Watch MEG closely... and accumulate?

Megaworld used to be a 'friendly' stock at least before it was hit  (as most others in the index) by the recent indiscriminate sell-off. It was "friendly" in the sense that you can disregard and be unafraid of the daily dips, because you're sure that the uptrend will be in tact even within the month, more so for long term.

Check MEG's one-year performance:

Its uptrend was consistent from April to beginning June. If it goes down, there are two seeming assurances: 1) it wont dip by much, and 2) it will recover back within 2 weeks, almost guaranteed! But this is before the June butchery. During that bloody month, even the 90-day trend (1 quarter SMA) was broken. And indeed MEG can be declared still inside bear territory today.

So the question now is what to do given that it is beginning to show strength and its characteristic small dips that was previously observed as it goes up.

These will be my guideposts:

• Foreign funds must begin to buy. DEUTSCHE, UBS, ATR, et al must come back.
• Forums might give some clue on how many still shell-shocked investors will exit en masse once it enter 3.7 - 4 + price. There are some many Pinoys left holding the bag there, they might just be hoping and eager to exit without question. This will cause a major correction with MEG and may bend to a significant downtrend again.
• do not add up big time. take it slow. better to miss some of the uptrend the be shocked again.
• the next earnings announcement must be at least +10% income, or else... flat is most optimistic.

And will remember these factors that remain in MEG's favor:

1) Megaworld is still the pride and pillar of Andrew Tan above any of his other subsidiaries. If you read any of his profiles and recollections, you can get the impression that MEG is still his favorite baby, he wont leave this stock to the dogs. There were even supports and insider accumulation that he seemed to have greenlit himself to prop the stock up.
2) Local funds are consistently brandishing up its future value. There was even a news item printed by Inquirer no less that it will be at 9 pesos soon, prompting many local funds to buy.
3) All the recent stock options to managers were kept by the insiders; no one divested.
4) its P/E is only at 12. very cheap for an index stalwart.
5) projects are left and right. marketing of these projects also widespread in Manila and major cities in the provinces.
6) It is managed by groundbreaking, ambitious people who are not afraid to take risks to bring the company to greater heights.

I cannot overemphasize the promise of MEG as a company. But on short term, wont hurt to exercise caution.