Leisure & Resorts World Corporation or LR in the Philippine Stock Exchange has taken the Philippine domestic market by storm with its stellar gains over the past couple of months. Back in December 1, 2010, LR was just trading at around PHP 2.72. Since then it had erupted on a really fast pace without showing signs of letting up. Last week, it reached a high of PHP 8.80 before closing at PHP 8.00 on Friday. Now that’s a gain of 224% less than two months. Amazing. So looking now at its daily chart over the last six months, you can see that it has been trading on a short term uptrend. Last Friday’s movement, though, brought it back right at the uptrend’s support. Technically, this level could be a good buying area in the short term. However, because of its rapid rise and the stock’s overbought condition, there’s a chance also that the immediate uptrend will be broken. A fall below the uptrend could send it towards its 38.2% or 50% Fibonacci retracement levels which are at around PHP 6.75 and PHP 6.00, respectively.
Looking at its two year horizon, you will notice that its for the last two months was indeed vertical. Technically, the steepness in its rise makes the move unsustainable. The stock’s present MACD also is about to make a bearish crossover, signaling a likely step lower. Anyway, sooner or later the traders and investors who bought at the lower levels will take their profits. Any sign of market weakness could trigger them to do so. And speaking of bearish market catalyst, last Friday’s bloodbath which was triggered by a political tension in Egypt could set off a broad-based sell off. I could be wrong, of course but always better to be on top of your investments at these times of uncertainty.