InvestaDaily

As Larry Williams once said, “Simplicity is the hallmark of a great trader”.

Godlike, a.k.a. @imperno, takes the spotlight for this week’s featured trader! Read how she used simple support and resistance (or S/R) to not only spot a potential breakout in $DITO, but also to determine a clean exit point.

Let’s take a look at how Godlike used this indicator to her advantage. 

At the time of Godlike’s post, $DITO was trading at the 3.20 level. Godlike saw that if the forming lower highs were to be broken, the price could potentially rally and only slow down in momentum upon reaching its next resistance at the 3.50 level, which can be used as an exit point.

5 days later, the stock managed to break through the lower highs. Although initially a false breakout, the support level around 3.05 was strong enough to hold the price and propel the momentum upwards up to a total of an 16% increase from the lowest point of 3.04.

TECHNICALS OF THE TRADE

In $DITO’s chart, it can be seen that it is forming a descending triangle pattern. This is because there is a string of lower highs that forms the upper line, and the lower line is a support level in which the price cannot seem to break. Usually, price would most likely go down and eventually break the support line. However, such as in this case, the support line was strong, and the price bounced off of it, resulting in a strong move up.

Godlike used support and resistance in her trade to determine $DITO’s potential move and where it would be likely slowdown in momentum. Support and resistance levels are key in establishing breakouts and exit points since they show traders where the market will likely go. Just like Godlike, traders may better comprehend market dynamics and make more educated trades by recognizing necessary support and resistance levels.

FUDNAMENTALS OF THE TRADE

DITO Telecommunity received five awards at the recently held Marketing Excellence Awards 2022. Marketing Excellence Awards (MEA), a Singapore-based marketing communication awards platform in Asia, awarded DITO three gold awards: Excellence in Brand Strategy, Excellence in Digital Marketing, and Excellence in Social Media Marketing, as well as two silver awards: Excellence in Media Strategy and Excellence in Influencer / KOLs Marketing.

These awards were considered significant for DITO because the firm is still a rookie to the telecom market and a first-time participant in MEA since its commercial operations began in March 2021.

WHAT SHOULD BE YOUR NEXT MOVE

Currently, $DITO is hovering close to a strong resistance level. Despite the strong momentum, buyers should wait to see if $DITO can break through this level. It is advisable to wait for further confirmation of where the stock will go to avoid the risk of a potential pullback. Godlike demonstrated that keeping things simple with S/R levels can effectively make trading decisions. By identifying key support and resistance levels, traders can better understand market dynamics and make more informed trades.

Once again, KUDOS to @imperno for being this week’s featured trader! Enjoy your 14-day InvestaPrime Access and continue to be an inspiration to the trading community.

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Index methodology refers to the criteria and methods for selecting and maintaining a stock market index. It defines which stocks are included, how they are weighted, and how frequently the index is rebalanced. This involves adjusting the composition and weighting of the index to reflect changes in the market. Hence, index methodology includes new stocks being listed, delisted, or changes in the relative size of reserves.

However, before learning about the methodology used to construct an Index, we must first understand what an Index is. 

What is an Index?

A stock market index (also called indices) measures the performance of a set of stocks chosen to represent a specific market or industry. An index is typically calculated by combining the prices of the different individual stocks using a specified formula or technique. The methodology used to calculate an index varies depending on the specific index and its intended purpose.

The three most popular indexes in the U.S. are the Dow Jones, S&P 500, and Nasdaq Composite. Whereas locally, we have the Philippine Stock Exchange Index (also known as the PSEi).

Kinds of Index Methodologies and their repercussions

Index methodology typically involves criteria or rules used to select the stocks that will be included in the index. Some of the most common index methodologies are:

1. Market Capitalization Weighting: This index methodology style assigns weights to the stocks in the index based on their market capitalization. This is then calculated by multiplying the stock’s price by the number of outstanding shares. This would also mean that the larger the company, the larger the weight in the index. However, this methodology may result in the index being concentrated in a few large stocks and not accurately representing the overall market.

