Stock in Focus: MEGAWORLD CORPORATION (August 20, 2009)

(This analysis is for August 24 - 28, 2009)

BUSINESS PROFILE

Megaworld Corporation was founded by Andrew Tan and incorporated under Philippine law on August 24, 1989 under the name of Megaworld Properties & Holdings, Inc. The company was primarily organized to engage in real estate development, leasing and marketing. In 1994, it spun off Empire East Land Holdings, Inc. which focused on the middle income market. On August 19, 1999, the company changed its name to Megaworld Corporation to coincide with its conversion from a purely real estate company into a holding company, although MEG continues to focus on its core competence in real estate development.

The company is primarily engaged in the development in Metro Manila of large-scale mixed-use planned communities, or community townships, that integrate residential, commercial, educational, leisure and entertainment components. In addition, MEG engages in other property-related activities such as project design, construction oversight and property management. MEG's real estate portfolio includes residential condominium units, subdivision lots and townhouses, as well as office projects and retail space. The company's property development projects include Eastwood City, Forbes Town Center, McKinley Hill, Newport City, Manhattan Garden City, and Cityplace.

MEG's subsidiaries include Megaworld Land, Inc., Richmonde Hotel Group International Limited, Prestige Hotels and Resorts, Inc., Eastwood Cyber One Corporation and Forbes Town Properties and Holdings, Inc., among others.

Source: SEC Form 17-A (2008)

Reference: http://www.pse.com.ph/

(Note: double click image to enlarge)

Analysis:

MEG has closed below its Short time moving average and is still currently trending downward with a strength of about 36.32. Short time moving average is currently above mid-time (50 MA), and above long time moving averages (200 MA). The relationship between price and moving averages is: neutral in short-term, and bullish in mid to long term.

MEG historical volatility for the past 2 weeks is approximately about 56.43%.

Bollinger Bands are 2.1% wider than normal.
MEG has closed above bottom band by 9.0%.
The current width of the bands (alone) does not suggest anything conclusive about the future volatility or movement of prices.

(Note: double click image to enlarge)

Support/Resistance:

As seen from the chart above, MEGs nearest support line is at 1.22 while it nearest resistance is at 1.26.

Base from the weekly pivot point analysis of MEG.
This are the primary support lines of MEG this week: 1.32, 1.26, and 1.22
While its primary resistance lines for this week are: 1.42, 1.46, and 1.52

(Note: double click image to enlarge)

Buy/Sell:

MEGs momentum for the past 10 days is somewhat bearish with a strength of -0.07.

The RSI reading is 44.57. It is not currently in a topping (above 70) or bottoming (below 30) range. The last signal was a sell 7 days ago.The RSI and price are not diverging. Base from our RSI reading we can confirm that MEG is currently below and near a major resistance line (1.26 Resistance Line).

Williams %R reading is now -90. It already indicates an oversold condition for MEG.

Currently the MACD is bearish since it is trading below its signal line.
The MACD crossed below its signal line about 3 days ago.
Since the MACD crossed its moving average, MEG's price has decreased -3.125%
And has ranged from a high of 1.360 to a low of 1.220.
Base on our MACD there have been no divergence signals within the last 5 days.

Suggestion: BUY

This is a buy because:
1. Its near our projected support lines,
2. Its starting to gain momentum. If not for the red DOW influence MEG could have breakout already.
3. Leading indicator (Williams %R) already indicates a BUY signal.
Even thou MACD is still indicates a SELL signal. It is a lagging indicator and I usually use it as a confirmation signal to buy.

Target Price for August 24, 2009 is 1.36. That's about twice the daily average range for MEG the past 10 days. But i still expect MEG to reach about 1.42 before entering the oversold state.
When buying MEG i suggest to buy it, if you can, near or between our support lines: 1.22 and 1.26.

Probability of Finishing Above Upper Target : 15.87 %
Probability of Finishing Below Upper Target : 84.13 %

Stock in Focus: PAXYS, INC. (August 7, 2009)

(This analysis is for August 10 - 14, 2009)

BUSINESS PROFILE

Paxys, Inc. (PAX) was originally incorporated on February 14, 1952 as Fil-Hispano Holdings Corporation and engaged in the manufacturing of ceramics. In 1999 to 2002, Fil-Hispano closed its manufacturing operations and disposed of its land and other assets related to the ceramic business. In 2004, the principal shareholder of Advanced Contact Solutions, Inc. (ACS), a call center company, acquired a controlling stake in Fil-Hispano through a reverse takeover by injecting 100% of ACS into Fil-Hispano, effectively making the latter the first call center firm to be listed in the Philippine Stock Exchange. On October 14, 2005, the Securities and Exchange Commission approved Fil-Hispano's application for a change in name from Fil-Hispano Holdings Corporation to Paxys, Inc.

