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Chart of the Week - Aug 10, 2009

 Manila Mining Corporation (MA)

MA Monthly Chart - Approaching Previous High at 0.038

charts are courtesy of Metastock

 

MA Weekly Chart - Trending up Strongly but Testing Previous High at 0.030 

charts are courtesy of Metastock

 

MA Daily Chart - Bullishly Consolidating at its Highs

charts are courtesy of Metastock

 

 

Legend: blue lines - range for Tsupiteros

            dotted blue lines - range for Position Traders

            red lines - important trend lines

 

Short-term Traders/Tsupiteros: Medium-term/Position Traders:
Support - 0.024 Support - 0.017 to 0.020
Resistance - 0.028 / 0.030 Resistance - 0.035 to 0.038
Trend - Up Trend - Up
Recommendation - Hold Recommendation - Hold

Manila Mining Corporation (MA) suddenly came to life last Tuesday and went limit up as news came about stating that First Pacific is conducting a due diligence. Whether this deal would eventually push thru or not is not really important at this point as the market is already anticipating the conclusion of the deal, given the tremendous ascent in its market value in just a short period of time. The big question now is, is the market getting way ahead of themselves in chasing this stock?

First, let's look at its long-term outlook by analyzing its monthly chart. As you can see above, the stock has already climbed quite a lot. Just six months ago, MA was trading at 0.007, thus, at current prices, the stock has already climbed up by 400% in just six months time. Given its steep rate of ascent, I would presume that prices will not easily break above its previous high at 0.038 and would probably consolidate first, at best. Those who bought down below may start taking some profits while those who got stuck near 0.038 may start cutting losses.

In the medium-term, by analyzing the stock's weekly chart, you can see that the stock is also at the high end of its range right now. Not only is the stock testing its previous high at 0.030 right now but is also trading at the resistance line of its upward channel. In my opinion, the huge climb last week have already factored into the price the news that First Pacific is interested in the company. While I would not discount the possibility that the stock may still continue to climb up from here, I would tend to think that prices will pause a bit for now or just move within a sideways to upward trend, at best.

The short-term picture of the stock is showing a very, very strong trend but is currently encountering resistance at the 0.028 level. Again, this strong trend was based on the news in the stock. Nevertheless, there were probably a lot of people who regretted selling this stock too early and are probably some of those who are currently supporting the stock down below. Those who are selling at 0.028 are those who are currently taking profits. So, because of the support of these people who sold too early, there is probably hardly any risk that the stock will trend down from here. However, whether the stock could continue to trend strongly from here is the big question mark. Objectively speaking, the short-term picture is already pointing to a possible target of 0.033 to 0.035, that is, as long as it holds above the 0.024 level and is able to breakout convincingly above that 0.028 level.

So, how do we trade this stock? For Position-traders, who are lucky enough to be holding this stock, you may want to just hold and use a break below the 0.02 level as your mental stop. Watch the behavior of the stock as it gets closer and closer to the 0.038 level. I would not recommend Position-traders to enter this stock anymore at current prices as it is already trading at very high levels. As for Tsupiteros, who are currently holding this stock, you may just want to hold and use a break below the 0.024 level as your mental stop. For Tsupiteros, who would like to buy this one, I would suggest buying it if prices are able to convincingly breakout above that 0.028 level. You may also want to buy it as close to 0.024 as possible, however, if you are able to buy at 0.024, the 0.028 level may become a very tough resistance line to break.

Nowadays, people have a very, very bullish perception of a stock the second that it gets associated with either Mr. Manny Pangilinan or Mr. Ramon Ang. The problem with this right now is that the market discounts the news very, very rapidly as with the case of MA. For most people who tend to buy on this news, you will likely be vulnerable to be buying at the highs. Remember, MVP or RSA too will need to sell in order to make money. Just be sure you are not the ones that they will be selling into. It would be naive to think that these people are into the business of charity.

 

Notes:

Short-term Traders/Tsupiteros vs. Medium-term/Position Traders: Recommendation for short-term traders or Tsupiteros are meant to be used by traders whose holding period are limited to one day to two weeks. Medium-term or position traders are meant to be used by traders whose holding period are two weeks to three months. Long-term investors whose holding period is more than three months should not follow these recommendations.

 

 

  2006. Miko S. Sayo. All Rights Reserved.