StockWatch ( Dec 22-24, 2008): PSEi

PSEi ( Chart: Daily Resistance: 1960 Support: 1880)

Nothing happened last week for the index. It just kept moving sideways. With the shortened week due to the holidays, it looks like index will leave 2008 without anything happening. We only have 3 trading days for this week and definitely a lot may be on holiday mode already so volume would probably be low for the 3 trading days.

The symmetrical triangle is still intact, however, the price action is very near the apex of the symmetrical triangle, that if nothing still happened for this week, the symmetrical triangle we are seeing would become invalid.

My hopes are down for any further exciting actions in the market, but if its any consolation, I’d rather see the index go sideways than down.

Merry Christmas and Happy New Year to ALL! Hope you had a very profitable year or if not, a very educationally filled year of trading.


General Note: A lot of other stock’s MACD are near the centerline as well as the RSI’s also near the 50 line. In bearish markets, the center line of the MACD and 50 level of the RSI sometimes acts as a resistance level, so expect either further consolidation or sideways movement or further downward movement. At this point, if there are any upward movements beyond the centerline of the MACD, it has to be accompanied with volume otherwise it will just fail to move further upward and just dip downwards below the centerline.

StockWatch (Dec 15-19, 2008): PSEi, MBT, GLO

PSEi (Chart: Daily Resistance: 1970 Support: 1850)

This is the last normal trading week for the market and it looks like the index is not about to let the year of 2008 go without a farewell break-out or break-down. From the chart, we’ve seen that the index is pretty much following the symmetrical triangle formation and it is currently 1/3 away from the apex, which means the break out or down or dissipation of the symmetrical triangle may happen within this week. Ofcourse this is a symmetrical triangle and it definitely give mixed signals like the trading action last week where rallies were accompanied by good volume, but as well as declines were also accompanied with good volume. So its anyone’s guess where the market will head for this week.

Is the symmetrical triangle a reversal sign? Well sometimes it does act as a reversal pattern. There were cases where a symmetrical triangle can be found at the top or at the bottom of the chart, signaling a reversal. But this we still have to see for the coming week. If this breaks out of resistance, target level is around 2400, hopefully easily moving past the MA’s. If this breaks down, its target level is around 1500.

Still watchout for the MACD and RSI, the index/stock usually encounters resistance on the center line and 50 line respectively during bearish market conditions.

MBT (Chart: Daily Resistance: 23.50 Support: 21)

MBT is also showing signs of a symmetrical triangle similar to the index. Possible upside of up to 31 and possible downside of 13.

GLO (Chart: Daily Resistance: 835 Support 750)

GLO seems to be forming an ascending triangle, but it is still too early for a breakout and anything can still happen. Just watchout for the support line, the formation of a higher low is also good news for this stock.

StockWatch (Dec 08-12, 2008): PSEi, SM

PSEi (Chart :Daily Resistance: 1986 Support: 1830)

Again the resistance line has proven itself to be a strong resistance line. The index was unable to move past the resistance line, and moved lower last week. Volume was very small last week. What is clear right now is that the index in moving within a symmetrical triangle. For the coming week, the support line of the symmetrical triangle will be tested.

Still there is no clear reversal pattern in the chart except for an island reversal on the previous short term upward trend. Watchout for the centerline as MACD approaches it, usually it is an area of resistance.

General Note: A lot of other stocks are similarly forming a symmetrical triangle. It is still too early for a break out or a break down, but do watchout for the progress of the symmetrical triangles.


SM(Chart: Daily Resistance: 183 Support:167)

SM is showing signs of a descending triangle. Trading last Thursday and Friday already breached the support line at 67. Things are not looking good for this stock as the sell down last week was accompanied by significant volume. For the coming week, further breach to the support line may happen.

StockWatch (Dec 01-05, 2008): PSEi, PX

PSEi (Chart: Daily Resistance: 1990-2000 Support: 1760/1830)

The trading last week was very impressive, compared to the situation of the index 2 weeks ago. A new higher low was formed last week and a very impressive rally started on Tuesday which gave the index a 70 point boost in just a day. This was accompanied with a good volume compared with the volume the previous week, but probably not sufficient enough to hold upward momentum. The resistance line is still proving to be a very strong resistance line as it is currently being tested for the third time. It still is any body’s guess on what will happen to the resistance line. Technical indicators are showing us mixed signs. Bullish signs coming from the MACD and stochastics while bearish signs coming from the RSI (50 level is usually a resistance for bearish markets) and the volume on the market action last week (volume is probably not good enough to sustain the rally as evidenced by the last 2 trading days where the index went flat).