2. Free Float Weighted: This index methodology is in which only the freely tradable shares of each constituent stock are included in the calculation. This index methodology excludes shares that company insiders, governments, or other strategic investors hold. The weight of each stock is then determined by its free-float market capitalization. Repercussions of this index methodology include encouraging investors to focus more on the short term. This is because the short-term market moves to influence the index’s success.

3. Mixed Index Methodology: This combines elements of market capitalization and free float weighting. The weight of each constituent stock is based on a combination of its total market capitalization and its free float market capitalization. This methodology seeks to balance the need to accurately reflect the overall market size of each stock while also accounting for the shares that are freely traded. Besides lower liquidity, this index methodology’s repercussions often include its complexity and higher costs. Using multiple weighting schemes can also make it difficult to compare the performance to a single benchmark.

Conclusion

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Investing in Amazon can offer the potential for higher returns, but it also comes with higher risk as the performance of the stock is closely tied to the performance of the company.

On the other hand, investing in an S&P 500 index fund can offer diversification and lower risk. pic.twitter.com/hF3CMngl0a

— Vittorio Rigato (@stoicmoneycoach) February 14, 2023

Overall, index methodology is an essential part of the stock market since it decides which stocks are included in key market indexes. These key market indexes are then frequently used as benchmarks for investment portfolio performance and as a measure of the overall market’s health. Each kind of index has advantages and disadvantages. Understanding index methodologies allows investors to make sound decisions that are in line with their financial capabilities and goals. 

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ACCESS MARKET LEADERS TODAY

Real-time access to our Market Leaders is where you can see all the leading stocks, crypto, forex and other markets in one glance.

This is calculated using Investa’s proprietary ranking system, which utilizes advanced parameters to identify the best stocks to monitor objectively. 

GET YOUR ACCESS NOW!

@bluecheats takes the spot for this week’s featured trader! @bluecheats used price action to identify the triple bottom visual pattern and paired it with the symmetrical triangle and basic support and resistance (also known as S/R) to spot the surge in the price of $MER.

Let’s take a look at how @bluecheats used these indicators to his advantage. 

By zooming out, bluecheats was able to spot the triple bottom visual pattern that $MER was forming. The triple bottom pattern is a technical analysis pattern that traders frequently use to identify probable bullish reversals in the price of a stock. Bluecheats also used support and resistance to not only set his initial target profit but also to form a symmetrical triangle that serves as an additional indicator of where the stock’s price is going next. The stock breaking out upward in the symmetrical triangle supports the triple bottom pattern in indicating a potential upward momentum for the price. 

At the time of the bluecheat’s post, the stock was trading at the 291 level. The stock surged in price 8 days later, not only hitting the trader’s initial target profit at the 311 level (for a gain of around 7%) but also peaking at the 317 level, for a potential gain of around 9%

TECHNICALS OF THE TRADE

The three essential indicators @bluecheats used in this trade are the triple bottom visual pattern, the symmetrical triangle, and S/R.

The triple bottom is produced when the price of a stock falls three times to a support level and bounces off of it without breaking it. When a stock produces a triple bottom pattern, it suggests that there is considerable buying activity at the support level, keeping the price from falling below it.

The symmetrical triangle is created by drawing two converging trend lines that connect a stock’s price action series of highs and lows. Traders might look for a breakout in either direction after the symmetrical triangle pattern has formed. If the stock breaks out to the upside, it might imply that bullish momentum is building and that the stock is positioned to rise. If the stock breaks out to the downside, it might imply that bearish momentum is building, and the price is likely to fall.

Traders commonly use support and resistance levels to identify potential areas of buying or selling interest in a stock. It’s crucial to remember that support and resistance levels aren’t always good predictors of future price moves. Traders should always employ other types of research to back up their trading decisions. Nonetheless, support and resistance levels may be a valuable tools for traders attempting to discover probable entry and exit points for their trades, as well as control risk by setting target profit levels.

