StockWatch (Oct 01-10, 2007): PSEi, PLTL, ISM

PSEi (Chart: Daily Resistance: 3600-3700 Support: 3520)

We now have further confirmation of the upward move. The 65 day MA and 61.8% Fib retracement were easily taken out by a gap up with considerable volume. As of current the index is now overbought, expect side to downward movement in the index for the coming days. MACD may test the center line as support, if it is able to stay above the centerline despite the downward move this is another sign of strength for our index. We now have only 2 remaining resistance along the way to establishing a new high: the gap down and previous high formed last July. Let’s get ready to rumble!

PLTL (Chart: Daily Resistance: 7.10/7.30 Support: 6.90)

PLTL is displaying the characteristics of an ascending triangle. Two resistance points can be noted, first is at 7.10, second at 7.30. If it breaks out of 7.10, target price is around 8.70, if it breaks out of 7.30 target price is 8.90. A good breakout volume would be above 15M shares traded

ISM (Chart: Daily Resistance: 0.055 Support: 0.046)

ISM is a candidate for a flag/pennant formation. Watch out for the pennant/flag for the coming week. Conservative target price of atleast 0.07 based on the current pole.


General note: There are a lot of other stocks exhibiting ascending triangle characteristics (e.g SM, SMPH, SMDC). If the coming week will be a down to sideward move, this might be a good chance to get in those stocks, however do observe your cutloss levels if incase price moves further down.

In Retrospect: Mining, WIN, SMPH, BSC

Mining

Mining was very bullish, so bullish that it has already formed a new high. Watch out for a possible side to downward movement soon as RSI is now overbought. It is also possible that the side to downward movement may form a falling wedge, a confirmation of the bullishness.

WIN

The bulls and the bears are in a constant battle for the past week as most of the trading days last week were marked by the same opening and closing price. There is a little bit of upward movement in the price, but it never was able to move above the 65 day MA. There is also another resistance coinciding with the 65 day MA, this was the gap down formed last August which might also be contributing to the slow upward movement of price. On the bright side MACD has now crossed above the center line which is a sign of bullishness. However RSI is now near overbought level. For the days to come, the MACD may retest the center line. To confirm its bullishness, the MACD needs to stay above the center line and volume should be light on down days. The big symmetrical triangle that I earlier pointed out is invalid because the volume on the breakout of the smaller symmetrical triangle has broken the diminishing volume characteristics of a symmetrical triangle.


SMPH

SMPH went as high as 12, but there never was sufficient volume on the breakout. The symmetrical triangle now needs to be redrawn. Watch out for the upcoming resistance at 12.25. There is a possibility that it may form an ascending triangle.

BSC

BSC was unable to move above the 65 and 130 day MA. It went only to as high as 0.39 and moved to as low as 0.34 for the week. The good thing about its downward move was that it was going down with light volume. For the coming days, price may move side to down ward and MACD may try to test the centerline. As of current, BSC is lacking in bullish signals. First it was unable to move above the 2 MA’s, second, RSI went above the 50 level, but was unable to stay above it. In addition, if MACD is unable to move above the center line and subsequently crosses below the signal line, then this definitely is not a good sign.

Technical Insider by Ninodal

Another TA blogsite by Ninodal from the Absolute Traders community. "Technical Insider: a saucy term for "Ipit/s" - a person who used technical analysis to spot area patterns to profit from it but was sadly stuck inside because of greed and impatience". Here you can read on his trades, analysis and stock issues where he is a "Technical Insider".

StockWatch (Sept 24-28, 2007): PSEi, Mining, WIN, SMPH, BSC

PSEi (Chart: Daily Resistance: 3460/3580 Support: 3280)

The index is near the 61.8% Fib retracement at 3460 acting as resistance which is also the 65 day MA. The strength of the bulls will be tested at that resistance level. Now in order for the bulls to win there has to be an increase in buying sentiment. However, on plotting the slope of the On Balance Volume line, it seems that there is only mild buying compared to the intense selling that happened on the downward trend. Probably a lot are still waiting for more signals to confirm the bullishness of the upward move. As of current we already have one bullish signal which is the MACD crossing above the center line. If the index is able to move above the 61.8% fib retracement, this can also be another bullish signal. Also another upcoming resistance would be the lower end of the gap formed last July at 3580. With these upcoming resistance levels and mild buying sentiment on the upward move, it would be best to keep watch of your stops. It’s definitely a wait and see if the resistance will be easily taken out by the bulls.

