FLI: Ready to fly?

FLI is a stock worth looking at. The chart below shows that FLI is currently resting near its channel resistance which if broken may push FLI to go up fast.

Will FLI break past its resistance or breakdown and head back down? In my opinion, FLI may break it. It's MACD and RSI are suggesting that FLI has a good potential of going back up. RSI is far from overbought which, should buying will start, indicate that there is a very huge room for growth.

FLI is fundamentally rich as well. A week or two ago, Filinvest reported different projects worth P5.2 billion in different major cities. With that being said, we can expect FLI to have a series of developments and projects in the years to come.

Rainbow After the Rain

The crisis that has hit Europe, Greece in particular, so far has caused both reasonable and exaggerated fear. Reasonable in a sense that the markets are bound to go down in the next few weeks or even months not until the said crisis is resolved and exaggerated in a sense that some traders/investors are making it look worse than it seem. Either way, major markets are going down and not even the good economic state of the United States can spare it.

Patience is indeed a virtue and on an investors' point of view, the rewards that may follow the recession may not just be great but spectacular. Let's see how did some blue chip companies do after the 2008 financial crisis.

DMC - For as low as P2 per share in December 2008, DMC went up to as high as P48 in May 2011 or some 2400% increase in 2.5 years. DMC was around its previous high of P14 before it went down to lower the P2 levels.

JGS - JGS was around P2 per share in December 2008 and went up to as high as P28 in May 2011 or 1400% increase in 2.5 years. JGS was at a previous high of around P15 before it went down to P2.

DMC and JGS are just some of the stocks that have worked wonders when the market recovered. What does this say? Blue chips are bound to get cheap with the upcoming recession (if Europe can't solve the Greece puzzle). Some stocks that are have great potential are EDC, MEG, mining sector stocks such as PX, NI, ORE, AGP, DIZ, LC, and MA, the financial sector stocks, and probably SMC, and CEB.

However, while waiting for the storm to calm down, penny stocks are getting some attention. 2011 was filled with mixed emotions in the market but these penny stocks has just been plain spectacular

BHI - From around 0.065 in January 2011 to as high as 0.51 mid September, BHI has already went up to as high as 685% in just 9 months before it went down after the news broke out that it is going to be suspended for 3 months. At around 0.2, BHI is somewhat cheap and it will go back up in just a matter of time.

MA - From 0.022 in January to as high as 0.077 at late August, MA has gone up to as high as 250% in just a matter of 9 months. Thanks to the strong mining sector that has pushed this one up along with LC. MA/B has basically the same growth as MA.

LC - A leap from 0.4 to 1.8, LC has gone up by 350% in just a matter of roughly 9 months. A strong gold plus the Goldfields deal pushed LC up along with LC/B and pulled MA and MA/B along with it.

ZHI - Kinda late as it started its run just on July but it went up by more or less 500% in just a matter of weeks. After the retracement, ZHI has started to show some life once again by going up from 0.6 to nearly 1, roughly 66% in two or three weeks.

What are the key points here?

1.) With a very uncertain market, traders/investors are banking on "cheap" stocks such as penny stocks. Putting aside P/E ratios, debt-to-equity ratios, and other fundamental indicators, by cheap we mean a huge upside potential. Penny stocks can give a large number of shares which in return, may result to bigger earnings (or losses) per tick. Penny stocks come to life when the market is bad and while waiting for the market to recover and the blue chips to come back to life, rest on penny stocks. One stock that may follow suit is WPI.

2.) As soon as the market recovers, shift to blue chip companies. Blues move faster in a very good economy because they are the barometers of the economy. Though penny stocks may still continue to do good, blue chips move faster. Just refer to DMC and JGS's performance after 2008.

BEL: Double Bottom?

The chart below shows that BEL (Belle Corporation) is in a potential double bottom. BEL was one of the many companies that surged late in 2010 as it went up from a little below P2.50 last November of 2010 to as high as P6.30 in mid January of 2011 before starting to sink to less than P5 in February.

However as shown in the chart, BEL gained some momentum at around P4.70ish, went back up to reach near P5.20 before going back down to around P4.70. Since then, BEL gradually picked up some uptrend momentum.

