Presented by: Juan G. Barredo Chief Technical Analyst VP –Sales & Customer Support COL Financial Group Inc. Presented by: Juan G. Barredo Chief Technical Analyst VP –Sales & Customer Support COL Financial Group Inc. Outline: • Looking for Alpha: Making your trades count Trading • Trading in Your Zone • Accepting & Managing Risk to Alpha • Gauging the Market’s Mood • Stock Reviews 5 Looking for Alpha: Making Your Trades Count (𝜶) ALPHA DNL vs PSEi (2 Yrs) The excess returns of a fund (investment) relative to the return of a benchmark index INVESTOPEDIA 6 Looking for Alpha: Making Your Trades Count BDO vs PSEi (1 Yr) MBT vs PSEi (1 Yr) Outperformance Underperformance 7 Can I make good money in the market easily? Yup… 8 Can I do better than an index fund? Yup… but now you gotta work hard 1969-2009 George Warren S&P500 Soros Buffet CAGR: +26.3% +21.4% +9.4% Know-nothing Investors Professional Professional Trader Investor http://hedgefund.blogspot.nl/2010/11/portfolio-manager.html 9 Know this… • An index (fund) is 100% invested all of the time • Yes, including being 100% invested during declines • If you can avoid/control your exposure into declines and get back into the market at the right time, you can conceivably beat the index Ah! Limiting risk is the key! 10 But Emotions get in the way: FEAR GREED The FOUR FEARS ‘TRADING in the ZONE’ • Fear of Missing Out • Your mind and the • Fear of Loss market must be in sync • Fear of being Wrong • Right Mind, Right Action! • Fear of Letting a Win Turn into a Loss 11 Trading in your Zone: TRADING (Short-Medium-Long term): Hunt for many 5% to 20% short- term winners, where the goal is to Choose your trend compound capital quickly by master then master actively moving in and out of them your art! • Trend Trading • Swing Trading • Momentum Trading • Day Trading * Do not switch styles mid-stream a trade 12 Trading Styles: TREND Trading A trend trader takes a position COSCO in an up trend and stays positioned until the trend changes. • Opportunities to buy come into retracements to major Sell support (Up Trendlines or Moving Averages) • When such major support Buy into Support areas break… you sell! Rebounds & Hold 13 Are you patient enough? BLOOM Markets trend actively 20% of the time, they spend the other 80% grinding within ranges, pullbacks, & corrections! 14 Trading Styles: SWING Trading A swing trader takes a position ICT into fresh breakouts & upon retracements to support in an Breakout Up trend; can also Range Trade Sideways trends Breakout Buy into: 1. Breakouts – prices push over a winding Reactions to consolidation or Area Support Pattern 2. Pullbacks – a brief reaction back to support after a push 15 Trading Styles: SWING Trading A swing trader takes some ICT Resistance profits into swing highs Target Sell some into Swing highs: 1. Technical targets 2. Major Resistance zones 3. Overbought levels (with RSI > 70-80%) 4. Use technical indicators to refine your view (MACD, Slow Stochastics, DMI-ADX, Overbought Volume) 16 TREND & SWING Trading Samples BPI GLO Breakout Possible Sell Stop Buy into Support Rebounds & Hold Overbought 17 Can Trading Small Caps Advance My Portfolio? Average absolute returns based on capitalization (Four Up Trend Series Swings from 2009 to 2016) 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Large Cap Mid Cap Small Cap Average St. Deviation PSEi Source: Bloomberg, COL Premium Notes: The returns utilized logarithmic returns. Std. Dev is the standard deviation of the absolute returns in the four events. Can Trading COL’s EIP Stocks Add Value? Average absolute returns of COL’s EIP Stocks 14.00% (Four Up Trend Series Swings from 2009 to 2016) 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% EIP Stock Non-EIP Average Return St. Dev PSEi Source: Bloomberg, COL Premium Notes: The returns utilized logarithmic returns. Std. Dev is the standard deviation of the absolute returns in the four events. Which Corrections Should I Focus On? RETRACEMENTS RESETS: REVERSALS: (A pullback in prices towards (A wider correction that swings (An even wider correction or : term moving averages - shorter back to larger moving averages down trend that falls below 50 to 100-day EMA) 200 to 400 day EMA) larger moving averages) Stock rebounds fast; may swing Rallies moderately but stops on Takes time to reverse as many back to an up trend quickly occasion into its recovery resistance zones lie above it Trends take Time to Turn: URC Are you paddling