Mining (Chart: Daily Resistance: 7040 Support: 6370)

Mining sector is very bullish with MACD crossing above center line. The slope of the upward move is very steep accompanied by increasing volume. However, as clearly seen in the chart, the mining sector needs to take a breather. It cannot sustain a very steep slope forever and looking at the RSI, it seems that the breather will happen anytime soon.

WIN (Chart: Daily Resistance: 0.39/0.46 Support: 0.33)

WIN has broken out of a small symmetrical triangle. Target price is 0.50. If the target price is reached, with high volume, this means a break out of the outer symmetrical triangle with a TP of 1.00, but this is still far away and still needs to be confirmed by a good breakout volume.

SMPH (Chart: Daily Resistance: 11.50 Support: 10.25)

SMPH is forming a symmetrical triangle. Breakout above 11.50 needs to have a good volume. Target price is 15.00.

BSC (Chart: Daily Resistance: 0.38/0.40/0.46 Support: 0.30)

BSC showed signs of positive divergence. RSI and MACD logged a higher low, while price logged a lower low. Trading last Friday has an increase in volume. There is no area pattern, so our basis for selling is only the Fib retracement at 0.40 (38.2%) and 0.46 (61.8%).

In Retrospect: BPC

BPC

BPC broke out of the inverse head and shoulder formation. However, the breakout volume in my opinion was not large enough. The upward move without a large volume means there is a lack of buying sentiment. There would come a point when those who are bullish with this stock become depleted and there will be no one else to buy this stock and of course, will naturally cease from moving further up.

On further analysis of the inverse head and shoulder, I think I may have made a mistake in the interpretation of the right shoulder. Inverse head and shoulder should have light volume on the right shoulder’s decline, but the chart indicates that there was increase in volume in the right shoulder formation. This became obvious to me after overlaying the OBV chart against the price.

At point 1 to point 2, we could see the formation of the head and volume is increasing as evidenced by the upward movement in the OBV line. What went wrong with the inverse head and shoulder is that the decline towards the formation of the right shoulder should happen with a lighter volume; however as what can be seen in the OBV line is that it went lower than the point where the head was, which indicates further intense selling during the formation of the right shoulder. This I think invalidated the inverse head and shoulder formation which is currently confirmed by the low breakout volume.

These are the things to watch out on the succeeding days: 1) Watch out for the price level 4.20-4.30 acting as resistance, this is the 38.2% Fib retracement and also the 130 day MA. 2.) Watch out also for previous resistance line (at 3.70-3.80) which is now the support line. Because there is a lack of volume on breakout, the price may re-test that line and if there really is no further buying sentiment, the price may eventually break below that line. 3.) If price moves below that support line, watch out for the previous low of 3.25 as the next major support line.

StockWatch (Sept 17-21, 2007): BPC

BPC (Chart: Daily Resistance: 3.85/ 4.20/ 4.85 Support: 3.25)

BPC displayed a divergence of RSI movement against price. Price has formed a lower low and RSI formed a higher low. The MACD is also showing a slight divergence. There is also an inverse head and shoulders formation in the charts of BPC and the volume is confirming the formation. A significant characteristic of an inverse h&s is that volume tends to diminish from the left shoulder to the head. And volume has to increase during rally after the formation of the head. These characteristics are noticeable in the BPC chart which strongly confirms the formation. The break out price level would be around 3.80-390. The critical part for this formation to be valid is that the volume on breakout should be large. Coming from the bottom, it needs to have momentum for it to be able to propel itself to the target price of around 5.0. If the breakout does happen, expect that the support line (former resistance line) will be tested.