What's interesting in the chart is that the P4.70 level was an uptrend resistance before the double bottom (hopefully) formed. Around January 6, 2011, BEL hit the P4.70 level before bouncing back up for one more run before losing some strength.

Should the double bottom hold, BEL could continue its uptrend run. The good catch? BEL is just hovering around the P5 mark, quite cheap.

I'm optimistic about BEL (I'm always optimistic anyway) but a confirmation would be wise. The double bottom might not hold true. Better be safe than sorry.

MER: Shining Bright

The chart below shows that MER (Meralco) is getting near it's 2-year uptrend support at around the 213-220 range. For the month of February, MER found a strong support at around the 216-220 range but always manages to finish a higher high from 235 to around 240 and its resistance forming a slope signaling an uptrend.

If worse comes to worse and the technicals won't hold true, MER could fall back down to its 5-year uptrend support at around 160.

Fundamentally, MER is a good long term buy. MER has significantly developed under the leadership of Manny Pangilinan in energy production, distribution, and customer care. MER is looking forward for further and massive developments in energy production and distribution in the next 5 years.

To start off, MER is going to put up a pioneering jet fuel/diesel/natural gas plant in Calamba, Laguna set to start on the first quarter of 2012 to produce 120-150 megawatts of power. The company also aims to produce 150 megawatts in 2012, another 150 megawatts in 2013, 600 megawatts in 2014, and 300 megawatts in both 2015 and 2016. MER is also in talks with 2 to 4 groups for possible partnerships in the future and is optimistic that they can offer consumers 5 kilowatt per hour rates.

MER is dancing around the 230 levels right now which for me is a good buy. As soon as their plans will start to come into fruition, MER could go as high as 450 in the next 1 1/2 years based on Fibonacci.

SCC: Going Down?

For a little more than a year, SCC's uptrend support has been so strong. SCC's stock rose from around P40 in January of 2010 to as high as P210 (even higher) in January of 2011. The support was challenged several times yet held firm.

However the chart below signifies that SCC's uptrend support might finally give in. First, the chart shows a rising wedge formation which theoretically signals that a downtrend is coming soon. Second, SCC has breached its seemingly strong uptrend support (encircled in blue).

Though SCC is a strong one, the chart shows the market sentiment. It's price action is starting to consolidate after a gradual yet consistent rise. This could be testing a new support level or heading for a reversal (hopefully, it's the former).

On a personal note, I think that SCC is going to be one of the strong stocks as soon as PHISIX is done with consolidation and resumes an uptrend. The Mining and Oil index is projected to do very good in 2011 and SCC is the leading company in the said index.

SCC's charts shows two things: [1] That it is a very strong stock considering its uptrend support (which was breached possibly because of consolidation of the market), and [2] That it might finally break the support and go for a nosedive. How deep? Nobody knows. SCC could go as low as P160, P140, or P110 based on Fibonacci's 38.2%, 50%, and 61.8%.

A bold prediction on SCC: As soon as this gets through the previous uptrend support which is at around the P210-P215 range, it will gain momentum and rise fast. Right now, I think that it would just be wise to buy on rallies and sell on dips (or sell on resistance).

Megawide: Developing Properties, Developing Potential

Megawide Construction Corp. is the first company to go public this 2011. Just in case you're not familiar with what this company is, Megawide is one of the biggest and fastest growing engineering and construction firms in the Philippines today. Megawide accounts for 70% of the residential condominium projects of the Sy family's SMDC. Other than SM's projects, Megawide's clients include Belle Corporation, Antel Group, Suyen Corp. (owner of Bench), Prince Jun Development Group, Bellevue Hotel Group, Keppelland Realty, Malate Bayview Development Group, and Goldland Properties and Dynamic Realty.

In it's move to go public, Megawide opened 34% of its company's total stock to the public. In it's opening day, Megawide (listed as MWIDE in PSE) offered P7.84 per share.