against the river? Down Don’t you know the river Sideways always wins! Up Up? Sideways 21 Resets and Reversals: Valuable Lessons SECB JFC 50-Day 200-Day 400-Day 200-Day 50-Day 400-Day 22 Review of our Trading Guidelines Low Side or High Side? 1) Check you emotions 2) Choose your trend style High (profit take) 3) In Trend trading buy Low (buy backs) reactions to support and hold 4) In Swing trading, assess High your trend ranges and watch for breakouts and Low support recalls; take profits into swing highs 5) Remember, resets & reversals take time High Low 23 Accepting & Managing Risk: Risk Taking and Control “Nothing in Life is worthwhile unless • The willingness to take a risky action to achieve a desired you take risks. Fall effect Forward. Every failed experiment is one step closer to • Price Stops success ” • Position Sizing Denzel Washington • Stock Allocations 24 Price Stops: • A price stop is a tool used MWIDE to sell off a position if that price is violated; it is usually placed at a key area of support • Price stops may be Support adjusted as prices move Stop upwards away from the first placed stop – trailing one’s stop 25 Position Sizing: • Keep losses at a minimum Starting % Acceptable # Trade losses Capital Loss Loss before 0 • Losing 2% of your capital ₱1,000,000 1% ₱10,000 100 on a failed trade will 2% ₱20,000 50 nullify you in 50 trades 3% ₱30,000 33 4% ₱40,000 25 • Your positon size is 5% ₱50,000 20 controlled by your 6% ₱60,000 17 accepted loss value 7% ₱70,000 14 • An acceptable loss of Price Stop Possible Loss P20k should only buy ₱10.00 ₱9.50 ₱0.50 40,000 shares of a would be loss of P0.50/share Acceptable % Loss Acceptable Loss Shares to buy 2.0% 20,000 40,000 ₱400,000 26 Stock Allocations: Diversification: Adding up: • Do not put all your eggs in one • Add up only to a winning basket position • Try to run a trade portfolio of 3 to • Do not add to a losing one 5 stocks (33% to 20% each in • Scale Up using the Up Right value allocation) Pyramid method • Do not overdiversify… you don’t need a bazooka to hit one target Smallest Smaller than the 1st 1st is the Biggest 27 Gauging the markets mood: Mental Preparedness “There's no harm in • Understand your battlefield hoping for the best as before entering the fray long as you're prepared • Review your global for the worst” surroundings then localize Stephen King your view • Trading can be hard enough without having to be surprised by your unfamiliarity of external /internal events 28 How is the US, Europe & Asia doing? 29 How are Currencies & Commods Doing? 30 How is The Philippines doing? (S) 7,400 /7,285 PSEi (R ) 7,720 /8,118 PESO 200-Day 400-Day 50-Day 200-Day (S) 49.23 /49.00 400-Day 50-Day (R ) 50.13 /50.40 31 Were still in a wide sideways shift: PSEi - Elliot Wave B EPHE A C 32 Stock Review AYALA LAND INC (35.60) ALI (S1) 34.80 (S2) 33.05 (R1) 36-36.50 (R2) 38-38.25 • Range bound – but in rally mode • A range trade buy may be attempted looking at an upside target of 38 to 38.25 • Signals are imperfect but some improvement is seen • Support stop at 34.80 then 33.05 33 Stock Review MEGAWORLD PROP. (4.10) MEG (S1) 3.91-3.88 (S2) 3.74-3.68 (R1) 4.12-4.35 (R2) 4.62 • Attempting to break resistance (4.12-4.19) • A pushover this would herald a swing to next resistance • MACD still good to go • Support stop at 3.91 34 Stock Review PLDT INC. (1,698) TEL (S1) 1,636 (S2) 1,600 (R1) 1,800 (R2) 1,869 • PLDT has reacted back to its trendline and has so far found support • This shelf at 1,636 should try to hold (Stop) but may effect a new pattern low • Its MACD suggests a corrective period – not surprising since its quick run • Resistance at 1,800 35 Stock Review DOUBLE DRAGON (52.25) DD (S1) 52.00 (S2) 50.20-48.82 (R1) 56-56.50 (R2) 59.00 • DD has just broken its 50-day EMA (53.36) • And may suggest some lightening given its large toppish rounding pattern • MACD and RSI show weakness trend force • A retreat to next support is possible 36 Stock Review METRO PACIFIC (6.51) MPI (S1) 6.33 (S2) 6.00 (R1) 6.56 (R2) 6.80-6.84 • MPI is now rallying within a wide horizontal pattern • A wide range of 6.84-6.00 is shown in this pattern • Prices now are little over mid-way to the upper band • A range trade – Hold may be recommended with a range trade –sell located near resistance 37 Stock Review CEMEX (7.91) CHP (S1) 7.72-7.50 (S2) 6.70 (R1) 8.44-8.60 (R2) 9.16 • CHP is trying a reversal swing; but may be lacking a basing pattern (support retest or