FUNDAMENTALS OF THE TRADE

Lately, Manila Electric Co. (Meralco) has begun the building of a new substation in Kawit, Cavite, to meet the area’s expanding power demand. The new substation is expected to be finished by April 2024. It will hold three transformer banks with a total capacity of 249 megavolt amperes (MVA), each capable of providing around 83 MVA.

“This Meralco Island Cove Substation will be an integral part of the Meralco Distribution System in Cavite, supporting not just Island Cove’s power requirements but also that of the communities around Kawit and Bacoor, Cavite,” said Ferdinand O. Geluz, Meralco’s first vice-president and chief commercial officer for customer retail services, in a media release.

Meralco stated earlier this month that it had commissioned a 115-kilovolt switching station at the Light Industrial Science Park 2 in Calamba City, Laguna. The project is anticipated to improve the area’s system dependability and electricity quality. The La Mesa switching station will handle an increase in power demand of around 13.5 megawatts (MW) this year, rising to 20 MW by 2027.

WHAT SHOULD BE YOUR NEXT MOVE

Currently, $MER ranges in its support level around 309. It is advisable to wait to see if this level would hold or would break down. The RSI also shows overbought signals. This further supports the risk of a potential drop in price. As a result, it is advisable to evaluate strategy and wait for other multiple signals of where the stock will go. When multiple confirmations align, it can aid decision-making and reduce the risks of potentially going against the trend. 

Once again, KUDOS to @jprados for being this week’s featured trader! Enjoy your 14-day InvestaPrime Access and continue to be an inspiration to the trading community.

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Everyone’s retirement story is different. 

You may be planning to retire at a certain age, or need to be retired earlier than you thought, or even plan to keep working well past retirement age.

Whatever your story is, we want to help you build your retirement financial goals that are right for you and make the most of your retirement with your loved-ones.

Start your retirement journey with the Investa app today: http://invs.st/DailyInvestMFfeb 

FIRE is a movement and a way of life centered on gaining financial independence as soon as possible in order to retire from regular work and enjoy life on one’s own terms.

But how does it work? What is its purpose? Who is it for? Let’s find out!

FIRE: What and Why?

Popularized by Vicki Robin and Joe Dominguez’s best-selling book, Your Money or Your Life, FIRE is an abbreviation that stands for Financial Independence, Retire Early. It refers to financial independence principles and practices that may be utilized to support early retirement.

Enthusiasts make minor withdrawals from their funds to support their living expenses after retiring at a young age, often about 3% to 4% of the sum yearly. This demands extraordinary vigilance to monitor spending and devotion to the maintenance and reallocation of their investments, depending on the amount of their savings and desired lifestyle. You’ve crossed the finish line when your funds can pay your post-retirement costs (after inflation).

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Financial independence is not about retirement. It is about being empowered with options.

— D.Muthukrishnan (@dmuthuk) March 2, 2022

Who’s it for?

The FIRE movement is for everyone who aspires to attain financial independence and, if desired, retire early. No one is too young or too old to attain it. It is intended for those who wish to gain financial control and grow money in order to have more options and freedom in their life. The principles apply to anybody who wishes to attain financial stability and security, not simply those who desire to retire early. It is open to anybody, regardless of income level. This is because the emphasis is on cutting spending, growing savings, and making wise investment decisions. The road to financial independence may take longer for people with lesser earnings, breadwinners with heavy financial responsibilities, or those with multiple financial obligations, but with perseverance and discipline, anybody may achieve financial independence.

Types of FIRE

These are the most common types of FIRE. The goal is to find the strategy that works best for your own financial circumstances, lifestyle, and ambitions.