Being it's top client, Henry Sy's SM bought 64% of MWIDE's total shares leaving only 36% left for public consumption. SM is having several construction plans for 2011 all over the Philippines which means more projects for Megawide. Never mind Sy and SM owning part of Megawide to cut costs in their projects, Megawide is going to have a very busy year and that's all that matters.

Rumors also has it that SMC plans to buy into MWIDE. SMC's diversification plans fits well with MWIDE as SMC is planning to get into PPP (public private partnerships) this year. Should SMC get into MWIDE sooner or later, that would further boost MWIDE up. SMDC and SMC are strong enough to lift MWIDE up. Aside from SMC, Phinma and Ben Chan of Bench are also rumored to take part of MWIDE.

Lastly, there are 11 PPP reported to start this year for a rough total of $200 billion. Being one of the biggest construction and engineering firms, expect Megawide to get into the negotiation and contract talks in at least one of these 11 projects.

Megawide was established in 1997 by De La Salle University civil engineers Michael Cosiquien and Edgar Saavedra and became a P2 billion company since then and accounts for 20% of high rise residential property construction business. Turnover is expected to double to P4 billion this year.

My personal note is that I think that MWIDE is still undervalued considering that SM bought more than half of it's shares. If SMC would push through in acquiring shares and with their PPP plans, MWIDE could be worth a lot more than its IPO price.

SMC: Fundamentally Sound in 2011

San Miguel Corporation (listed SMC) is one of the companies poised to have a breakout in 2011. SMC broke loose from around P80 in November of 2010 and reached highs at around P185 entering January 2011. The sudden rise was triggered by the reports that SMC is going to invest $40 million in Indophil Resources NL, owner of 37.5% stake in the untapped gold and copper deposit in Asia and part of the $52 billion Tampakan copper-gold project in South Cotabato and the recent acquisition of petroleum heavyweight Petron.

However, SMC has somewhat found a resistance at around P180 as shown in the chart below. For a company that has a lot of fundamentals, what could possibly be holding SMC back from breaking out? SMC's sharp rise might have prompted several firms and individuals to take their profits. The sell out has brought PHISIX down and several investors have taken their money to more stable economies such as the United States and Europe, invested them in stronger currencies or indices.

As far as SMC is concerned, their diversifying plans have further boosted the value of their stocks. Other than the Tampakan project, SMC may also challenge the Pangilinan-led Metro Pacific Investment Corp.'s offer to buy the government's stake in Metro Rail Transit (MRT 3) confirmed by SMC president Ramon S. Ang. SMC is also in talks with Citra Lamtoro Gong Persada and Star Tollway Corp. for a possible organization and establishment of a corporation that will consolidate and undertake toll-road operations and participate in infrastructure projects initiated by the government through it's PPP (public private partnerships) program.

In terms of revenues, SMC eyes a revenue of P1 trillion by 2016. The company made P230 billion in 2010 and projects P530 billion in revenues in 2011. Out of the projected P530 billion revenue, only P214 billion are said to come from the company's traditional food and beverage businesses while the remaining sum from the new businesses, spearheaded by Petron.

Mr. Ang also announced that SMC will have its second public offering once the price of its shares goes up to P250. Ang also said that SMC's current price which is around the P175-P185 range doesn't reflect the company's real assets and worth.

As soon as the market would pick up some buying momentum and break its resistance at P180, expect SMC to go high, fast, and steep. Personally, I think that SMC could go higher than P250 even as high as P300 before 2011 ends provided that its diversification plans would come into fruition.

JFC: The Bee is Buzzing

After reaching the P100 plateau by late October of 2010, JFC (Jollibee) has somewhat gone sour and went down. From November 1, 2010 until early February of 2011, JFC went down from P90 to as low as P70, about 23% decrease in value.

JFC isn't getting much attention lately but I think that JFC has great potential than it's price action dictates. The chart below shows that JFC is potentially starting an upward momentum. The price picked up since it reached P70 and in nearly a week, it is hovering around the P75 mark. MACD and RSI are also positive. JFC's MACD signifies that an uptrend is somewhere ahead and it's RSI shows that it is strengthening both marking that it will go up sooner or later.

