Stock Pick: GREEN

Before going down to what GREEN has in store, let us first give a little background about this company because most traders probably aren't familiar with this one. Greenergy Holdings Inc. or GREEN, formerly known as MUSX Corp. is a listed renewable energy firm led by businessman Andrew Tiu.

The company used to create, design, develop, and manufacture semiconductors until it became a holding company. Though GREEN's semiconductor business remained under it's umbrella name Music Semiconductors Coroporation or MUSX Corporation, it started to venture and focus to the field of renewable energy in the latter part of 2010. In June 22, 2011, SEC approved the company's proposal to change its name (MUSX) to the current one (GREEN).

GREEN is considered as a third liner stock. This stock lacks volatility and volume but it may change soon. Earthright Holdings, the parent firm of listed AgriNurture Inc., bought a total of 250 billion GREEN shares for P250M at P0.01 per share via private placement. Greenergy's president and chief executive Andrew Tiu owns Earthright and AgriNurture, Inc. The private placement increased GREEN's capital stock from P1B to P2B.

Apart from the private placement, Greenergy are also in talks for a possible purchase of a Taiwanese renewable energy firm. GREEN said in a PSE filing last Thursday (Feb. 23, 2012) that is board approved a plan to enter into negotiations with Grateful Strategic Consultants Co., a company that operates two biomass plants in Taiwan, for a possible acquisition.

Coincidentally, the general manager of the Taiwanese firm, General Manager Chung Ming Yang, is also a director in AgiNurture, Inc. which is owned by Tiu.

Apart from the private placement and the possible acquisition of the Taiwanese firm, Greenergy is also planning to put up at least 1,000 MW (megawatts) of wind power facilities in the country in the next 10 years and is said that will prioritize spending of up to $200M on wind energy.

Other than its plans on wind energy, Greenergy also looks forward to do projects on biomass, geothermal power, solar power, and hydroelectric power.

Greenergy also had a recent joint agreement with Chinese firm Tianjin Tianabao Investment and Development Corp. to put up renewable energy projects.

The chart below shows GREEN's price action since it changed its name from MUSX.

The chart suggests some strength. Here's why:

1.) Its SMA1 (32-day SMA) is moving fast and higher from the other SMAs (SMA2 at 65 days and SMA3 at 130 days). If a shorter SMA moves higher than the longer SMA, it indicates strength. 

2.) Though GREEN's price may look like moving inside a channel, price at 0.12 is well supported and became GREEN's immediate value. Notice how many times did it open below 0.12 but it still managed to close at 0.12. The surge from 0.11 to as high as 0.15 may have been prompted by the rumor about the possible acquisitions and the private placement.

3.) Since the surge during the first week of February, the resistance at 0.12 became its support. If you played GREEN during these times, you could have pocketed instant 8.33% everyday by buying GREEN at 0.12 and posting immediately at 0.13.

4.) Because of the news, GREEN is now a fundamentally sound stock. GREEN may have consolidated and needs a catalyst for it to surge again. However, since the news is already out, we could expect for GREEN and Andrew Tiu to release disclosures from time to time particularly regarding their acquisition in Taiwan or their planned projects.

At it's current price at 0.13, it's immediate TP could be its high at 0.15. That is some 15.38% gain.

Last Feb. 24, 2012, GREEN's latest trading day, it finished with only 54 trades for a total of 272,900,000 shares or only 4.27% of its outstanding shares. ATR Kim Eng bought 72,000,000 shares for a total of P936,000 and sold none. ATR Kim Eng also ate up the shares when the day closed which meant that such broker may have been positioning itself for a possible price surge.

Analysis:

GREEN is currently at 0.13 which could possibly be its new support, the same thing that happened to 0.12. MACD is showing some reversal and may cross. A cross between a shorter moving average (blue line) going up the longer moving average (orange line) indicates strength. RSI also crossed its resistance which is another indicator of strength. However, its RSI must break past 55. Right now, its RSI is at 54.59.

MBT: Who will win, resistance or support?

MBT is one of the best performing stocks in the financial and banking sector. In fact, it is one of the big reasons why the financial sector has been doing exemplary well this year. Below is MBT's long term chart.

MBT is currently at its long term resistance which theoretically suggests that MBT will go back down. Below is MBT's short term chart which suggests a different thing.

MBT is currently on its short term uptrend support which, again theoretically, suggests that MBT should bounce and continue to go back up. Because of the strong momentum that it has gained and considering the strength of the financial sector and even the whole index, MBT has a greater chance of bouncing back up.

However, it's MACD and RSI are suggesting some weakness which may make the long term trend resistance more significant than its short term trend.

Citiseconline has set a face value of 108 for MBT which is 30% away from its current price at 83.15.

Stocks has been breaking all time highs this year and MBT might just do the same. Three possibilities: [1] MBT will simply break it's long term resistance, [2] MBT will consolidate before breaking out, or [3] MBT may sink lower giving more buying opportunities.

PSEI: Correction Bound?

The Philippine Stock Market Index has been stellar since 2012 stepped in. The index has gone up from a little over 4300 after 2011 to as high as 4950 (as of this writing) or roughly 14% in less than 2 months. We are officially in a bull market. A bull market is a market condition wherein almost everybody is a genius, even the beginners. Almost all the stocks you buy go up if given some time resulting to hefty gains.

However, looking at it short term, the index may go lower for a few days (which is quite rare for 2012).

The chart above shows that the index, which is currently at 4950, is near its possible psychological resistance at 5000. It is also inside an uptrend channel which pegs its resistance at 5000.

However, PSE's RSI is still far from overbought which may, just may, push it higher past 5000.

Whether PSE corrects at 5000 or will break past it, it doesn't matter. Oil, mining, the financial sector, real estate, and everybody's new favorite, the basuras are doing more than just fine, as well as other sectors. This bull run has a long way to go because this has been the long overdue run last year (Japan tsunami, chaos in the middle east, European debt crisis, who cares about Europe especially Greece these days by the way? haha!) and companies in the Philippines has been so fundamentally excellent. Prices will continue to go up so let's enjoy the feeling of being a genius while it lasts. haha!

You can disregard the index but if you want a more better return, consider trading with the index's momentum.