StockWatch (Jul 13-17, 2009): PSEi

PSEi (Chart: Daily Resistance: 2508/2570-2560 Support: 2410/2350)

I wasn’t able to closely follow the local market for the past 2 weeks because my mother-in-law died and I had to set aside blogging about the market for a couple of days. Looks like I missed out some action in the market with the index consistenly moving up last week. The index is now approaching the previous high of 2508 and it is a wait and see if by next week the index is able to move past that previous high. After that resistance, next resistance is between the level of 2560-2570, this is the resistance line formed since Oct of 2007.

The market is consolidating currently and there is still more room in the RSI before it is considered as overbought so there is still a stronger possibility for the index to move further upward. However having those resistance levels near the current index level is a little bit disturbing. For the coming week exercise caution in buying. If trading for this week has low turn over or volume for the stocks, I believe that the index won’t be able to move above the long standing resistance line from Oct 2007 (2560-2570).

StockWatch (Jun 22-26, 2009): PSEi

PSEi (Chart: Daily Resistance: 2620 Support: 2350/2290)

Looks like this is the long awaited correction to the upward movement of the index and it means were still within the long standing downward channel generated from Sept 2007.

Possible support are at levels 2350, which was the previous resistance that was broken and 2290, which is the 38.2% fibonnacci retracement level. There is a possibility for an upward movement next week considering that the RSI is now on the 50 level, usually RSI at 50 acts as support when the RSI is coming from the high of 80. Still for next week, it would be best to stay on the sidelines just to be sure and wait for any signs of reversals.

StockWatch (Jun 15-19, 2009):PSEi

PSEi (Chart: Daily Resistance: 2630 Support: 2485/2350)

The index corrected for just 2 days and it went back to its upward movement which is very surprising. We are now very near resistance at 2630 which is the previous high and also the resistance line from Sept 2007. This coming week will be a make or break week to see if the resistances are overcome by the index. Still, it would be best to stay on the sidelines for the mean time until after the previous high is broken.

StockWatch (Jun 08-12, 2009): PSEi. FLI

PSEi (Chart: Daily Resistance: 2630/2770 Support: 2400)

The index is now near a couple of major resistance levels. We have 2630 and 2770 which are previous highs of the index. Of the 2 resistance levels, 2630 has more significance, because if the index is able to breach above that level, this means the index is now out of the downward trend that plagued the market since the drop which happened last Oct 2007. This indeed is something to watchout for in the days to come.

However, I think these resistance levels will give the index a hard time before it is able to move past those levels. As I have mentioned before, I believe we are in a bullish phase as evidenced by the RSI always staying above 70 while the index never goes down. And currently the RSI is now near 80 level which is considered the overbought level for a bullish scenario. The RSI being overbought coupled with the fact that the index has always moved higher every week gives more probability for a sell down or a sideways movement by this coming week or next week. I would suggest to take profits for now and wait until the index is able to move past those resistance levels.

General Analysis:

I have mentioned previously that a lot of stocks are exhibiting signs of a rounding bottom. Currently most of those stocks are already near the previous high, so watchout possible resistance on the level of the previous high. If the stock is unable to move past the previous high, then sell for the mean time.

FLI (Chart: Daily Resistance: 0.88 Support: 0.69)

FLI has recently been trading with increased volume and is about to test resistance at 0.88 which is the previous high. With the looks of the RSI being overbought, there may not be enough steam to push this stock beyond the resistance level and it may take some days before this stock is able to move past that level. Also a gap up has formed, but the stock hasn’t moved up any further, so be on the look out for a gap down which may indicate an island reversal.

This maybe a good stock to hold for the long term, but for those who are playing this stock for the short term, it would be best to sell for now.

StockWatch (Jun 01-05, 2009): PSEi, MEG, EDC

PSEi (Chart: Daily Resistance: 2400/2620 Support: 2300)

The index has been continously climbing for the past weeks. It looks like the bulls are confirmed to be back as we can see that the index has been very much over bought for the past 3 weeks as indicated in the RSI. I have been very much observant about the RSI being overbought for the past 3 weeks, because in a non-bullish situation, usually when the index hits the RSI overbought level, the stocks immediately turn south. However for a bulish situation, the RSI overbought level will always be triggered and the graph usually stays above the normal overbought level of 70. Also RSI overbought level is usually re-desginated to a higher level than the usual 70 (because it will always be triggerred if it is around 70). Usually the bullish overbought level is at 80 and from the looks of the index, there seems to be more steam for the index to push through since the bullish overbought level of 80 is still not triggerred.