The graph below shows that JFC is approaching the 38.2% mark of Fibonacci. Theoretically, prices changes direction when it hits the 38.2%, 50%, and 61.8% marks of Fibonacci. 23.8% and 76.4% are areas worth looking at but not as strong as those 3.

JFC's behavior follows Fibonacci religiously. It went down when it hit the 61.8% mark in 2006 before bouncing back up when it hit the 76.4% mark later in 2006. It went down again after hitting the 50% mark in 2007 before bouncing back up after hitting the 76.4% once again in mid-2008. 38.2% could be a potential support if JFc would continue to follow Fibonacci.

JFC found a long term support at P30 but after surging past it's resistance at around P55, it might turn such resistance into support.

If worse comes to worse and JFC won't bounce back at 38.2%, it could go further down to P55 which is it's next support (shown on the chart below).

Fundamentally, JFC hasn't been a talk of the town lately. However, as soon as their Ti Amo coffee shops will start to materialize, expect JFC to take some serious momentum going up. The acquisition of Mang Inasal spurred the bee up in 2010, Ti Amo might do the same as well.

JFC still lacks market sentiment as of the moment but as soon as the fundamentals will start to come in, it will further strengthen it's technicals and there's no reason for it not to go up.

JFC went up from a little less than P10 in 2001 to as high as P100 in near end of 2010, some 900% growth in nearly a decade. From mid-2008, it went up from about P32 to a high of P100, more than 200% growth in just a year and a half.

It think that JFC still has a lot of room to grow given it's current price. P110-P120 range is doable before 2011 ends as long as fundamentals and market sentiment could back it up.

Going Long for 2011? Consider these Stocks

There are some things that got me excited recently. Some companies are showing great potential and are giving excellent points of entry before another rally comes.

A number of the companies in my watchlist are showing signs of life as soon as PHISIX recovers. I've mixed up very raw data (weekly MACD) to the historical charts of several companies and picked a few that shows really great potential (with few biases because most of these are personal favorites). Here are some of the potentially big (I mean really big) winners for 2011.

SMPH (SM Prime Holdings): The chart below shows that SMPH is bound for it's fifth wave in reference to Elliott Wave Theory. The fifth wave is an uptrend and ideally it will go for about a year referring to the first two uptrend waves.

SMPH's MACD for the week was good improving from -0.176 to -0.081 from February 2 until February 7.

For those who are looking to go long with SMPH, there is a drawback in it's graph. Should SMPH fail to bounce from it's support at around 10.2-10.5, it might go all the way down to it's long term support pegged at 6.50. Quite a deep fall from where it is right now (10.98).

SMC (San Miguel Corporation): A personal favorite. SMC was resting on a not so steep uptrend support until it broke loose near end of 2010. The chart shows that SMC jumped from around 80 late October 2010 to more than 180 by January 3, 2011 or about 140% growth in a little more than a month.

Right now, it seems that SMC met a strong resistance at 180. However, it remained strong despite the weakening of PHISIX which signifies that a very strong rally is just awaiting on the corner. Personally, I think that what's keeping SMC from getting past 180 is PHISIX. Once PHISIX starts to go up, expect SMC to go as well.

Many people are hesitant on taking SMC because of it's price but for me SMC still has a long way to go. SMC has already announced for a 2PO at around 250, announced it's diversifying plans, and has an income more than many blue chip companies. 180 is actually cheap for SMC. I could say that we could never go wrong with SMC.

SMB (San Miguel Brewery): SMB's chart looks very promising. An ascending triangle from near end of November 2010 until February for 2011 before finally getting past 30. Right now, it seems that history might repeat itself. SMB have found another resistance at 33 but another ascending triangle is forming. 35 and 36 is definitely within reach and is a good one for swing traders.

Just like SMC, SMB skyrocketed late 2010 before resting around the 25-30 plateau. Should another SMC rally come, expect SMB to follow. The good catch? SMB is way cheaper than SMC.

MEG (Megawide Corporation): Just like SMPH, MEG is another wave 5 bound entity based on it's 2-year chart. MEG was way below a peso back in the first quarter of 2009 and now is roaming around the 2-3 peso range (banks, cooperatives, bonds, and mutual funds can't give you around 200% growth in less than 2 years).

