Pick of the Week for Week 34: wait for JGS and MPI to kiss their support levels; small moves in MBT

The main reason for JGS's downtrend is its reported reduction in earnings. The non-growth in terms of income, in turn, was caused by forex losses. Perhaps the Gokongweis gambled. They thought that because of the Philippines's upcoming upgrade to non-junk and all, PhP will reach 38:1 to a dollar easily (as what most of the pundits also confirmed just three months ago), so they tried their hand to earn a bit extra from the peso's projected appreciation and made loans or sold bonds in USD.

Now, because the dollar suddenly strengthened, forex loss hit JGS hard. This is the same case as AP, SMC and power companies. But unlike SMC (whose sales figures are stagnant or decreasing) , JGS's revenue are increasing comfortably (they would have reported growth in earnings if most of their loans are dealt with local banks). And the conglomerate's businesses are all solid and poised to grow.

Therefore, we should observe JGS's movement in the next 14 days. If the price kissed 38, I'll buy with initial tranche, and will average down until 35.


MPI on the other hand seems to be forming one of two channels:

The first, which I favour to happen, is a rectangular one:

Rectangular channel. Note that we disregarded the huge dip in July, which can be considered an outlier (foreigners selling-down indiscriminately during that time). 

If this channel holds true, MPI is a buy with one tranche if it reaches 5... and should be for average down at 4.9, 4.8, 4.7. There must be some real bad news in our economy or with MPI if reaches 4.4 or lower. If it slides down that low, we'll have to do that painful cut loss. 

A familiar triangle formation is also a possibility. If you pick this option, buying should start at between 5 - 5.1. And cut loss all position immediately if it drops below 4.8 (support if you look at candlestick). 

Lastly, I have high conviction that MBT is a buy at current price... and for average down until 100 PhP (which should serve as a very strong support)... until Aug 28, at which time you can opt to sell all, or a portion of your position, at a [should-be] gain. Hopefully that gain would be more than +10% (which is heaven at current market condition), or realistically at +5%. If you get the hard part of the range--say your average price turned out at 108, but price tumbled down to 101 at closing of Aug 28--you can opt to just hold for the hefty stock divs (ex-date 29 Aug) and find a rally to sell in September. Either way, I believe you wont lose trading MBT (with fresh buys) in the next 10 days. 

Let's go!