Also what can be seen from the index’s chart is the breaking above a significant resistance line at 2350 last Friday. This line was the support line of the index when the index created a large gap down last Octoer of 2008 which conversely becomes the current level of resistance prior to Friday. This line was broken with a significant volume and it is highly possible that Friday’s bullish ending will still continue come Monday.

General Analysis:
A lot of stocks are exhibiting characteristics of a rounding bottom pattern. You can make profit on this pattern in 2 ways: One, you can ride the stock up until it reaches near resistance, which is the previous high. A lot of stocks are still halfway from reaching major resistance levels. Second is that you wait for a break-out of the pattern. Or you can do a combination of both, you ride the stock up until a certain level near resistance and sell a few for the moment and then wait for breakout and buy again. Watchout for break-outs with low volume, these are possible bear traps.


MEG (Chart: Weekly Resistance: 1.02/1.20 Support: 0.47)

MEG seems to be going sideways for now, but looking at the weekly chart, it seems that a pennant formation is brewing for this stock (pole formed last May 08). Resistance is at 1.02. A break above this level with large volume would confirm the formation. Possible target price for the pennant formation is at around 1.5




EDC (Chart: Daily Resistance 4.50 Support: 3.30/3.60)

EDC seems to be forming a cup and handle formation. The break-out price is above 4.50. Possible target price of up to 6.5. As long as the price stays above 3.30 I think this stock is still good. Watch out also for the crossing of the 65 day MA (red line) above the 260 day MA (green line)

StockWatch (May 18-22, 2009): PSEi, DMC

PSEI (Chart: Daily Resistance: 2350/2400 Support: 2256/2060)

The index moved sideways for a moment last week, but ended still strong by Friday, having successfully moved farther from the 260 day MA (green line).

There are two upcoming resistance at 2350 (orange horizontal line), which is the gap from Oct 2008 and 2400 which a point in the line connecting the peaks of May and Aug 2008.

There may still be some small upward movements next week, but trade cautiously. RSI is still very much overbought and a correction is due any time. Probably it would be best to sell a portion for the mean time to lock-in some of the profits.



DMC (Chart: Daily Resistance: 7.30 Support: 5.1)

DMC had a break out with volume from a rounding bottom pattern. Volume on breakout was large. Modest target price is at 8.5 . Upcoming resistance at 7.30 which is a previous high. If you buy at the current level of 6.9, cutloss is at around 6.5.

StockWatch (May 11-15, 2009): PSEi

PSEi (Chart: Daily Resistance: 2270 Support: 2060)

The index’s movement last week was very impressive. I was expecting that the trading last week would follow the same trend where a sell down would happen at the start of the week and recoup on the last trading days of the week. This time the index moved higher for the whole week and just fell short of moving past the 260 day MA (green line).

Next week’s action is anybody’s guess. The RSI is again overbought and currently the 260 day MA is acting as resistance for the index. I’m not sure if the bullishness can extend further next week, but I’d be cautious in trading just incase the recent bullishness does not follow through.

Also 2 gaps has already formed since the start of the rally, so I’d be on the look out for a possible island reversal.

I’m still skeptical on the recent bullishness, probably because I was fixated on the negative divergence between the RSI and the Index. But the chart is showing a different story now, so let’s see where this would take us for the following weeks.

StockWatch (May 04-08, 2009): PSEi

PSEi (Chart: Daily Resistance: 2120/2170 Support: 2057)

The index had a sell down for 2 days but was again able to recoup the loses on Thursday. Although it is not evident in the chart, the volume on Thursday’s recoup was less than the volume on the April 24 rally. The volume last Thursday was just bloated by block sales. Volume is still diminishing on every time the market is able to bouce back which I believe is not a very good sign.

Also, something not that evident in the chart is the MACD crossing below the signal line. For MACD followers, this means a signal to sell for the mean time, which I believe is what should be done.

The index also broke the standing support line (orange line) from March 2009. The recoup last Thursday just fell short of moving past that line so this is something to watchout for the coming week.

Overall, I still advise caution in trading or for the risk averse stay on the sidelines for now. Watch out for upward movements with low or diminishing volume