It is definitely a welcome sight if the index is able to move above the resistance line. If it is able to move above the resistance line, check for the volume. If the volume is high, then it may probably be a breakout of a double bottom formation ( not your text book double bottom) or a symmetrical triangle. Both formations have a target level of around 2400. Otherwise, if the index moves south, let’s hope that support near 1830-1820 would hold.


PX (Chart: Daily Resistance: 5.70 Support: 4.85/4.40)

PX had an unusually large spread accompanied with large volume on the last trading day last week. It is possibly a breakout from a symmetrical triangle, with a target price of around 6.70. There are however upcoming resistances at 5.70, the previous high; 6.10 the 65 day MA and 6.60 the 130 day MA.

If you are to get in this stock, do take note that the MACD is still on the bearish side, so trading strategy would be only for a short term hold.

StockWatch (Nov 24-28, 2008): PSEi, BPI

PSEi (Chart: Daily Resistance: 1990 Support: 1684)

The downward action that happened last week was not a surprise because 2 weeks before, the index did not have much volume when it tried to re-test the resistance line. So as expected, it did not have a chance against the selling action that happened last week.

So far nothing much has changed and the index is still bearish. A thing to look out for this week is the MACD’s possible cross below the signal line. This may spur further selling action. Also observe the RSI, we are still oversold, but during bearish market, the RSI 30 level acts as either a resistance or a support. In this case we are looking at RSI 30 to act as a support.

Aside from the RSI and the MACD, observe also a possible double bottom pattern, with support at 1684.

There is nothing much to be joyous about the index. We still don’t have a clear reversal sign, so were still in bearish territory. The only good thing that I could think of with last week’s selling action is that it was not accompanied by volume. But usually, volume is not important when it’s a downward action. Selling action may still continue even if there is no volume. It probably is just an indication that a lot of traders are still on the sideline.


BPI (Chart: Daily Resistance: 44/41 Support: 34)

BPI, although very volatile, is one very resilient stock. I consider it resilient because it is probably one of the few stocks that still hasn’t formed a new lower low. While others have broken support lines one after another forming new lows, BPI has a very good support at 33-34 level. From the looks of it, the current downward action for the past two weeks will try to re-test this support. For this coming week, we will be able to see if the impending move towards the support will push thru or not. If the low last week at 36 holds as a support, then watch out for a possible inverse head and shoulder formation (left shoulder Oct 10, head Oct 28).

PSEi (Chart: Daily Resistance: 2070 Support: 1890)

Last week the index formed a higher low. It was something that I though would be good, however the succeeding trading days had very low volume and I would guess that the higher low that was formed may not be able to handle selling pressure when it happens.

The current resistance near 2070 is still a problem for the index and from the looks of the chart the index is moving is a tight range between 1890 and 2070, probably forming a small triangle formation before making another move.

There are still no signs of reversal. The MACD is opening upward which indicates bullishness for the short term, but it is still below the center line. RSI is still on the oversold side and it looks like it going to take some more time before it is able to move above the 50 level.
Usually in a bearish market, the MACD will not be able to immediately move past the center line. It would usually take some time at re-testing the center line before being able to move past it. And from the looks of the MACD, it is just half way thru its course to re-test the centerline.

MEG (Chart: Daily Resistance: 0.85 Support: 0.59 )

MEG is either forming a double bottom or a descending triangle. The neckline for the double bottom is at 0.85, while the support line for the descending triangle would be at 0.59. If the double bottom does materialize, then it has a target price of around 1.10. The descending triangle on the other hand has a target price of 0.30. The spread for the breakout of the double bottom is very small, but it would be good because it means this stock may have found bottom.



General Note: A lot of other stocks have the same chart as MEG having a possible double bottom formation (e.g. AC). But the neckline is near the support line so possible spread for the breakout is also small. It would be best to just observe where this would end.

