Leisure & Resorts World Corporation or LR in the Philippine Stock Exchange has octupled its value from PHP 1.10 to PHP 8.80 in a year’s span which is an incredible 800%!!! This is an amazing feat especially for those who were able to buy the stocks at the lower levels. The company is involved in the realty business and developing and licensing gaming hardware and software programs for casinos. Their current partnership with Belle Corporation (BEL) to put up the Belle Grande Manila Bay, which could become the biggest hotel and casino complex in the country, was one reason for its stock price to shoot up.
In my technical point of view, there could be a 2-month head and shoulders pattern forming. For those who do not know, a head and shoulders is considered a bearish reversal chart pattern and often found at the end of uptrends but rarely, they become continuations. Anyway, the head and shoulders looking pattern could be confirmed when the price drops below the neckline. Furthermore, the diminishing volume at the start of the left shoulder validates the pattern’s potential breakdown. If it breaks, we could achieve a target price of PHP 5.00. That is around -20% from the current value and I got that by gauging the height of the head then added it to the possible breakdown point. But before it reaches the PHP 5.00 price mark, it needs to go below the PHP 6.00 psychological support.
Fortunately, the stock price is still above the 50 and 100 moving averages which indicates strength. The MACD is above the 0 marker and the RSI away from the overbought condition which is favorable for the bulls. If LR bounces back up, it needs to surpass the 1-month downtrend to reach the next resistance at PHP 7.55. The LR stocks are in the “gray area” in terms of its direction but personally, I’m leaning towards a breakdown given the fact that the PSEi has been correcting (kindly check my colleague’s post). I may be wrong but just to be sure, it’s better to keep an eye on it.