confirmation of support holding.

5. RCR (RL Commercial REIT Inc.) – Consolidating Near Breakout Levels

Buy and Sell Signals We Are Looking for Today (January 23, 2025)

  • Buy Signal: A break above 6.00 with volume, confirming a bullish breakout.
  • Sell Signal: A failure to hold above 5.88, leading to a potential pullback.

Risk Management

  • Stop-Loss Level: 5.85, protecting against a breakdown.
  • Partial Profit-Taking Level: 6.10 - 6.20, where sellers may emerge.

👉 Verdict: Closest to a trade setup, but needs confirmation of breakout.

Final Thoughts – Are We Entering Our First Trade Today?

Based on today’s evaluation, RCR is the closest stock to providing a potential buy setup, but we need to see a breakout above 6.00 with strong volume before entering.

For URC, MONDE, ALLHC, and DDMPR, none of them currently offer a strong enough setup to justify a trade. We remain on standby, ensuring we only take high-probability trades that align with our Hybrid 10-Step Trading Strategy.

Key Takeaways for January 23, 2025

✅ Stay patient – No forced trades!

✅ Monitor RCR closely for a potential breakout.

✅ Wait for green power bars and strong volume before entering trades.

✅ Stick to our stop-loss and profit-taking strategy.

🚀 The goal remains the same: Secure our first trade under Phase 2 – but only when conditions align!


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Disclaimer: This post is for informational purposes only and should not be considered financial advice. Always do your own research before making any trading decisions.


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