Araneta Properties, Inc. (ARA) surprised a lot of people when it came out of nowhere and hit its ceiling price of Php1.21 yesterday from Php0.81 on heavy volume. Bid at closing yesterday was at 8m shares + so naturally people would expect it to move higher still on the second day. For a brief moment it did rise and even marked a new 10-year high of Php1.36. However at that time it was apparent that it was standing on shaky grounds because the offers became heavier as the moment moved on. A presence of profit takers and short sellers led it to lose its footing and give up its gains. Late in the afternoon session, it was already down by 14% after being up by more than 10% early in the day.
Given today’s price action, it is likely that ARA will shed more of its recent gains. It actually formed a bearish piercing line or dark cloud cover pattern which signifies a likely downturn in the near term. Despite this, we remain positive for ARA in the mid to long term. Why? Because yesterday’s breakout from a big inverted head and shoulders pattern is still valid. A target of Php1.90 may still be achieved on the premise that ARA will stay above the neckline at Php0.85.