Monday, January 20, 2025

Justifying the 90-Share Purchase of URC Despite a Sell Signal

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 stock chart showing retracement levels and moving averages

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.

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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Retracement Analysis of URC Downward Power Moves

Contents:

  • Understanding Retracement in Trading
  • Breakdown of URC's Retracement Levels Across Three Downward Moves
  • Retracement Probabilities and Key Levels
  • Key Takeaways from the Charts
  • Final Analysis and Trading Strategy

The analysis presented focuses on three separate downward power moves of Universal Robina Corporation (URC), each of which underwent a retracement phase. The data table outlines key retracement levels and probabilities of rebound, while the accompanying retracement charts visually highlight these key levels.

Universal Robina Corporation (URC) stock chart displaying retracement levels and probabilities for August 2024.

URC stock retracement levels from the August 2024 power move, showing potential trend continuation points.

URC stock chart illustrating retracement levels for November 2024, including 33%, 66%, and reversal sweet spots.

URC stock retracement analysis for the November 2024 downward move, highlighting key probability zones.


Universal Robina Corporation (URC) technical analysis showing retracement levels from the January 2025 power move.

URC retracement probabilities for January 2025, emphasizing resistance and reversal areas.

Understanding Retracement in Trading

A retracement is a temporary reversal in price movement within an overall trend. In downtrending stocks, retracements occur as price moves upward after a significant drop before resuming its downward trajectory. Identifying retracement levels helps traders determine whether a pullback is a continuation setup or a signal for a potential reversal.

Key Retracement Levels:

  1. 100% Retracement (Origin/Start) – The beginning of the downward power move.
  2. 66% Retracement – The level where price has a 80% probability of resuming its downward move.
  3. 33% Retracement – A more cautious zone where price has a 50% probability of continuing downward.
  4. 0% Retracement (End of Move) – The lowest price reached in the downward move.

In contrast, a "Sweet Spot - Reversal Zone" lies in the 50%-75% retracement area, where there is a 60%-90% probability of a price rebound.

Breakdown of URC's Retracement Levels Across Three Downward Moves

Trade Duration5 Days (Aug 2024)8 Days (Nov 2024)4 Days (Jan 2025)
Start Date of Power Move01-Aug-2406-Nov-2413-Jan-25
Origin Price (100%)119.00101.3079.15
End Date of Power Move06-Aug-2414-Nov-2417-Jan-25
End Price (0%)98.1078.6567.80
Total Price Range20.9022.6511.35

Retracement Probabilities and Key Levels

  1. First Downtrend (August 2024)

    • 100% Retracement: 119.00
    • 66% Retracement: 111.90 (80% probability of downward continuation)
    • 33% Retracement: 105.00 (50% probability)
    • 0% Retracement: 98.10 (Potential reversal or continuation)
    • Reversal Sweet Spot: Between 108.55 and 113.80 (60%-90% probability of rebound)

  2. Second Downtrend (November 2024)

    • 100% Retracement: 101.30
    • 66% Retracement: 93.60 (80% probability of downtrend continuation)
    • 33% Retracement: 86.15 (50% probability)
    • 0% Retracement: 78.65
    • Reversal Sweet Spot: Between 90.00 and 95.65

  3. Third Downtrend (January 2025)

    • 100% Retracement: 79.15
    • 66% Retracement: 75.30
    • 33% Retracement: 71.55
    • 0% Retracement: 67.80
    • Reversal Sweet Spot: Between 73.50 and 76.35

Key Takeaways from the Charts

Each retracement analysis provides the following insights:

First Move (August 2024)

  • The price never surpassed the 33% retracement level (105.00), indicating strong bearish momentum.
  • This failure to break above 33% reinforced the high probability of trend continuation, confirming the downtrend’s strength.
  • The move served as a bearish confirmation, signaling a low likelihood of reversal.
  • Short traders should have waited for a shallower retracement before re-entering, as the price did not show signs of a deeper pullback.
  • Long traders looking for a bounce should have exercised caution, as retracement failure at 33% often signals further downside.
  • Key level to monitor in future setups: The 66% retracement (111.90) was never tested, reinforcing that the bearish trend remained dominant.

Second Move (November 2024)

  • Price briefly reached the 33%-50% retracement zone before selling pressure resumed.
  • This created an ideal short-selling opportunity, as the probability of trend continuation remained high.

Third Move (January 2025)

  • This was a shorter-duration downtrend, with retracement failing to approach even the 33% level (71.55).
  • The narrower price range resulted in a tighter retracement zone, limiting opportunities for counter-trend trades.
  • Selling pressure was exceptionally strong, causing the price to struggle to find support before stabilizing within the 33% continuation zone and moving sideways.

