Contents:
- The WHY?
- Final Thoughts: A Tactical, Speculative Play
In our most recent analysis of Universal Robina Corporation (URC) using our Hybrid 10-Step Trading Strategy and Percentage Retracement Trading Strategy, we reached a SELL or partial SELL conclusion. The closing price of PHP 68.80 was within the 33% Retracement Continuation Zone, which typically suggests that the bearish momentum is still in play. However, despite this assessment, we made a contrarian decision to purchase 90 shares during the run-off session. The question is: why?
URC Daily Chart Analysis as of January 20, 2025
1. Position Sizing for Future Upside
While our strategies indicated a SELL, we did not make an aggressive buy but instead took a small 90-share position. This allowed us to maintain exposure in the event of an unexpected reversal or relief rally without significantly increasing our risk.
2. Intraday or Run-Off Strength Consideration
During the run-off session, we observed subtle indications of buyer absorption at the lower price levels. This could imply that sellers may have exhausted their momentum, providing an opportunity for a small tactical entry.
3. Contrarian Play on a High-Risk Reward Setup
The 33% retracement continuation zone suggests that the downtrend remains active, but it also serves as an area where some reversal attempts may form. Taking a contrarian approach, we positioned ourselves for a possible counter-trend bounce while maintaining tight risk controls.
4. Preemptive Entry for a Possible Rebound
By entering at PHP 68.80, we positioned ourselves for a potential rebound toward the 20-day moving average (PHP 75.94) or the 66% retracement level (PHP 75.30). This trade assumes that a reaction to these levels is likely in the short term, creating an opportunity for a quick gain.
5. Global Market Sentiment: Trump’s Inauguration & Macro Considerations
In a few hours, Donald J. Trump will be sworn in as the 47th President of the United States. While this may seem distant from URC’s fundamentals, global market sentiment often trickles down to emerging markets like the PSE.
How Could Trump's Inauguration Affect the Market?
Risk Sentiment Shift – If global investors perceive Trump's policies as pro-business, risk appetite may return, benefiting emerging market stocks.
Currency Fluctuations – A potential strong US dollar policy may weaken the Philippine Peso, which could impact consumer goods companies like URC due to import costs. This uncertainty may have already been priced into the sell-off.
Trade Relations & Commodities – If the US focuses on trade barriers, global supply chains may be affected. However, this could also mean a temporary relief rally as markets adjust to the new administration’s direction.
Risk Sentiment Shift – If global investors perceive Trump's policies as pro-business, risk appetite may return, benefiting emerging market stocks.
Currency Fluctuations – A potential strong US dollar policy may weaken the Philippine Peso, which could impact consumer goods companies like URC due to import costs. This uncertainty may have already been priced into the sell-off.
Trade Relations & Commodities – If the US focuses on trade barriers, global supply chains may be affected. However, this could also mean a temporary relief rally as markets adjust to the new administration’s direction.
Final Thoughts: A Tactical, Speculative Play
Despite our trading strategies signaling a SELL, our 90-share purchase was a calculated tactical entry. We viewed this as a speculative trade based on:
The potential for a near-term relief rally after market uncertainty fades.
A contrarian stance at the 33% retracement level, anticipating at least a short-term bounce.
External macroeconomic factors, including the impact of the US presidential transition on investor sentiment.
While our core strategies guide our trading discipline, market conditions sometimes justify small discretionary trades. This purchase is not about abandoning our strategies, but rather about adapting to real-time market conditions while keeping risk in check. If the price fails to hold, we remain ready to exit quickly with minimal losses, reinforcing our commitment to strategic risk management.
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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