The stocks of Andrew Tan’s Megaworld Corporation or MEG in the Philippine Stock Exchange have been significantly dropping since it reached a high of PHP2.48 last month. Today’s 1% decline closed it at PHP1.96 as uncertainties with Philippine stocks rise. Piling up the negative sentiments globally, the financial markets could continue to go sour.
Chart-wise, MEG has broken down from its 50, 100 and 200-day moving averages and its MACD has shifted towards the negative territory 2 weeks ago. Last week, MEG also broke down from its 4-month support with heavy volume. By the looks of it, the stocks could further head south in the near term given its recent price movement. In any case it does, the 2-year uptrend will be a significant support. If that breaks, the next support could be PHP1.74. Personally, I’d consider catching the stocks at the 2-year uptrend or around the PHP1.84 marker which I think is a very strong level of support and place my cut loss when that breaks. This in turn would give me tight stops with an upside target around the 7-month resistance.