PAX is a holding company that focuses on investments in the business process outsourcing (BPO) industry within the Asia Pacific region. The company's subsidiaries are engaged in diversified services such as contact center, data transcription, salary packaging and software solutions. PAX's subsidiaries consist of ACS, ScopeWorks Asia, Inc., Global Ideology Corporation, Paxys N.V., Paxys Australia Pty. Ltd., SmartSalary Pty. Ltd, Stellar Global Solutions Philippines, Inc., and Ubaldo Reidenbach Solutions, Inc.

Source: SEC Form 17-A (2008)

Reference: http://www.pse.com.ph/

(Note: double click image to enlarge)

Analysis:

PAX has closed below its Short time moving average.
It is currently in a trading range with an ADX reading of 26.67 and ATR reading of 0.17 for the past 10 days. Short time moving average is currently above mid-time, and above long time moving averages. The relationship between price and moving averages is: neutral in short-term, and bullish in mid-long term.

PAX has closed above bottom band by 27.9%.
Bollinger Bands are 32.1% narrower than normal.
The current width of the bands (alone) does not suggest anything conclusive about the future volatility or movement of prices.

PAX market volatility for the past 10 days is 61.38%.

(Note: double click image to enlarge)

Support/Resistance:

Price is current standing at this major fibonnaci support line and the S/R support line. Next fibonnaci resistance is located at 3.25 while the next S/R resistance is at 3.15.

(Note: double click image to enlarge)

Buy/Sell:

PAX momentum has slowed down to -0.04 for the past 10 days.

The current value for the 10 day RSI is 51.88. It is not currently in a topping (above 70) or bottoming (below 30) range. The RSI has just reached its lowest value in the last 10 days. This is bearish. The RSI and price are not diverging.

The Williams %R for past 10 days is -90. It is already at the oversold area.

Currently the MACD is bearish since it is trading below its signal line. The MACD crossed below its signal line 2 days ago. Since the MACD crossed its moving average, PAX's price has decreased -1.818% and has ranged from a high of 2.900 to a low of 2.650

Suggestion: BUY

Although there is no indication of a buy base on the indicators it is already a good to time to buy because the price is standing at a major support line and is already oversold.

Target Price for August 10, 2009 is 3.00.

Probability of Finishing Above Upper Target : 15.87 %
Probability of Finishing Below Upper Target : 84.13 %

Stock in Focus: SOUTHEAST ASIA CEMENT HOLDINGS, INC. (June 29, 2009)

BUSINESS PROFILE

SOUTHEAST ASIA CEMENT HOLDINGS, INC.

Southeast Asia Cement Holdings, Inc. (CMT) was established on May 3, 1994 as a cement holding company, and listed at the Philippine Stock Exchange on December 14, 1994. In December 2003, CMT subscribed to 1,548,614,753 common shares of Republic Cement Corporation. As payment for the said subscription, CMT exchanged its 19,960,995 common shares in FR Cement Corporation (FRCC) and 10,000,000 common shares in Lloyds Richfield Industrial Corporation (LRIC). As a result, FRCC and LRIC ceased to be subsidiaries of CMT. Accordingly, Republic became an associate investee of CMT.

On October 9, 2007, the Securities and Exchange Commission approved the merger of CMT's subsidiaries, Seacem Silos, Inc. (SSI) and Seacem Trading Corporation (STC), SSI's subsidiary, Agrodynamics Philippines, Inc., and STC's subsidiary, Hopkins Holdings, Inc., where SSI is the surviving corporation. SSI remains a wholly-owned subsidiary of CMT. SSI has not started commercial operations.

Source: SEC Form 17-A (2007)

Reference: http://www.pse.com.ph/

(Note: double click image to enlarge)

Analysis:

CMT is now -0.10 bearish. The drop of the DOW and PSE did not affected CMT from improving its status. It finally crosses above the 10 day moving average signifying that it is now starting to be bullish. A mini hammer formation is another proof of a more bullish trend expected to occur by tomorrow hoping DOW will end the day well. ADX reading is 35.74 and Williams %R reading is -59.09.

Bollinger Bands are 67.3% narrower than normal. The narrow width of the bands suggests low volatility as compared to CMT()'s normal range. Therefore, the probability of volatility increasing with a sharp price move has increased for the near-term. The bands have been in this narrow range for the past 7 days. The probability of a significant price move increases the longer the bands remain in this narrow range.

(Note: double picture to enlarge)

Support/Resistance:

Despite the drop of the market today, CMT's major support line at 50% fibonacci fan still holds. It just pass by the 38.2% fibonacci time extension line. This together with the bullish hammer candlestick will indicate a possible increase in price the next coming days. Hopefully by tomorrow if not the next day. As long as this support line is not broken we will expect the price to continue trending upward along this support line.

Suggestion: BUY

Stock in Focus: SOUTHEAST ASIA CEMENT HOLDINGS, INC. (June 26, 2009)

BUSINESS PROFILE

SOUTHEAST ASIA CEMENT HOLDINGS, INC.