StockWatch (Nov 10-14, 2008): PSEi, JGS, BPC

PSEi (Chart: Daily Resistance: 2070 Support: 1850/1680)

The index continued its rally Monday last week only to be stopped by the support-turned-resistance line near 2030. Looks like this rally is just a short return move to re-test the resistance line and unfortunately the resistance line held its ground. For the succeeding trading days, the index went down and even creating an island reversal.

Aside from the island reversal, we can see that last Friday’s trading created a short white candle. But unfortunately again, the volume was not that significant. With this, it is highly probable that the index will continue to move further down and may probably close the gap that was created by the rally 2 weeks ago.

Still there is no major sign of a reversal from the current bearish conditions. The MACD, even though it has crossed above the signal line, is still in bearish territory. In a bearish market, the RSI at 50 level is usually a resistance area, which for last week has proven such.
For the coming week watch out for the following: a.) If support at 1850 holds, then this is a very good indication of good things to come as a higher low might be formed if the support holds. b.) Otherwise if the index still moves past 1850, then there is a possibility for a double bottom formation if support at 1680 holds. If this materializes, this might be the reversal sign that we are hoping. c.) If the index still moves past the previous low, then were headed for more selling action.

JGS( Chart: Daily Resistance: 3.15/6.00 Support: 2.55)

JGS just caught my attention due to high volume. I’m not sure what is going on with this stock, but technically it is very much oversold and it hasn’t been able to move significantly with the rally last week. I believe there is still a large potential for a rally in this stock. The MACD is about to cross above the signal line and if it does it may probably spur buy signals for some. Resistance is currently at 6.00, which is the level of the 65 day MA and at the same time, one of the points in the resistance line from Aug of 2007. If you are to get in this stock, recommendation would be to hold only for the short term and sell near 6.00

BPC (Chart: Daily Resistance: 1.70 Support: 0.96)

BPC is showing characteristics of a double bottom formation or a possible descending triangle. Which of the 2 formations will it be is still left to be seen. The double bottom formation has a neckline of 1.70, while the descending triangle formation has support line of 0.96. Just watch this stock for now and wait for either break out or break down.

StockWatch (Nov 3-7, 2008): PSEi

PSEi (Chart: Daily Resistance: 2030/2350-2400 Support: 1684)

Looks like the long awaited correction is here. The index plunged further on the first trading day last week, but was able to regain losses by the end of the week. The index is now approaching possible resistance at 2030, which is probably a retest of the previous support-turned-resistance. If this is broken, the next possible resistance is at 2030-2400 then 2680.

The last trading day ended with a white candle recovering all losses last Monday. If my chart is correct, we can see that the volume was very significant on the last trading day. This may be an indication that this rally may last for a couple of weeks more before doing a return move downward.

Looking at the weekly charts, it can be seen that a last week’s trading was a hammer which is a bullish sign if found at the bottom of a trend, which is what we currently have. Up until when will this bullishness remain in the market is anyone’s guess.

The MACD is poised to cross above the signal line in probably a week’s time and this may spur further buy signals. However, the whole MACD is still below the center line, so if you are to enter the market, keep the stock only for the short term. Sell on signs of weakness.

There are a lot of resistances along the way up, so don’t expect that the index will immediately recoup its loses. I would like to see the index go up, rest a little, then go up again, rather than zoom is way up with out a rest.

General Note:
There are a lot of stocks that are currently reacting positive to the recent rally. Since the market is still generally bearish and the rally last week may well just be a reversal for the short term trend and not a reversal on a bigger picture. Observe possible resistance lines where the stock previously broke down. It is highly likely that the current rally is just a return move to test the resistance. If you are to enter some stocks with these characteristics, it would be best to sell near the resistance and lock-in profits immediately.

StockWatch (Oct 27-31, 2008): PSEi

PSEi (Chart: Weekly Resistance: 2060 Support: 1850/1800)

Unfortunately the index is still looking for a bottom. It has recently broken support at 2030 which is a previous low of 2006. Looking closely at the chart, it has not only broken the previous low support, but it has also broken a large downward channel that has been formed since the start of the index’s decline Oct 2007. There is still no clear indication of any major reversal but for the following weeks to come, watchout for the following: a) The next support at 1850-1800. This is the target price of the symmetrical triangle break down (symmetrical triangle formation marked as orange lines) and at the same time, 1800 is a previous low from June 2005. If this support level holds, then there is a possibility for the start of a return move towards 2030-2070 level (the support-turned-resistance of the large downward channel) b.) Watch out for a possible island reversal for the short term. The chart has already shown 3 gaps formed since the start of October, so at the current level, we are already in the exhaustion gap phase, so a gap up rally is also a possibility.

