The stocks of Manila Electric Company (MER) or Meralco as most people know it because of its electric energy distribution silenced the “bear Jones” 279-point 2% decline as it went up 7.5% to PHP268.80 in today’s trading session. Since Meralco is part of the Philippine Stock Exchange Index (PSEi), its rise helped lift the PSEi towards the positive territory to close up by 0.9% to 4,324.98.
Chart-wise, Meralco just broke out from a 5-month symmetrical-triangle-looking consolidation. This may not be a good example of a symmetrical triangle chart pattern but whatever this may be looks like the handle of a possible 2-year cup and handle continuation pattern with the neckline at PHP300.00. Today’s move drew a long white candle in the Meralco stock chart and as the strong close suggests, there is more room to go higher. The MACD is at the positive territory and the stocks move above the 50, 100 and 200-day moving averages which show the bulls are taking over. The next resistance it could encounter is PHP280.00. Furthermore, the next resistance after that could be the PHP300.00 neckline. If the neckline gets cleared out, my minimum target for the cup and handle breakout is PHP400.00. In any case the stocks retreat, my immediate support could be the 6-month uptrend. If that breaks, the next support could be the 2-year uptrend.
Recently, a news came out that Gregory Abel, the CEO of Warren Buffet’s firm, MidAmerican Energy Holdings, was in the Philippines last April to meet Manny Pangilinan for a possible tie-up on a power project that will run on liquefied natural gas. The facility was proposed to be placed in the northern part of the Philippines, Luzon if it pushes through.