In Retrospect: GEO

GEO

GEO price movement fell back inside the small ascending triangle but was able to move above the resistance of 1.64 on the succeeding days. This move back in the triangle has somehow tainted the formation’s bullish expectations. The price currently stopped near 38.2% Fibonacci retracement. The volume is increasing on the past trading days, but the price movement still has the 130day MA approaching as resistance. If the volume continues to increase on the coming week, there maybe a chance that the target price may be reached.

StockWatch (Sept 10-14, 2007): PSEi, Mining, GEO

PSEi (Chart: Daily Resistance: 3380 Support: 3260)

Last week at the Absolute Traders CAF session, Chairman Fitz Aclan also noticed the inverted H&S forming in the index. With the first 2 trading days down movement of the market I was already thinking if this is the start of the right shoulder’s formation. In my analysis from the gaps formed, I was expecting that the right shoulder should start its formation when it reaches near 3460 level. It is only now when I saw the index’s chart that I came to verify that the recent activity in the market was just a sideways movement. So this definitely is not yet the right shoulder’s start of formation. This is now the critical part of the movement, the recent week’s sideways movement can mean any thing. If traders are still bullish on the market, the sideways movement is just a healthy pause for a further upward move. If traders have started to get bearish once again, the sideways move may be an exhaustion of the buying activity and we may see the index move down. Things to watch out for this week is the 130 day MA acting as resistance at 3380 and the gap formed between 3210 and 3260. A move above the resistance line means there is a good chance for price to move up to the 35 day MA at 3500 for now. A move to close the gap means were in for another bearish ride

Mining Index (Chart: Daily Resistance: 6270 Support: 6030/5900)

The mining index caught my attention because of the gap, the great spread and high volume last Friday. This led me to look thoroughly at this index as to what area pattern it broke out from. But, as I tried to turn the image upside down, flip it left to right, I was not able to see any area pattern from where it broke out. But on further analysis of the gaps formed, rather than being a bullish indicator, the gap with big spread and high volume was rather a bearish warning. Index has already formed a break away gap, runaway gap and now, the recent gap formed was the exhaustion gap. Considering the runaway gap as a halfway point to the top, coupled with the exhaustion gap, this means the current index level is already near the top. The current index level is also being blocked by the 35 day MA. Things to look out for this week are the resistance level of 6270 which is also the 35 day MA, support level at 6030 which is the 130 day MA and the RSI reaching the oversold level. The gap, big spread and high volume may still attract buyers, and possibly contribute to a short upward move before moving sideways

GEO (Chart: Daily Resistance: 2.00/2.04 Support: 1.64/1.52)

GEO seems to have formed a small ascending triangle and broke above resistance at 1.64. The target price for the small triangle is 2.20. Along its way up it may encounter resistance at 2.0 the psychological resistance and 2.04 the 10day Simple Moving Average. Best price to get in on this stock is below 1.76. Cutloss is at 1.62. Recommended selling price is at 2.18. The breakout volume is good; however this may still be affected by general market sentiment and also in particular the mining index, so keep watch of the movement this week.

In Retrospect: CMT, PAX, WIN

CMT

CMT move down to as low as 1.10 this week breaching the long term resistance line for the second time. Trading last Friday brought the price back above the resistance line. Price may move sideways to down next week. This is now a crucial part of the stock: if price is able to hold above the support line, this means there is strength in this stock. Otherwise, price may move to the next support levels 1.08 and 0.99.

PAX

PAX moved sideways this week. Fortunately the island reversal still holds, as the gap was not filled up, this means there is still strength in this stock. However, the price level at 15.25 which is also the resistance line connecting the peaks from year 2000 to 2006. This is a classic close quarter battle between the bulls and bears. The bulls are trying to hold the gap while the bears are preventing the price to move above the resistance line. For the coming week, price may move sideways. If the gap is closed, then this is definitely a sign of weakness of the stock.

WIN

WIN went to as low as 0.31 respecting the support line of the triangle for the 3rd time. This is a good sign for this stock. This could be the next Piso stock if we try to plot the target price of the triangle. However, as I have said before, it is still too early in its formation and anything can still happen. For range trading, getting in at 0.33 would still give a good profit considering a target price of 0.44 (65 day MA)

Recomended: AT's CAF: PSEi into the last quarter: Up, Down or Sideways?