Southeast Asia Cement Holdings, Inc. (CMT) was established on May 3, 1994 as a cement holding company, and listed at the Philippine Stock Exchange on December 14, 1994. In December 2003, CMT subscribed to 1,548,614,753 common shares of Republic Cement Corporation. As payment for the said subscription, CMT exchanged its 19,960,995 common shares in FR Cement Corporation (FRCC) and 10,000,000 common shares in Lloyds Richfield Industrial Corporation (LRIC). As a result, FRCC and LRIC ceased to be subsidiaries of CMT. Accordingly, Republic became an associate investee of CMT.

On October 9, 2007, the Securities and Exchange Commission approved the merger of CMT's subsidiaries, Seacem Silos, Inc. (SSI) and Seacem Trading Corporation (STC), SSI's subsidiary, Agrodynamics Philippines, Inc., and STC's subsidiary, Hopkins Holdings, Inc., where SSI is the surviving corporation. SSI remains a wholly-owned subsidiary of CMT. SSI has not started commercial operations.

Source: SEC Form 17-A (2007)

Reference: http://www.pse.com.ph/

(Note: double click image to enlarge)

Analysis:

Base on the 20 day DPO reading, CMT is -0.01 bearish. The Williams %R reading is -70.37 indicating a BUY signal since June 24, 2009. Upward trend strength is now 38.19 base on ADX reading. This slowdown in trend strength is mainly due to the fact that many traders have neglected the capability of this stock. Before the retracement, CMT has the strongest trend strength among the other stocks. Its strongest ADX reading of 76.30 occured last June 5, 2009 before the retracement occured. A proof that this stock was simply neglected can be seen after the big flash out of traders that occured June 17, 2009. Three consecutive horizontally alligned dojis occured and small volatility can be seen here onwards. The bollinger bands also can attest to this. According to the bollinger band readings, the price have been on this narrow range for 6 days already and the longer it stays on this range the greater is the probability of a significant price increase. What usually happens after a small volatility in stock is a large volatility, therefore this factor is a big plus to this stock.

(Note: double picture to enlarge)

Support/Resistance:

Based on fibonnaci readings the current price is above the 38.2% fibonnaci retracement support line at 0.74. The price is also currently trending along the 50% fibonnaci fan support line. Then base on the fibonnaci time extension the price just reach the 38.2% line, so we expect a major change in price direction possibly upward by monday or tuesday.

Suggestion: BUY

Stock Market Wisdom from The Tortoise and the Hare

by: Gary Wollin

Once upon a time, there was a young hare, a hotshot rabbit investor who would always brag to anyone that would listen and that he was the smartest, fastest, best performing investor in the world. He would constantly tease the old tortoise about his slow, solid investment style.

Then, one day, the annoyed tortoise answered back: "There is no denying that you are very aggressive in your investment strategy. You take very high risks and get high returns. But even you can be beaten."

The young hare squealed with laughter. "Beaten? By whom? Surely not by you. I bet there's nobody in the world that can win against me, because I'm so good. If you think that you can beat me, why don't you try?"

Provoked by such bragging, the tortoise accepted the challenge. Each of them put an equal amount of money into a new account and the race was on. The hare yawned sleepily as the meek tortoise trudged slowly off.

As might be expected, the tortoise invested in high quality blue chips, companies with household names.

The hare, as anticipated, invested his money in dotcom stocks and options.

You know the story. The aggressive hare jumped out to a big early lead. In a rising market, the highest risk stocks perform the best. This is called momentum investing. Money flows into the investments that are performing the best.

The hare, having jumped out to such a large early lead, stopped paying attention to the market environment. Basically, he fell asleep. He thought to himself, "I'll have 40 winks and still remain way ahead of that stupid old turtle."

The hare awoke from his sleep and gazed around looking for the tortoise, who was nowhere in sight. Unfortunately, while he was sleeping, dreaming about what he would do with his winnings, the market turned against him.

His very high-risk portfolio had taken a terrible beating and was now practically worthless.

The tortoise, a Warren Buffett style investor, had passed the sleeping rabbit long ago. He had been plodding forward, steadily, since the beginning of the contest. The Tortoise never for a moment stopped, but went on with a slow but steady pace straight to the end of the course.

The hare realized that the tortoise was way ahead of him, and away he dashed. He leaped and bounded while gasping for breath, but it was too late. The tortoise had beaten him.

There are two very important lessons to be learned here.

First – slow and steady wins the race.

Second – never confuse your own intelligence with a bull market.

About The Author
Gary Wollin is a Warren Buffet style investment advisor with 45+ years of Wall Street experience. He has been regularly featured in The Wall Street Journal and New York Times. He writes and speaks on sales, customer loyalty, and the stock market. http://www.garywollin.com