StockWatch (Nov 26-30, 2007): PSEi, GLO

PSEi (Chart: Daily Resistance: 3505 Support: 3455/3290)

The index suffered 3 straight selling days last week with the index breaking the support at 3520 even gapping down to its lowest at 3455. Last Friday the index was up, as well as the DJIA. A couple of things to observe for the coming week: 1.) The broken support from the previous gap up, might be re-tested as a resistance. If the resistance fails to hold, and breaks above it, we need to see the succeeding days trade above that line. 2.) Observe also the gaps formed. As of current there have been 3 uncovered gaps formed. Assuming that the recent gap does not get covered, this also means the resistance was able to hold the line, this translates to further downward move. The only good side of this is that the recent uncovered gap might indicate a possible upcoming bottom to the downward movement. 3.) RSI is now nearly oversold. This re-enforces the possibility of an upcoming bottom. 4.) Assuming that the recent gap was covered, but the resistance line was able to hold the index from trading above and beyond it, we can use the 2nd gap as a measurement of how low the index will move further. Measuring the distance of the 2nd gap from the top, this translates to a further downward move to near 3300 (also the 260 day MA acting as support) as the lowest that the index could possibly go. As of now, the sentiment is still bearish so keep track of your exit points.

GLO (Chart: Daily Resistance: 1450 Support: 1390/1360)

GLO may encounter a temporary breather from the downward movement. As of current, there have been 3 gaps that formed with the exhaustion gap being confirmed by the RSI marking an oversold for this stock. Last Friday the stock was bought up, however, there was not much volume on the buy up, so we might see further downward movement down to 1360. The 360day MA is acting as support at that level. This is a possible candidate for range trading. Buy at 1360, sell at 1450, cutloss at 1355. Note that we are just taking advantage of the possible bounce from support, so trading this stock should be done as quickly as possible. The gaps don’t guarantee a reversal from the current downtrend, unless an island reversal is formed. The gaps just suggest a possible upcoming bottom. But what can also happen is that the stock may rally for a short time from that possible bottom and continue moving downwards, considering that there is still no clear signal of reversal