Absolute Traders will be having its monthly CAF (Chart Analysis Forum) "AT's CAF: PSEi into the last quarter: Up, Down or Sideways?" this Tuesday, Sept 4, 2007 at Rack's El Pueblo. I was able to attend most of the CAFs before and I have to say that the CAFs gets better each month, thanks to the growing community of traders using technical analysis and ofcourse to the people behind Absolute Traders. It is in these forums that you get to improve on your technical analysis skills by listening to other people's analysis, learning their techniques and style, validating these with your own and someday be able to use them to create and refine your own techniques and analysis. This is definitely a recomended event.

StockWatch (Sept 3-7, 2007): PSEi, CMT, PAX, WIN

PSEi (Chart: Daily Resistance: 3390/3460/3500 Support: 3317/3260)

The index has now formed a possible exhaustion gap. This looks like an early warning sign for the index. RSI seems to be contradicting the gaps formed as RSI is still halfway from reaching the 70 mark of being overbought, however considering we are on a bear market, usually the 50 level is already considered an overbought level (as 50 is sometimes the oversold level for a very bullish market) . The Dow closed 100+ pts higher last Friday, the local market may follow on Monday. This means we may reach near 3460 level (the 61.8% Fibonacci retracement), within the coming week. There is also the 65 day MA to watch out. Interestingly, if the 61.8% Fibonacci retracement would prove to be a resistance, this may somehow pave the way for the creation of a head and shoulders formation. The left shoulder and the head are already formed (marked as number 1 and 2). We are still waiting for the right shoulder and right neckline to be formed. It’s an exciting wait-and-see for the coming weeks if indeed a right shoulder will be formed. Now try to close your eyes and imagine the right neckline forming near 3460. See it? =) Now try to draw the target price for the H&S formation! Whoaoooo!!!!! Target price is around 4075 level (also the 127.2% Fib extension). Come to think about it, there maybe some possible technical truth to what analysts are predicting of reaching the 4T level by end of the year. Now slap your face! Wake up! This is just a hallucination for the moment. My analysis might be incorrect as the left shoulder might be too short to be a valid shoulder and it is still too early, anything could still happen! Hehehehe! =)

CMT (Chart: Daily Resistance: 1.40/1.55 Support: 1.24/1.08)

CMT has been moving with large volume for the whole week. This definitely is a very bullish sign for this stock. There is currently no area pattern for this stock except for a sideways channel. Current resistance is at 1.40 and 1.55 which are 50% and 61.8% retracement levels. MACD is now above signal line which is a bullish sign and RSI is half way to being overbought. The trading last Friday displayed a large upper shadow on the candle which indicates that bears are starting to move in. It is possible that sideways to downward movement may happen this coming week.

PAX (Chart: Daily Resistance: 15/16/17.50 Support: 14/13.25)

PAX may have formed an island reversal. The breakaway gap was accompanied by large volume. What would be good to see is that everyday trading volume would also increase to indicate that there really is momentum in this stock. As of current the large gaps on the downward move may be a cause of concern for traders as this translates to resistance. The stock may move sideways to downward for the coming week. What to look out for the following weeks is the possible formation of a runaway gap.

WIN (Chart: Daily Resistance: 0.37 Support: 0.30)

WIN is currently forming a symmetrical triangle. As of current it is still in its early stage of formation. The current level is a good buy level considering it is near the support line and that the target price for range trading at 0.45 is large enough to support a 1:3 risk to reward ratio. However price may still move down to 0.30. If you are able to get in at 0.33, cutloss if it goes below 0.29

In Retrospect: JFC

JFC

The stock was able to breach the 2 moving averages acting as resistance. This stock is now near the resistance line at 54.50. Watch out for that level as that may be the price level where range traders starts to unload their positions. At this point, it is still too early for a breakout, but if it does, it is breaking out from the triangle with a target of 73. The breakout volume should have at least 2.5M shares traded for a valid breakout. Otherwise, if price continues to move up without sufficient volume, this means we need to re-draw our triangle. Next possible resistance after breakout from the resistance line is at 57. Judging from the RSI, a move towards the price of 57 may be possible as RSI is still halfway from being overbought.