In addition to my previous
post on Cebu Pacific Airlines, I’ve added a quick technical point of view on the
matter below.
Even though my previous post
indicated some positive factors that you may consider in your evaluation of
CEB, the charts may tell us otherwise. According to the lines drawn above, CEB
for the past year has been following a downwards trend with no broad signs of
any long term reversals.
Although CEB broke out during May of this year and continued to trade above its 60 and 100 day simple moving average (SMA), it struggled to maintain this trend when it crossed back below both SMAs after a months time and it stayed that way after July. Since then, it has continued to trade well below the 60, 100, and 200 day SMA.
Although CEB broke out during May of this year and continued to trade above its 60 and 100 day simple moving average (SMA), it struggled to maintain this trend when it crossed back below both SMAs after a months time and it stayed that way after July. Since then, it has continued to trade well below the 60, 100, and 200 day SMA.
Moreover, from May to
September, a symmetrical triangle formation (blue lines) emerged that
eventually concluded with the stock breaking down from PHP 80 to PHP 67. This
was largely due to the global sell off period that was brought about by the U.S.
and European debt crisis. Nonetheless,
we can see a smaller symmetrical triangle formation surface (pink lines) as the
stock trades thinly on it’s new support line of PHP 67-68. If the stock does
not pick up within the next couple of weeks, it is highly possible that CEB is poised for another break down.
On the flip side, with the
PSEi trading on a more positive outlook, we may see a short term upswing with
the stock due to a possible rounding bottom formation that could also be seen
in its MACD and RSI levels.
Furthermore, with the RSI in
the oversold territory, this is a good technical indication for CEB to potentially
go up. Hence, short-term traders may consider purchasing the stock at around
PHP 69 and selling it at PHP 73-74.
Overall, if you’re a long term
investor relying heavily on the charts (which sounds ironic), you may consider
staying away from CEB for now. The best time to enter into a position with CEB
is to wait for its long term downward trend to reverse.
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