If MEG will continue to follow Elliott Wave Theory, it could reach P4 before 2011 ends or maybe even around P4.50.

For the past week, MEG's MACD is getting better bouncing from -0.0812 in February 2 to -0.0716 in February 7. MEG's price action doesn't show a lot of optimism lately but as far as technicals are concerned, MEG is going to be a really good one as soon as PHISIX recovers.

Lastly, MEG has announced to sell 292 million more shares at about P7.84 per share. If MEG will hold on to it's fundamentals, we are seeing some 200-300% growth this year.

JGS (JG Summit): Speaking of growth, where else could you find a gain of nearly 2000% in just two years? JGS grew from barely a peso back in January of 2009 to roughly P20 in January of 2011. In fact, it went as high as P25 around October of 2010. Now that's some serious growth.

Right now, JGS is getting near it's uptrend support at around 18 or 17.50 the least. However, it would be wise to take PHISIX into consideration before riding the JGS wave.

JGS's MACD went up the past 4 trading days which signifies that it is strengthening once again. Price action might say otherwise but technicals never lie. Sooner or later JGS will rise again.

This is one serious stock to take into consideration for 2011 (along with SMC).

CEB (Cebu Pacific): Price action doesn't really look good for CEB but the chart says otherwise. CEB is forming an identical triangle which says that it could go either way. However, MACD is getting better and in fact, has signified a buy signal.

Since CEB's value are down, I think that it is going to be at bargain once PHISIX gets back up. Lance Gokongwei already announced that CEB will be adding more planes and CEB will be having more affordable flights in 2011. Good news for employment and passengers.

Though it really doesn't look that good right now (price action), CEB is something worth looking. Never take CEB for granted especially if JGS will rise back up.

The downside for CEB is that it doesn't come in cheap. More fundamentals are needed.

PHISIX heavily influences the direction of the prices as much as the price action directs where PHISIX would go. Be patient and at the same time be cautious. PHISIX will get bullish (go back up) sooner or later but the London based Barclays Capital projected that the Philippines inflation rate might reach 4.5% by mid year of 2011 which might make PHISIX continue to go down. BDO's forecast of PHISIX to go down to as low as 3600 might really come true.

MEG and SMPH wave 5 uptrend bound?

It's weekend and I've got a lot of time to review the companies on my watch list as well as look for some news to form some solid grounds on coming up with my trading and investing decisions. Looking at long term charts, MEG and SMPH are showing good room of potential to go long.

Elliot's Wave Theory (EWT) states that a stock normally goes 5 waves before changing it's course. 1, 3, and 5 going the same way while waves 2 and 4 going the opposite way.

EWT shows that SMPH have gone through waves one to four for the past year and a half going up from roughly P6 in near end of 2008 to more than P12 to near end of 2010 before slipping down to just a little over P10 as of this writing.

Supports at P10.7 and P10.5 were already hit and there is a good chance that this stock will slip further down. Confirmation is strongly recommended for this stock before entry. Personally, I think that this could go down further to P10 or maybe even more.

MEG presents a very interesting case as it could go either way. Starting with the downtrend, MEG could possibly be on it's 5th wave which is going down and should a reversal will happen, there's no other way to go but up. If we'll start wave one with the uptrend, MEG's wave 5 will be going up for a year (based from the interval of the first four waves). Either way, be it starting EWT from the downtrend or from an uptrend, it will still go up sooner or later.

MEG started from barely nothing near the start of 2009 and went all the way up to as high as near P3 in 2010 before settling down to near P2 as of this writing. Just like everything else, entry should be done best after a confirmation of the trend.

For the fractional growth of these two stocks since wave 1, MEG (computing from the uptrend) grew nearly 300% in roughly two years and a little over 200% to date while SMPH was close to 100% gain in two years and around 67% as of this writing. Not really that bad if you ask me (way better than putting money in the bank actually).

And lastly, it might be wise to make an entry when PHISIX is back on an uptrend again. Take note that we're entering for a long hold, not day or swing trade the stock.