Shareholders of the DMCI Holdings, Inc. or DMC in the Philippine Stock Exchange must have been partying all season long because of the unbelievable performance of the stock. Imagine, DMC only started trading at below PHP 10.00 in January 2010. And before you know it, DMC shares already reached a high of PHP 41.00 last November. Incredible! Anyway, after reaching the said high, DMC appears to have lost its upward momentum and has been trading flat ever since. Are shareholders just cashing their profits? Are we seeing a start of a downtrend? Or is DMC just gathering enough legs to propel itself to the sky once again?
From a technical perspective, after topping at PHP 41.00, DMC has been consolidating into a symmetrical triangle or a inverted head and shoulders (continuation) pattern. An upside breakout is more likely than a breakdown since the pattern is coming off an uptrend. Therefore, if DMC moves above the triangle’s resistance or the head and shoulder’s neckline, then it could easily revisit its former high. Now, a break above PHP 41.00 could send it to uncharted territories. Is this possible? Of course, especially since the long term uptrend of the stock is very much intact. So what I’m going to do is to wait for a breakout which is confirmed by surge in volume before getting in.