higher-low) • MACD shows only a bearish rally so far • Resistance stands closer to 8.44-8.60 which it did near • A sell on strength will remain until a clear reversal pattern is confirmed 38 Stock Review FIRST GEN (22.00) FGEN (S1) 20.89-20.85 (S2) 19.50 (R1) 22.32 (R2) 23.00 • FGEN shook itself down to the bottom of its large sideways pattern then rallied • A trading band between 23.00 and 20.89 is seen • A range trade is carried on • Only a break over 23.00 can turn it into a stronger buy 39 Stock Review D&L INDUSTRIES (22.00) DNL (S1) 12.50-12.40 (S2)12.20/ 11.70 (R1) 13.16 (R2) 13.64 • DNL seems to be losing some strength (poor MACD) and may be being distributed • But as long as it can hang on over its range low of 12.50- 12.40 a Hold can remain • A break of this shelf may prompt for a skid towards next support 40 Stock Review METROBANK (83.50) MBT (S1) 81.50-80.97 (S2) 75.00 (R1) 87.30-88.00 (R2) 91.40 • MBT rallied after nearing its recent breakout point (80.85) • But its MACD is now in correction mode and may keep rallies limited for now • A new wind up pattern may be needed after its reacted from its channel range highs • Support stop at 80.97 41 Stock Review SM PRIME HOLDINGS (29.28) SMPH (S1) 29.30 (S2) 28.50-28 (R1) 30.25 (R2) 31.50-31.77 • SMPH broke off from its long reactive channel but is still encountering some resistance • A push over 30.25 is needed to sponsor more upside action • MACD has weakened a little but a resistance break can still save the day • Support stop at 28.50-28 42 Stock Review MERALCO (281) MER (S1) 271 (S2) 257 (R1) 284.60 (R2) 290-297 • MER may be crafting a wide pattern between 271 - 297 • It is experiencing some mid- zone resistance at 284.60 • It needs to break this to swing back to 290 to 297 • A range trade is maintained • Support stop at 271 43 Stock Review HARBOR STAR (3.23) TUGS (S1) 3.10-2.88 (S2) 2.59 (R1) 3.30-3.45 (R2) 4.13 • TUGS has shifted into corrective channel and volumes have dried • Either it makes a move now or it may succumb to more reactive sway • It needs to hold over 3.10; if not, it will intensify its reaction • Support stop at 3.10 then 2.88 44 Stock Review ALLIANCE GLOBAL (14.70) AGI (S1) 14.00 (S2) 13.25 (R1) 15.00 (R2) 15.66 • AGI stormed up higher after breaking out of 2 patterns • MACD still shows strong following – could extend a little but more (15.00) • It has however hit overbought levels and may soon need to pause or correct • Next support is at 14 then 13.25 45 Stock Review SM INVESTMENTS (711) SM (S1) 705 (S2) 688 (R1) 747-755 (R2) 779 • SM is moving to correct its earlier flight after reaching its range target (750) • MACD shows the same reactive call • It may need to windup or even correct further – take some profits on 2nd rallies to resistance • Support stop at 705 46 Stock Review JOLLIBEE FOODS (208) JFC (S1) 201 (S2) 192-182 (R1) 210-212 (R2) 214.56-219.80 • JFC broke out of its reactive trend and now moves to tackle its next resistance (210-212) • MACD is showing some slow down and may drive a price envelope between 201-212 • A push over this may then work on testing 214.56-219.80 • Support stop at 201 47 Stock Review UNIVERSAL ROBINA (170) URC (S1) 167.70-166 (S2) 163 (R1) 174.50 (R2) 180-186 • URC broke out of its rounding bottom after staging a higher- low base • It is now making another preparatory pattern and would do well if it can break 174.50 • For now it may have to complete its winding • Support stop at 166-165 48 Stock Review BLOOMBERY (8.71) BLOOM (S1) 8.05-7.78 (S2) 7.19-7.01 (R1) 8.75-9.35 (R2) 10.30 • BLOOM broke out of its consolidation range and nears next resistance (8.75) • Some slow down in MACD may inhibit strong drives and drive more choppy action • Its wide spread to its 50-day may also cause some drag • Support stop at 8.05 49 Presented by: Juan G. Barredo Chief Technical Analyst VP –Sales & Customer Support COL Financial Group Inc. @coltradingtoalpha • Exclusive to COL Premium customers • Trading opportunities through technical analysis • Trade the COL Premium way • Get the latest updates from COL Premium To join: 1. Download Instagram 2. Request to follow @coltradingtoalpha 3. Let us know your handle (@) so we can accept. Call or email you CEM TRADING QUESTIONS EVERY FRIDAY 3 to 4PM Presented by: Juan G. Barredo Chief Technical Analyst VP –Sales & Customer Support COL Financial Group Inc. Presented by: Juan G. Barredo Chief Technical Analyst VP –Sales & Customer Support COL Financial Group Inc.