Latest posts by Jaycee De Guzman (see all)
- $TECH Trade Dissection: How We Earned Up to 20% in the 1st Round and Up to 15% in the 2nd Round - December 7, 2018
- $NOW Trade Dissection: How We Lose 20% in Round 1 and Earned 50% in Round 2 - December 6, 2018
- PXP, STI, PLC, ABA, BEL: Know Their Top 10 Players’ Buying and Selling Averages - December 5, 2018
It’s been more than five months since I wrote the article that talked about whether Cemex Holdings Philippines, Inc. (CHP) was a bad stock recommendation of the Truly Rich Club or not. Is it one of Bro. Bo Sanchez’s bad stock recommendations? It’s not totally the fault of the good man. CHP had attractive fundamentals before the Initial Public Offering (IPO).
However, the trend changes when sentiments change. You should have made an independent decision for yourself when you felt you were no longer agreeing with the insight of the Truly Rich Club on CHP.
This is what I tell my clients. I indulge in a data-driven analysis. I don’t make “I think, feel, believe” statements without supporting it with data. But no matter how data-heavy my analysis is, you should always make a decision based on your personal financial goals, investment horizon, and risk tolerance. I am a coach. I wear pants and long sleeves with a tie. You are the one who wears shorts and rubber shoes. You’re in the basketball court. I’m on the sidelines guiding you and cheering for you. You are in charge of your own money.
CHP was trading at 3.00 when I wrote the article above. It went down by more than 30 percent as it is now trading at 2.02 as of closing on November 12, 2018. I asked the members of my Facebook Group if any of them got burned on CHP and are still holding on to their losing position. Surprisingly and sadly, many of them are still holding on to their position on CHP.
A trailing stop loss must have been employed. A trailing stop loss helps you PRESERVE your capital, PROTECT your gains, and PREVENT unbearable losses. Why? It’ll force you to calculate your reward-to-risk ratio and to respect your risk tolerance. If you’re one of my clients, I strongly suggest that you read Newsletter Vol 1 No 13. I wrote that newsletter in Filipino (Tagalog). I explained what a trailing stop loss, why it’s important, and how to compute it through examples.
Anyway, since many of our customers are former Truly Rich Club subscribers and many inquirers are also from that group, I’ll give you another “freemium analysis” of CHP. You can treat this as a sample of how I respond to my customers in the forum in a conversational yet informative and technical yet understandable manner.
Let’s start with the chart of CHP.
This stock is still playing inside the downtrend channel. The bears still carry the ball. You don’t want to see the support at 1.90 to be broken. Otherwise, the 1.40-160 range will be more likely to be revisited. That range is in confluence with the 38.2 percent and 61.8 percent of the Down Fibonacci extensions, respectively.
What you want to happen here is to see CHP breaking out above the resistance between 2.35 and 2.40. That range is aligned with the Down Fibonacci’s 61.8 percent retracement. Breaking out above 2.35-2.40 will make CHP escape the downtrend channel and hopefully move closer to the 200 SMA. Know that CHP has a lot of work to do just to kiss the 200 SMA at 3.25.
On the other hand, CHP must break above the mid-range resistance at 2.09, preferably with a bullish volume, to build a stronger upward momentum.
I get the same observations when I switched from this daily chart to the weekly chart of CHP.
Let’s talk about the alignments of the simple moving averages.
CHP is officially moving inside the bearish territory because the longer-term SMAs are above the shorter-term SMAs. That’s not the alignment you wish to see unless your buy case is at least 80 percent intact. If your buy case is at least 80 percent intact, you have a data-driven reason to hold your position or buy more shares.
Do you really know and understand your buy case for CHP or you simply bought it because it appeared on the Strategic Averaging Method (SAM) table of the Truly Rich Club?
Almost all of the Truly Rich Club members who switched to EquiPicks didn’t know what a trailing stop loss is, what a buy case is, etc.
Well, how did I know that they didn’t know?
Firstly, they tell where they came from (whose stock market service provider).
Secondly, the first thing they ask in our mentoring room (also known as Private Clients Forum) is my analysis on CHP. As a matter-of-factly, they couldn’t even wait to get their account activated. They already submit their question via email even before my team gets the chance to verify their subscription fee.
I like their trust in me and their excitement but I don’t like the fact that they’ve been holding their position on CHP since July 23, 2016.
Mama mia! That was the time when CHP was near P13.00 per share. CHP closed at 2.02 last November 12, 2018. Their portfolios are down by up to 85 percent! I’m a high-risk trader but I’ll never ever have a risk tolerance that’s up to 85 percent.
Had they’ve been taught the concept of a trailing stop loss, this would have never happened.
Their tuition for this lesson is more expensive than our subscription fee at EquiPicks!
As of November 12, 2018, at 03:30PM, the volume of CHP is 213.17% of the previous trading day.
This stock’s latest volume is still below its 30-day volume average.
Remember the correlation between price and volume.
- bullish price + volume above the 30-day volume average = bullish
- bullish price + volume below the 30-day volume average = neutral
- bearish price + volume above the 30-day volume average = bearish
- bearish price + volume below the 30-day volume average = bearish
CHP has a MODERATE RISK level due to its risk percentage of 48.91%.
