Cirtek Holdings Rallies by 97% in 10 Days
Cirtek Holdings Philippines Corporation (TECH) entered the new year with a bang as it has so far risen by 72.50% since the start of the year or 97% since it marked a low of Php3.66 last December 20 to Php7.20. There appears to be no publicly known reason behind its recent surge as per the different news outlets, Bloomberg and company disclosures. Price-wise, however, it appears to be that the stock has and is being accumulated by a fund. The stock actually started to rise on increased volume last December 27. Since then, market participation on the stock has notably risen as well. From December 27 all the way to January 9, 2020, Colfinancial has a net buy of Php21 million worth on the stock. While a purchase by COL would normally be associated to retail trades, as a former equity fund manager of a universal bank that personally managed Php25 billion in discretionary funds, I recall that my favorite go-to move to accumulate a stock is not to purchase it with an institutional broker, more so foreign brokers, but rather I used a local retail broker. The reason being is that I don’t really want the market to know my moves until my entire demand is complete. Hence, it is best if I disguise my entry by buying the stock via a retail broker like Colfinancial. Contrary to common belief, Colfinancial is not only being used by the retail market. In fact, big institutional funds like SSS, Sunlife, GSIS, and other funds also use the broker precisely as a channel to “hide” their trades. Now going back to Cirtek, I believe that the stock has been and still is being accumulated by a fund. By the way, SSS and Sunlife each bought close to a Php1 billion worth of the stock at an average price of ~Php22.00 three years ago. Given the stock’s liquidity, or lack of on average, I don’t think that those two have already let go of their position.
From a technical perspective, the stock’s rally started to pick up the moment it breached its 30-day moving average on better-than-average volume as the said break likewise validated the presence of a bullish divergence with its RSI. Check that a resistance break on its RSI can likewise be observed. Looking at its long term chart, one can see that the stock has in fact rallied against its all-time support at Php3.66. In the near term, though, any rally may still be capped, especially since its RSI is already at the overbought level, by its resistance at Php8.00 or at Php10.00. Note that for it to have a more sustained up leg, it needs to pull back and establish a bullish reversal with a “higher low” base. I’m going to be a buyer again following the formation of the said pattern. Caveat.
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