1. Lean FIRE: This is for those who want to retire early and live on a tight budget. This type of FIRE emphasizes frugality and minimizing expenses, with the goal of retiring as soon as possible with a minimal budget.

2. Fat FIRE: Fat FIRE is designed for people who desire to retire early while maintaining a higher standard of living. This version prioritizes saving a bigger amount of one’s income and investing substantially in order to retire early while maintaining a comfortable lifestyle. If you’re looking for a solid mutual fund to invest in, the ALFM Global Multi-Asset Income Fund is a popular choice on the Investa platform. What makes it unique is that the fund provides a solid source of dividends. For 2022, the fund gave out an annualized dividend yield of around 5%.

3. Barista FIRE: This is for people who desire to be financially independent but aren’t quite ready to retire. This type of FIRE is quitting a traditional 9-5 job but continuing to work part-time, either for the joy of the work or to maintain a certain amount of income.

4. Pension FIRE: Pension FIRE is for people who have a regular pension plan and wish to enhance it with personal resources in order to live well in retirement. This sort of FIRE entails boosting pension plan contributions as well as investing in low-cost index funds and other savings. 

5. Hybrid FIRE: Hybrid FIRE is for those who wish to mix components of other FIRE techniques to develop a personalized strategy that fits their specific scenario. To attain financial independence, this sort of FIRE combines discipline, investment, and intelligent work choices.
   

Want to start your financial independence journey by investing in mutual funds? You can do just that by investing in Investa.ph!

Take responsibility for your happiness

FIRE comes with a price, and there are really trade-offs to be made. In the end, the goal of it is to achieve financial freedom, where one no longer has to work for money but instead can choose to do meaningful and fulfilling work. It’s critical to remember that the movement is about far more than simply financial freedom. It’s all about striking a balance and enjoying life on your own terms. By following the principles, you may attain financial stability as well as the flexibility to pursue your passions and live life on your terms.

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Everyone’s retirement story is different. 

You may be planning to retire at a certain age, or need to be retired earlier than you thought, or even plan to keep working well past retirement age.

Whatever your story is, we want to help you build your retirement financial goals that are right for you and make the most of your retirement with your loved-ones.

Start your retirement journey with the Investa app today: http://invs.st/DailyInvestMFfeb 

@jprado takes the spot for this week’s featured trader as he uses multiple technical indicators to support a potential upward movement in the price of $MWIDE! Using multiple indicators in trading can provide a more comprehensive picture of market conditions and increase the likelihood of making informed trading decisions.

With his excellent use of the Darvas box, exponential moving averages (or EMA), and the relative strength index (also known as RSI), @jprado managed to affirm multiple signs of a bullish direction and catch $MWIDE’s recent surge in price. As predicted, $MWIDE’s price increased to a peak of around 33% since his post. 

Let’s take a look at how @jprado used these indicators to his advantage.

In his post, our featured trader stated that the stock was in the middle of a Darvas box, above EMA 50, has an RSI above 50, and an undecided MACD. He stated that the stock has a possibility to go sideways due to the price being in the middle of a Darvas box (which means that the price of the stock is trading within the boundaries of the box) and having an undecided MACD. However, with a good catalyst and being able to break resistance, he still saw the potential of a breakout due to the bullish indicators of EMA and RSI, which can be further confirmed when the stock price breaks out of the trading range and moves above the upper line of the Darvas box as it would then generate a buy signal.

At the time of his post, $MWIDE closed near its low at the 3.25 level, even going as low as 3.12 due to the decrease in price on the following day. The stock started to truly accumulate in price 6 days after it broke out and reached a peak of the 4.33 level, resulting in around a 33% increase since his last post. 

TECHNICALS OF THE TRADE

Let’s elaborate on the three main indicators he used: the Darvas box, EMA, and RSI.