I said it before that you should check the risk level of the stock to see if its risk level is aligned with your risk tolerance.
If you’re a low-risk trader, trade stocks with a low to moderate risk levels.
Go for the high-risk to extremely high-risk stocks if you are a high-risk trader.
However, does it mean it’s okay to enter a new position on CHP just because it has a low-risk level?
You never base your decision on one indicator.
Don’t you see that I created more than one proprietary tool and I post several charts in my analyses?
You have to confirm what one indicator says with what the other indicator is saying.
I am the author of this Risk Level indicator so I can explain to you why CHP is low-risk despite its bearish price action.
CHP is low-risk because of the absence of extreme downward fluctuations. It went down “organically,” so to speak.
A stock will have a high-risk level when its price fluctuates erratically (either downward or upward).
Foreign Fund Flow
CHP registered a Net Foreign Selling worth P1,129,770.00 as of November 12, 2018.
On a 30-day trading period, CHP is on a Net Foreign Selling worth PHP123,972,740.00.
You don’t want to enter a new position on a stock while the foreign fundies are busy vomiting their shares. Let these deep-pocketed investors get over their selling activities on CHP for now. Let them settle down.
Most active price point(s)/range(s): 2.02-2.03
Why did I create this chart? Why do I always update my clients with the Price-Volume Distribution chart of the stocks that I monitor for short-term trading and long-term investing? Why do I always give them this chart when they request for my analysis that isn’t part of our watchlist?
- It helps us identify reversals, divergences, or false breakouts.
- It shows at a glance the prices that got the biggest volume with the highest number of trades.
- It helps us see if the majority of the volume is registered near the intraday high, intraday low, or median. The price bar at the top of the chart represents the intraday high. The price bar at the bottom represents the intraday low.
- It gives us a clue if cross trades happened at a certain price.
- This chart helps us decide where we should place our buying or selling price because we can see the prices that got the biggest volume with the highest number of trades at a glance.
Top 10 Players – EOD
Trading participants of CHP with a 100% Buying and Selling Activity as of Nov-12-2018 at 03:30PM:
- 5 out of 15 participants or 33.33% of all participants registered a 100% BUYING activity
- 4 out of 15 participants or 26.67% of all participants registered a 100% SELLING activity
- Top 10 Players’ Buying Average: 2.0275
- Top 10 Players’ Selling Average: 2.0260
The psychological average price of the top 10 players as of Nov-12-2018 at 03:30PM is from 2.0260 to 2.0275.
Top 10 Players – MTD
Trading participants of CHP with a 100% Buying and Selling Activity from Nov-05-2018 to Nov-12-2018 at 03:30PM:
- 17 out of 60 participants or 28.33% of all participants registered a 100% BUYING activity
- 12 out of 60 participants or 20.00% of all participants registered a 100% SELLING activity
- Top 10 Players’ Buying Average: 2.0668
- Top 10 Players’ Selling Average: 2.0620
The psychological average price of the top 10 players from Nov-05-2018 to Nov-12-2018 is from 2.0620 to 2.0668.
Why did I create the Top 10 Players chart? Why is it one of the most used tools in helping our customers at Equilyst Analytics?
- It helps us see if the top 10 brokers of the stock are buying the dips, selling the rips, or moving sideways.
- It ranks all of the brokers who have traded the stock as of the time of checking/
- It tells us the buying and selling average of each of the top 10 players of the stock on a real-time basis.
- It tells us the psychological average price of the top 10 players of the stock.
- It tells us the buying average and selling average of each of the top 10 players.
- It tells us the cumulative buying average and cumulative selling average of the top 10 players.
What should you do if you’re trading a stock with a paper loss that’s beyond your risk tolerance?
Firstly, write down the lessons you’ve learned from the experience. Don’t rush into thinking whether you should buy, sell, or hold your position. You can tackle that later. What you need to tackle now are the painful and costly lessons you’ve learned. If won’t tackle these things now, you’ll be more likely to encounter a de javu of the same mistakes.
Secondly, you trim your losses. Based on my analysis, the bears are holding the ball so tightly. In short, the bias is still with the bears. Is it impossible for CHP to recover back to its IPO price? It is not impossible. But the risk is greater than the reward right now.
You can say, “But Jaycee, I’m a growth investor. I’m forward-looking.”
Whether you’re a value investor (focuses on the present value of the company) or a growth investor (focuses on the future value of the company), you’re not exempted from this thing called Portfolio Risk Management.
Trim your losses in tranches.
Why in tranches and not just at once?
Oh, well, if I didn’t know any better. Sell at once if you can do that without having a heart attack.
Sell in tranches so you don’t get wiped out of the game totally just in case sentiments start to change for CHP. Know that selling in tranches is not a shield from additional losses. If CHP continues to challenge the 1.40-1.60 range, that means your paper losses will increase, too.
Welcome to the stock market!
I hope you will find a mentor who can guide you properly.
Modesty aside, if you think that’s me, you’re more than welcome to subscribe to EquiPicks.