^Disclaimer

^{Privacy Notice}

^{Terms of Service}

Chart of the Week - February 9, 2009

Manila Electric Company (MER)

MER Monthly Chart - Looks Poised to Retest its Previous High at 105.50

charts are courtesy of Metastock

MER Weekly Chart - Broke Above its Consolidation,  

charts are courtesy of Metastock

MER Daily Chart - Trending Up Strongly

charts are courtesy of Metastock

Legend: blue lines - range for Tsupiteros

            dotted blue lines - range for Position Traders

            red lines - important trend lines

Rumors have been circulating all over the place that the buy-out of the Lopez group by the SMC group is already a "done deal". It is even rumored that Mr. Ramon Ang himself as well as Mr. Winston Garcia is currently buying shares in the market right now. Obviously, if the deal between MER and the Lopezes pushes thru, the deal will be done at a premium to the current market price. This explains the unusually strong movement of all the Lopez stocks and especially MER at the moment. As you can see in the charts of MER above, the stock is now trending up in all time-frames. In fact, believe it or not but the monthly chart is now pointing to a retest of that previous high of 105.50 in the next couple of months time. Let's examine the charts more closely.

You can see in the monthly chart of MER above that the stock appears to have confirmed a trough at the 36.00 level already. By breaking and closing the week above the 65.00 level, the stock has now confirmed that it is trending up already, not only in the short-term but also in the long-term. By stating that the stock will retest its previous high at 105.50 is being conservative. Since the stock is now trending up again, I would certainly expect the stock to form new highs in the next few months from now.  I will continue to expect this scenario in MER as long as it no longer drops down below the 55.00 level. Short-term target is pegged at the 84.00 level.

In the short-term, you can see that the stock is now rocketing up and has even broken above its previous high at 66.00. If its trend continues, its next short-term resistance will already be at the 75.00 level. Support is now pegged at the 62.00 level. I would continue to be bullish in this stock in the short-term as long as it continues to hold above the 62.00 level.

How do we play this stock? Obviously, as a general strategy, you either just want to buy this stock or hold it. If you are medium to long-term investor and are willing to incur drawdowns of at least 20%, you may start to buy the stock right now. However, if you are a Tsupitero, it may be a bit high already to buy the stock at current levels. As a Tsupitero, you either just want to hold your position or look to take profits as close to 75.00 as possible. What if you want to buy this stock? Well, unless you can bear a possible downswing of 20%, I would advise to just let this rally go and just wait for the next correction before buying it.

The next question that a speculator should ask right now is, where will the Lopezes put their money next? :-)

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.