The Darvas box is used to identify strong trends and to trade only in stocks that are in strong up trends. Traders using the Darvas box method typically look for stocks that have established a trading range, meaning that they have been oscillating within a defined price range for a certain time. As we can see in $MWIDE’s chart, the stock has been ranging for months, making the Darvas box an appropriate tool to utilize.

He also mentioned that the price is above EMA 50. When a stock trades over its 50-day EMA, it signifies that the current price is greater than the average price over the previous 50 days. This may be taken as a positive indicator, suggesting that the stock is in an uptrend and that it is likely to continue.

@jprado stated that the RSI of the stock is above 50, which generally indicates that the security is in a bullish (upward) trend. Additionally, the line he drew in the RSI indicates that the price of a stock and the RSI is moving in the same direction, which is considered a sign of confirmation of the trend.

While utilizing numerous indicators might be advantageous, it is also vital to apply them methodically and logically. Overloading a trading strategy with too many indicators can confuse and even worsen decision-making.

FUNDAMENTALS OF THE TRADE

Megawide is one of the Philippines’ largest engineering and infrastructure organizations today, having a significant portfolio in Engineering, Procurement, Construction, and Transportation-Oriented Infrastructure.

Its ground-breaking construction and engineering solutions create new industry standards by combining first-world EPC skills with cutting-edge construction technologies such as precast, formwork systems, concrete batching and construction equipment, logistics, and services.

It recently joined the list of the Philippines’ 2023 Top Employers, where it stated that Megawide maintains employee trust by giving competitive perks and opportunities for personal advancement. Apart from being an active partner in nation-building, Megawide is also committed to continuing to establish a community that values its employees’ ideas and supports a good work-life balance.

WHAT SHOULD BE MY NEXT MOVE

Currently, $MWIDE is creating a new resistance around the 4.2 levels. The RSI is also exhibiting overbought signals, which indicates the possibility of a retracement. Due to this, it is advisable to reconsider strategies and enter a potential pullback. However, waiting for a pullback does not always result in a good trade, and traders should always apply adequate risk management strategies as well as evaluate other kinds of research, such as fundamental analysis, before placing a trade.

Once again, KUDOS to @jprados for being this week’s featured trader! Enjoy your 14-day InvestaPrime Access and continue to be an inspiration to the trading community.

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MACD can help gauge whether a stock is overbought or oversold.  Traders are alerted to the directional move’s strength and warning of a potential price reversal.

But what is a MACD? How should it be used? When is it best utilized? Let’s find out!

WHAT IS THE MACD

The moving average convergence divergence (also known as the MACD) is one of traders’ most often used indicators. It is simply a trend-following indicator that displays the connection between two moving averages.

Traders use MACD to detect changes in the direction or strength of a stock’s price trend. At first look, MACD may appear sophisticated since it is based on supplementary statistical ideas such as the exponential moving average (EMA). But fundamentally, MACD helps traders detect when the recent momentum in a stock’s price may signal a change in its underlying trend. 

This can help traders decide when to enter, add to, or exit a position.

COMPONENTS OF MACD

A MACD chart is made up of three components: the MACD line, a signal line, and a histogram, all of which are shown on a horizontal axis known as the baseline. The indicator is typically shown right below the price chart of the stocks. This allows price movements to be compared to changes in the MACD chart.

MACD BACKTEST APPROACH

For this backtest, the indicators we used are the EMA 100 and the default MACD. The EMA 100 is used in order to assess the trend of the market. The stocks covered were U.S. and PH stocks. Random liquid stocks were chosen, with historical data starting from January 1, 2020. 

The trades’ framework will be as follows:

• Long positions are entered once the MACD line crosses over the Signal line.

• Positions are then sold once a decrease in momentum is signaled by the MACD line crossing under the Signal line. Positions are also sold if there is a big change in market sentiment; hence, we must cut losses to prevent further deficits. 