A lot of stocks has broken and has gone way below major support lines and most haven’t had any rally from their current lows yet, so watchout for these stocks as these will most likely make a return move near the support-turned-resistance levels. However, there is still no clear major reversal pattern and MACD is still below the center line, so if you are to enter the market, strategy is still to hold only for the short term and sell on the first sign of weakness, or much better, just wait for a clear reversal before entering the market.

StockWatch (Oct 20-24, 2008) : PSEi, GLO, DGTL, PLTL

PSEi (Chart: Daily Resistance: 2176/2292 Support: 2080)

The index experienced a temporary relief during the beginning of last week, but this was capped by the resistance near 2270 and the index again fell and created a big gap. As of current, the index is still respecting the support line formed from August of 2007 connecting the trough of July 2008 and recently also connecting the last 2 week’s low. This week will be the judgement week for that support line to see if it would still hold.

There is currently a manifestation of a possible double bottom. But this double bottom may be a reversal only for the short term trend. Its neckline is at 2176, with a possible target price at around 2500. If the support line is broken, then the possible double bottom will be invalidated.
Still, there is no clear reversal for the current bear market. The MACD is still below the centerline so this means hold only for the short term. The market is still very much oversold, a lot of stocks are still below the RSI 30, so there is s higher probability of another short rally by this week.

GLO (Chart: Daily Resistance: 980 Support: 820)

GLO just recently turned very bearish as the standing support line connecting the troughs from 2002 was broken with large spread and good volume. The support line was initially tested last Sept 2008 and it stood its ground. Two weeks ago, it was again tested and broken with significant volume. The stock was able to rally for a short time and moved above the support line, but went further down last Thursday and Friday again with big spread and good volume. The break down that happened last week is further confirmation of the breakdown that happened 2 weeks ago.

The next support for this stock is at 820, which is the previous low from around June of 2006.

DGTL (Chart: Daily Resistance: 1.28 Support: 1.12/1.10)

Looks like all communications are down from the current bear market storm. DGTL, like GLO also broke down from its standing support line since 2002. The symmetrical triangle that I was previously so much hoping to breakout, went down instead. Its official, DGTL, GLO and TEL are all in the very bearish region. TEL broke its support line since June. PLTL is the only communications stock that still hasn’t broken its support line from 2003, although, it has already broken its support line from 2006. (See chart below)

Next support line for DGTL is at 1.10 which is a previous low from 2007.

PLTL (Chart: Daily Resistance: 7.40 Support:6.50)

PLTL unlike TEL,GLO and DGTL still has a long way to go before breaking the support from 2003. But it has already broken support from 2006. Compared to the other telecoms stock, I can say that PLTL still has hope amidst the bearish market, but, were still not out of the woods, so let’s further observe the movements for this stock. Next support for this stock is at 6.50 which is a previous low.

StockWatch (Oct 13-17, 2008): PSEi, TEL

PSEi (Chart: Daily Resistance: 2270/2360 Support: 2036/1900)

Last week has been one of the biggest drop in the market since Aug of 2007 when the current credit crisis started to become a buzzword. The index shed 400 points and broke the support at around 2350, which is the support line of the symmetrical triangle formation. Possible target price for the drop is around 1900. Next support is at 2036, which was the previous low of June 2006.

The question probably in everyone’s mind is when will the selling end? Well from the chart, it seems that we are about to see a rebound from the lows of last week. The RSI is pointing to a very oversold market and it is possible that next week will be bargain hunting week for those who still have the money and the guts to get in the market.
The MACD is still in the bearish territory, so trading strategy would be to hold only for the short term. There are still no signs of reversal, so watchout for this. It is possible that an island reversal or a double bottom may form as a reversal for the short term downward trend.

TEL (Chart: Daily Resistance: 2350/2425/2550 Support: 2245/2000)

TEL broke the support line at 2500. Possible downward target price is at 2000. With RSI at a very oversold level, it is highly probably that a rally will first happen for this stock before either proceeding towards the target price or if the bulls are able to take control, this stock may be able to move above the previous support line. Price levels at 2400 -2500 are critical as these are resistance levels for the possible rally.

