StockWatch (August 27-31, 2007) PSEi, JFC

PSEi (Chart: Daily Resistance: 3250 Support: 3170)

The index is currently testing the 38.2% Fibonacci retracement level at 3230. It’s still a wait-and-see if the resistance will be broken. However I’m more inclined to call that the resistance may be a problem for the mean time. This is due to the volume which is just average in the index’s upward move. Looks like most are still out of the market until further confirmation that the stock market scare is over or have died down. A positive note on the index is that the MACD has now crossed above the signal line. Hopefully this might attract more volume in the market. As of current we’re still not yet out of the woods until we have gone past the Moving averages and have created a new high. Looking further at the index, if I were to follow the downward movement gaps, it seems to be confirming a reversal. We have the breakaway gap, the runaway gap, and the exhaustion gap (marked as 1-3 in the image). The trough formed in the index was a confirmation of the runaway gap, that indicates a halfway point for the movement and the exhaustion gap which indicates that the bottom is nearing. Analysing the gap on the current upward move, we have the breakaway gap and runaway gap (marked as 4-5). If the run away gap is to be considered as a halfway point this means the top of the current upward move will be near 3460 (marked as 6 in the image), at which level is also the 61.8% Fibonacci retracement level. Considering the gaps on the upward move, this could probably indicate that for the coming weeks or months, we will be trading between 2870 and 3460.

JFC (Chart: Daily Resistance: 53 Support: 49)

JFC seems to be forming a symmetrical triangle with TP near 75. At this point, it is still too early for a breakout to happen. Price action may probably trade the range of 44-53 for the mean time. Also if my analysis is correct, there seems to be an inverted head and shoulders formation. Left shoulder is already formed and head is on its way to be formed, however we still have to wait for the right shoulder. Judging from the time span the left shoulder has formed, which is around 3 months, the completion of the head formation may be on September and the right shoulder and breakout by November or December. Watchout for the resistance line, this will be tested by the right side of the neckline formation of the H&S. Getting in at this level would be risky for range trading. A good level for range trading is at 45 or below. Sell at 53, cut loss at 43.50.

In Retrospect: PAX, JFC, DGTL

PAX

PAX moved with the market last week, going to as high as 14. A short upward move and sideways movement characterized its price action. However, we could see that even if there had been an upward move for this stock, it has consistently closed lower than the opening price. This means the bulls are still overpowered by the bears trying to sell the stock. Also the volume is still lethargic, which means there aren’t enough buyers. If this goes up and is able to close the gaps without a significant increase in volume, then this means the upward move was just superficial. Watch out for price levels 14.25 the lower end of the gap, 15.25 higher end of the gap, 16.25 and 19.00 the 23.6% and 38.2% Fibonacci retracement price levels. One good thing to note for this stock is that the MACD is positioned to cross above the signal line. It’s a wait-and-see if this cross above the signal line would attract more volume. Still be on the look out for the formation of an island reversal pattern.


JFC

The trough that we are waiting is now formed and this means that our positive divergence is confirmed. This stock went to as high as 53 with sufficient volume. However, the 2 MA’s are currently blocking its way and has proven to be strong resistance. Price may move sideways to down for this week. It may go to as low as 49 which is its previous low or beyond.

DGTL
The positive divergence is also confirmed for DGTL as the trough has formed. However, the upward movement of the stock was not accompanied by volume, which means its sideways movement for this stock for now until it’s able to get more volume. Any further upward move without sufficient volume may not be good enough to break out from the downward channel that it is currently in.

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StockWatch (Aug 20-24, 2007): PSEi, PAX, JFC, DGTL

PSEi (Chart: Daily Resistance: 2940/3100/3220 Support: 2740/2440)

The index went thru the 260day MA, even breaking the long term support line connecting the peaks from 2002 and 2006. Next support level is at around 2740, the long term support line connecting the peaks of 2002 and 2005 and afterwards at 2440, the support line connecting the troughs of 2003 and 2006. With last Friday’s Fed’s intervention in the US market by cutting the discount rates, hopefully our local market would also react positively with that event. There is still no sign of reversal, so it might be possible that upward moves maybe short lived due to heavy selling from those who were stuck in the 4 weeks straight selling. Resistance at 2940/3100/3220 which are previous highs.

PAX( Chart: Daily Resistance: 14.25/15/16/17.50 Support: 10/10.75/12)

On a bearish market, RSI goes way below the oversold level of 30. This somehow got my curiosity to find the stock that has the lowest RSI to date which eventually led me to PAX. The RSI of this stock is currently at 6.69, the lowest of all stocks actively traded. On further observation of the price movement, this stock also has a couple of other stories to tell. The prominent things I’ve noticed on this stock are the gaps. If my analysis is correct, the price movement may have formed a break away gap, runaway gap and an exhaustion gap. The exhaustion gap coupled with the RSI is somehow telling us that selling momentum for this stock maybe near its end. What may happen in the week to come is the probable formation of an island reversal or probably a short upward move then a sideways movement. Expect heavy resistance at those levels where the gaps were made. This can be a candidate for range trading. If you could get this stock at 12, you can sell at 14 for a 15% net profit. Cutloss is at 11.50. Word of caution, even though there are signs telling us of possible end of the selling momentum, there is still a possibility that price may further move down. Next support levels are 10/10.75. The price 10.75 is the support line connecting the troughs of 2003 and 2005. While 10 is a logical support and previous low.