RESULTS USING THE MACD STRATEGY

The strategy had a hit rate of 54% and an edge ratio of 1.80 over about 100 trades. It is important to take into account that trends play a substantial role in determining the success of each trade. That is why we also took into account if prices were above the EMA 100, which serves as an additional indicator to determine if the MACD signals were only portraying false positives. The majority of the significant gains were positions executed in above the EMA 100. 

INSIGHTS

Here are some key insights that can be taken from the test done:

1. The trend is your best friend.

False positive divergences frequently occur when an asset’s price goes sideways in a consolidation. Being able to determine where the stock’s trend is going would be essential in verifying the signals given by the MACD. Buy signals that are against the trend are most often retracements which leads to the risk of buying even if there is a chance that the price would continue to go lower.

2. False moves are common, so it is better to confirm first 

It is advisable to wait three or four days after a signal line crossing to ensure that it is not a fake move.

3. Be sensitive to the momentum

Even in the absence of a clear reversal, a slowing in price momentum (sideways movement or stagnant trending movement) will lead MACD to pull away from its prior extremes and gravitate toward the zero lines. This could be used to warn traders of the shift in momentum and allows traders to reassess their positions according to their risk levels. 

LAST THOUGHTS

The MACD technical indicator is best used to identify changes in momentum and trend direction. This means that it is most efficient in spotting trend strength, assessing its momentum, and identifying changes in its trend.

This indicator should not be utilized in isolation but rather in combination with other technical and fundamental analysis techniques. Trading against the trend would give a lot of false signals, this is why excellent risk management must be observed when doing so. 

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Got no time analyzing hundreds of stocks or cryptocurrencies in chart one at a time? We’ll make it easier for you with ProScreener!

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The ProScreener was one of the original features we launched years ago. The goal we had was to cut the screen time of traders. With the ProScreener, traders can automatically filter the markets for assets that fit their trading systems. No matter if you focus on momentum trades or buying the dip, the ProScreener will help you find the best trades in seconds.

With the new iteration of the ProScreener, we decided to put more focus on making quality-of-life upgrades. We made it so that you save a lot more screen time – time that you can spend with your loved ones or with your hobbies.

Here’s a look at the new scenes you’ll experience with the recent update.

PROSCREENER HOMEPAGE

• Easily load screener results straight from the homepage – no more need to load a new page!

• Access different saved screeners and suggestions through a quick toggle on the sidebar

BUILT-IN SCREENERS

Our built-in screeners have been revised and revamped to better cater to your trading needs

Screeners that previously only covered 1 market have been replicated to cover the other markets as well

Here’s a full list of the screeners that we offer:

PREMIUM SCREENERS

• Growth Stocks

• Investa Bottom Catcher

• Investa Dip Catcher

• Investa Momentum Leaders

• Investa Outliers

• Investa Short-Term Pullbacks

• Investa Short-Term Trend Follower

• Investa Shorting Candidates

FREE SCREENERS

• Positive YTD Performance – PSE

• Positive YTD Performance – PSE

• Undervalued Stocks – PSE

• Uptrending Financial Stocks – PSE

• Uptrending Holding Stocks – PSE

• Uptrending Industrial Stocks – PSE

• Uptrending Mining and Oil Stocks – PSE

• Uptrending Property Stocks – PSE

• Uptrending SME Stocks – PSE

• Uptrending Services Stocks – PSE

• Uptrending Cryptocurrencies

INVESTAWATCHER INTEGRATION

Add your picks straight to the InvestaWatcher

CUSTOM SCREENERS

Curating your own screeners is now easier with the new UX updates. Saving a newly created screener will make it accessible on the homepage. You can also easily access previously created screeners if you want to further tweak your parameters

TO WRAP UP

Hopefully, you’ll find the updates impactful to your everyday trading routines! As always, feel free to let us know your thoughts on how we can improve our services.

We’ve been creating a lot of updates and improvements to the platform recently. However, we’re not done yet. Our team is still dedicated to creating a positive impact for traders and investors alike. Stay tuned!