StockWatch (Jul 30-Aug 3, 2007): PHISIX, OV, FLI

PSEi (Chart: Daily Resistance: 3588/3641 Support: 3500/3400)

PHISIX gapped down last Friday affected by the jitters from the US economy. I previously saw a bearish divergence of the MACD, but somehow dismissed it, thinking that I might have mis-interpreted it. Others also found a double top in the chart and a gap down which was the breakdown from the double top’s neckline. If considering the break down from the double top, last Friday’s ending index value has already reached the target value of the double top which is near 3500. It also has touched the second support line from July of last year. If that support line is tested to be strong, then we could expect a up to sideways movement. Otherwise, a break from the 3500 would have the index falling near 3400 which is also be the 130 day Simple MA. Other probably good news for the index is that the RSI fell fast to near 30 level. It might be possible that the RSI oversold level might be reached by next week if selling continues, after which we could expect a bounce up due to RSI’s over sold level. As of Friday’s trading, US market is still down. We could probably see further selling next week for those who were not able to react fast with the market drop.

OV (Chart: Daily Resistance: 0.025/ 0.028 Support: 0.023/ 0.021/0.019)


OV caught my attention because of its resilience during last Friday’s market drop. It opened at 0.024 went to as low as 0.023 before closing on the opening price. It is currently forming a symmetrical triangle. The target price for this is at 0.034. Volume is right for a symmetrical formation….. however, price action is very near the apex. If this doesn’t breakout from the symmetrical by next week, this means we have to redraw our chart. Taking a look at the weekly view, OV seems to be a very promising stock as it is forming a cup, with the current symmetrical triangle as the handle. (See chart below OV –Weekly Chart). Target price for the cup and handle formation is at 0.052. With the current jittery market, it is much recommendable to buy only on valid breakout. Breakout point is at 0.025, volume should be above 2Billion shares traded for a very valid breakout volume.

OV-Weekly Chart

FLI (Chart: Daily Resistance: 1.98/2.06 Support: 1.90)

FLI also affected by the market drop has formed a hammer last Friday. A hammer found in a previous downward trend is bullish. But how bullish can this get is still a question as MACD is still below signal line. There are cases where in the hammer was just a signal of a short term bullishness and the downward trend would continue. Had this been a white candle, it could have gotten more credibility of a clear reversal (although the color doesn’t really matter for a hammer, it just gives us a better indication that bulls gained if it is a white candle). We need to wait for further confirmation of a reversal. So far we already have the hammer, if MACD crosses over the signal line this could be another confirmation. RSI is also near oversold, so this could also effect a bounce.