Megaworld Corporation (MEG) has made an awesome run in 2 years. From PhP0.44 back in March 20 of 2009, it shot up to a 2-year high of PhP 2.84. An outstanding 545% gain that is. In spite of many developments including the Newport City, The Palm Bay in Roxas Boulevard, One Uptown Place in Taguig City, The Venice in McKinley Hill and the PhP 60billion homebuilding upcoming program that would provide 18,673 residential units, the MEG stocks are looking to slow down recently as for my technical perspective.
In the process, there could be a 4-month head and shoulders formation in the daily stock chart of Megaworld. The stock price has gone below the 50 and 100-period moving averages which indicates a sell signal. The MACD is moving below 0 which indicates weakness. A break below the neckline of the said formation could lead the stocks to my target price of PhP 1.86. I got this by gauging the size of the base of the head and shoulders pattern and added it to the possible breakdown point. If MEG doesn’t rebound from the PhP 1.86 price mark, the next support could be the 22-month uptrend. Well, my bearish outlook is just for the near term. In the bigger picture, the overall trend is still northbound. In case MEG surpasses this bearish looking reversal area pattern and turns out bullish, it needs to first break its 2-month resistance. Upon doing so, the next resistance could be PhP 2.84.