JFC ( Chart: Daily Resistance: 50/51/54 Support: 44/42.50/39)

JFC may be forming positive divergence. Both the RSI and MACD are registering higher lows, while the price is registering lower lows. The positive divergence is not yet confirmed as price still has to form the trough. At this point, the price may further register lower low and may drag both the RSI and MACD with it thereby invalidating the positive divergence. However, even if the positive divergence is confirmed it may take a while before the stock starts to move the opposite direction.

DGTL (Chart: Daily Resistance: 1.20/1.40 Support: 1.10/1.02/0.88)

DGTL is also showing signs of positive divergence. Both RSI and MACD are registering higher low while price is registering lower low. The divergence is still not confirmed as the trough still has to be formed and price may still move further down dragging the RSI and MACD and invalidating the positive divergence. Price at 1.10 is a support level, this is the support line connecting the troughs from 2002, 2003, 2004 and 2006. It’s a wait and see this week if that support line will hold.

In Retrospect: AC

AC

AC moved with the market and went further below 457. It broke both the support line from 2002 and the 260day MA. However, thought it has moved back in an upward channel formation, the MAs hasn’t crossed each other’s path which is a sign that this stock is still bullish. Also as long as it does not go below the support line of the upward channel at around 300, this can still be considered bullish. RSI is current at 19, which very much oversold, but with the current bear market, RSI may still go further low.

StockWatch (Aug 13-17, 2007): PSEi, AC

PSEi (Chart: Daily Resistance: 3411 Support: 3242)

The PSE index, had a good run up, but was unable to sustain its upward move after reaching the 130 day MA. As of last Friday, the US market was still down, so expect further selling by Monday. Hopefully the previous low would be a strong support for our index, otherwise, we may see further move towards 3200 level.

AC (Chart: Daily Resistance: 470/477 Support: 460/457/450)

AC is in my watch list because it is now just above the 260day MA and also approaching price level at 457 which is the long term support line(see 5yr chart below) – or previous resistance line - from 2002. It’s a wait and see this week if those support levels will be able to withstand further downward market movement. If those support levels prove to be strong, it would be a good price level to buy at those levels. This stock is currently good for range trading since there is still no clear reversal from the downward move. Buy at the support level, and then sell at 510-520. If both the 260day MA and the long term support line are not able to contain further downward move, price may reach 450-430 level and possibly cause the 65day MA cross below the 130day MA.

In Retrospect: URC

URC

URC is now underway in creating the right leg of the double bottom. There was a large increase in price last Thursday which might be due to the good company earnings report released also that day. It was able to surpass the resistance at 17 which is also the 65 day MA only to hit a snag at the 130 day MA which is at 17.25. As noticed the price increase last Thursday was not supported by good volume which made the price fall back to the support at 16, closing high at 16.50. As of current, the double bottom still has to prove itself by breaking the long term resistance at 18.50. But before it is able to do that, it must be able to break the moving averages. Possible target price of 23 for the double bottom formation.

StockWatch (Aug 6-10, 2007) : PSEi, URC

PSEi (Chart: Daily Resistance: 3460 Support: 3320/3300)

PSEi was very bearish last week. Even if the US market was up twice by about 100pts each, the index was still down. The index even had false upward move where the market was about 50pts up, only to close lower near the end of the trading hours. The index breached the support line from March and further broke the 130 day SMA near 3400. As of writing, the US market sold down it previous gains going down 200pts last Friday. Expect further selling by Monday for those who would still want to get out of the falling market. Things to expect for next week: 1.) RSI is now very much oversold so this might spur some bargain hunting that would hopefully move the market up. 2.) Price has now retraced more than 50% of the upward move since Feb and it is now approaching the 61.8% retracement near 3300 which may provide support for our market.

URC ( Chart: Daily Resistance: 17.00 Support: 15.50)

URC is very much a candidate for a double bottom. In my previous analysis last May, URC showed signs of a bullish divergence. This bullish divergence was strong enough to break all moving averages but fell short of breaking the long term resistance line near 19. At current, URC is now very much oversold as RSI is way below 30 and somehow this oversold condition of URC may help complete the double bottom picture which may possibly be a sign of reversal from the stocks downward move. And again a further confirmation of a reversal would be if it is able to break the resistance at 18.50-19.00. Considering the volume last Friday, it seems that a lot were able to accumulate this stock at 15.50 to 15.75 which may translate to support area for this stock. If you are able to ride the risk you can buy at this level and hopefully ride this all the way to its resistance at 17.00 or to its complete reversal.


General Analysis
A lot of stocks have now reached oversold level with some even breaking the RSI 30. One of the more significant stock to watch is GEO. Last Friday’s trading had a large volume and RSI is also below 30, just like URC, this may suggest a support at 1.56

In Retrospect: OV, FLI

OV

OV’s resilience was no match for the current bear market condition. OV broke down and went to as low as 0.018. It is currently approaching the 130day SMA of 0.017. If it becomes successful at breaching the 130day SMA, next support would be the 260 day SMA at 0.014. Currently, the stock is very much oversold as RSI is now below 30. There may be a temporary bounce due to RSI. But currently this stock’s MACD has turned bearish, so eve if it’s selling at a “cheap” price, better stay out of this stock for the moment. Wait until the market gets better before getting in. The cup and handle formation is still intact, so this is still worth watching.

FLI

FLI further moved to as low as 1.80. A remarkable thing though for FLI is that even if it moved down with the market, there was not much depth in the sell down. If it moves down further, next support is at 1.68.