Melco Crown Entertainment (MPEL) Rally to Continue!
Happy Chinese New Year! Greeting from the The Market Oracle!
The Majestic Development from Melco Crown in Cotai
After my first encounter with MPEL last year, I have recently reenter MPEL. The reasons I am making the decision to reenter MPEL is overall the world markets especially for the US Market are improving, the never ending revenue growth in Macau, increasing Earning Per Share (EPS) and the tecnical and fundamental analysis as per this post. Based on long term chart above, MPEL has recently broken the long term down trend line. The MACD indicator is currently pointing a further upward move for MPEL and it is currently not oversold yet. The stochastic on the other hand is showing a slightly overbought position and a negative downtrend for this stock.
MPEL current formation is similar to the Descending Triangle Formation as the above. Even though, the chances is high for MPEL to follow the rules of Descending Triangle Formation and head lower after the consolidation, I am betting it will go the opposite way instead.
Based on the short term chart analysis, I am predicting that Mpel will retest the previous high of $16 and possibly to move higher after that. As of current, most of the technical indicators is pointing to an upward move for this stock, except for stochastic which shows an overbought position for this stock. One thing that I am concerned is the low volume in the rise up which means that the upward move is not strong. For the rally to be strong, we need a strong volume to justify it.
Quarterly data shown a strong improvement quarter over quarter. I am expecting the next quarter revenue will be even higher especially the Lunar New Year will bring all the gambler to speculate crazily.
Disclosure: I am currently all in at $11.25 with a total stocks of 5,800 and I am expecting a profit of 20%-30% at least for this trade.