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.