Red Flag On Alliance Global Group, Inc.

Warning! The shares of Andrew Tan-led Alliance Global Group, Inc. or AGI in the Philippine Stock Exchange could slide further given their recent price action. Let me show you how.

Well, AGI had been consolidating within a symmetrical triangle for a little four months. All along I thought that it was setting up for another bullish because of its run-up during the previous year. It was even one of the few issues, along with San Miguel Corporation (SMC), which held their ground when the general market made a correction following 2010′s stellar performance. However, it appears that AGI's luck has changed when it broke down from the said symmetrical triangle pattern. In fact, its breakdown was more pronounced when it made a bearish breakaway gap. Given this and the fact that AGI has failed to fill the gap within three days suggests that it would continue to fall further. If it does, it could fall down to its downside target of around PHP 9.80 (computed by projecting the height of the triangle from the point of breakout.

On the fundamental side, AGI sold some of its treasury shares and secondary shares that were owned by its subsidiary, Megaworld Corporation. All in all, it raised PHP 9.73 billion at PHP 11.16 per share which will be mainly infused in the development of new projects for the newly acquired Fil-Estate Land (GERI). Majority of those which bought AGI at a discount quickly took profits since at that time it was still trading at around PHP 12.00. At present, AGI is still trading slightly higher than the discounted price at PHP 11.16. Therefore, some of the institutions that got it at that price could still make a quick buck by selling it. This in turn would weigh on the price of the stock at least in the near term.

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