These insights emphasize the importance of adjusting expectations based on retracement behavior, recognizing when deep pullbacks are unlikely, and aligning trades accordingly.

Final Analysis and Trading Strategy

  • The 33% retracement level served as a key resistance zone, as price failed to move beyond this level in both August 2024 and January 2025.
  • The 66% retracement level was never tested, highlighting the strength of the bearish trend and the absence of deeper pullbacks.
  • The failure to rebound beyond 33% suggests that counter-trend trades were ineffective, reinforcing the importance of trend-following strategies over reversal setups in these scenarios.

Trading Decision Points:

  • Short positions (continuation trades) remained valid even before reaching 66%, as price consistently reversed near the 33% retracement zone.
  • Long positions (reversal trades) lacked confirmation, as price never entered the 50%-75% reversal sweet spot, requiring traders to wait for a stronger bullish signal before considering entries.

This refined retracement trading approach helps traders capitalize on both trend continuation and potential reversals, optimizing trade setups while minimizing unnecessary risk exposure.

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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Mid-Day Stock Analysis: URC's Intra-Day Chart Under Hybrid 10-Step Strategy for January 20, 2025

Mid-Day Stock Analysis

January 20, 2025

The stock market is a battlefield of buyers and sellers, with every price movement telling a story. In this mid-day assessment of Universal Robina Corporation (URC), we apply our Hybrid 10-Step Strategy to evaluate the stock’s performance and determine the best course of action for traders.

URC stock mid-day analysis showing trend context, key retracement levels, and decision points for traders.

Universal Robina Corporation (URC) intra-day chart analysis with key trend and price action


Step 1: Identifying Market State & Trend Context

URC is still in a downtrend, with recent price action showing a steep decline. A slight consolidation is emerging near a possible support level, but the broader sentiment remains bearish. ➡️ Decision: SELL bias, but monitor for potential reversal.

Step 2: Position, Location & Key Retracement Zones

The stock is below key moving averages, reinforcing the bearish outlook. However, there is a minor stabilization at a potential support zone. ➡️ Decision: HOLD (if monitoring for reversal) / SELL (if trend remains weak).

Step 3: Power Bars & Retracement Strength

URC’s recent red power bars indicate strong downward pressure. The emerging green candle is weak, failing to signal a strong reversal. ➡️ Decision: SELL (unless stronger green power bars appear).

Step 4: Entry Confirmation From Both Strategies

There is no confirmed breakout above resistance, and the small green candle suggests hesitation. ➡️ Decision: HOLD (for more confirmation) / SELL (if resistance holds).

Step 5: Tactical Stop-Loss Adjustments

For existing long positions, stop-loss levels should be closely watched. For short positions, a trailing stop-loss is advisable to lock in profits. ➡️ Decision: HOLD (if stop-loss is secure) / SELL (if price nears stop-loss without recovery).

Step 6: Color Change as a Secondary Confirmation

A minor shift from red to green is observed, but the lack of momentum weakens its validity as a buy signal. ➡️ Decision: HOLD (if waiting for confirmation) / SELL (if no strong recovery appears).

Step 7: Profit-Taking Aligned with Retracement Targets

URC hasn’t reached a major resistance level yet. However, partial selling of short positions can be considered due to the reduced downward momentum. ➡️ Decision: PARTIAL SELL (secure some gains on short positions).

Step 8: Re-Entry at Secondary Retracement Pullbacks

A potential buy entry exists if a strong bounce from support occurs. However, with weak buying pressure, re-entry is currently risky. ➡️ Decision: HOLD (until stronger confirmation emerges).

Step 9: Tactical Position Management

The market is showing hesitation, indicating a slowing down of the downtrend. For those holding short positions, partial profit-taking could be wise. ➡️ Decision: PARTIAL SELL (lock in gains).

Step 10: Counter-Trend Trades Only When Retracement Fails

Since the market remains in a strong downtrend, a counter-trend buy is only justified if a strong reversal signal appears. ➡️ Decision: HOLD (wait for further confirmation before a counter-trend buy).

Final Mid-Day Evaluation

  • HOLD: If waiting for a clearer signal before making a move.

  • PARTIAL SELL: If already in a short position to secure profits.

  • SELL: If downward pressure persists without signs of a reversal.

Conclusion

URC remains in a bearish state, and while minor consolidation is happening, it lacks the strength for a decisive reversal. Traders should adopt a cautious stance—monitoring for potential recovery while securing profits from short positions. The afternoon session will be key in confirming whether this level holds as support or if further downside is imminent.


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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