If the support at the current level holds, then there might be a possibility of a double bottom formation for this stock. But this is still too early to confirm. If your are to take advantage of the rally, hold on to this stock for the short term only. Sell if it is unable to break above the previous support line.

StockWatch (Oct 6-10, 2008): PSEi, MEG, BPI

PSEi (Chart: Daily Resistance: 2627/2700 Support: 2654/2447)

The DJIA ironically went down with three lucky sevens, and the local index followed. Amazingly it was not as bad as I was expecting. With that huge drop in the DJIA I was expecting a drop of around 200 points for that day. Yes, the index did plunge to 200 points below the previous close, but it went back up and closed just above the 65 day MA. The volume was significant and was followed by another up day with nearly 100 points also with significant volume.

So what does this mean? This points us to three types of traders who were present that day, those who panicked sold down their positions. Those who got lucky are the one’s who were able to scoop up positions near the bottom of the trading day. And lastly those who wished they can still be lucky are the one’s who bought near the top of the action, these are probably traders who are still betting on better gains or those who upon seeing the index rebound from the lows started to get in again.

If you were the trader who panicked and sold down their position, there’s nothing bad about that. It’s a natural reaction, it’s acceptable and it is playing safe. Don’t feel bad about selling your position, cash is also a position. But if you sold down and bought back your position. Then that I think is a recipe for disaster. Selling at a loss is a very emotional event, which sometimes clouds our decision. Usually after selling at a loss, we are still hesitant to enter the market again. But if you entered the market because of renewed confidence within the day, usually it puts us in the situation where we are already buying too late and near the top. Selling at a loss and buying back again within the same day, is not a recommended action, not unless you have already mastered your emotions and are able to act immediately on sudden turn of events. Otherwise, I would advise for you to cool down a bit before moving in again in the market.

If you were the trader who was able to buy near the bottom, then good for you. Better check your stops and adjust them accordingly to protect your profits. This rally is definitely something that will not last.

If you were the trader who bought near the top, you should have already sold your position last week. Even if the rally was good, the market is still considered to be very volatile. Riding the momentum is ok, since there was significant volume and spread for the two days. But on the last day of trading, this should have been a warning to you to already protect your profits and sell for the mean time. The last trading day was accompanied also by significant volume, just ¼ volume away from matching the volume on the 2 day rally. This is already a sign that a lot of traders have started to cash in, and you should have also done the same if you bought near the top. Otherwise, brace your self to be long term investors, if the market turns sour.
The trading last Friday was accompanied by large volume, it is highly possible that selling will still continue next week. A symmetrical triangle can be seen in the chart, but it is still too early for a breakout. The symmetrical triangle is only pointing to us that we are still to encounter ranging actions from the market.

MEG (Chart: Daily Resistance: 1.50 Support: 1.30)

MEG is now in a tight squeeze near the apex of a possible symmetrical triangle. Breakout or breakdown may happen anytime within 1 to 2 weeks. Otherwise if this does not materialize, then we can expect further consolidation for this stock. Breakout point is at 1.50 and a good volume breakout would be 200M shares traded.

BPI (Chart: Daily Resistance: 50 Support: 40)

BPI seems to be forming an inverse head and shoulder formation. Breakout price is at 50. Target price is around 65. Wait for the breakout. It is still possible that this stock may still consolidate a few more days.

StockWatch (Sept 29-Oct 03, 2008): PSEi, JFC, FGEN, EDC, SPH

PSEi (Chart: Daily Resistance: 2630/2685/2700/2780 Support: 2468/2342)

The island reversal that showed up in the PSEi chart delivered on its promise with the index moving higher. The index had a little bit of a wobbly start for last week and ended with a bang. The last 3 trading days we saw successive days with the index closing higher. It is worth noting that the index’s advance broke the 65 day MA resistance with high volume, which is a very good break. The next question is whether the index can sustain this bullishness this coming week. The 3 day advance that happened last week maybe showing us signs that we should be protecting our gains. The 3 white candles are similar to the three advancing soldiers’ formation in the Candlestick charting technique. The formation is most of the time pointing to a warning sign that recent upward movement may start to encounter problems on its further bid for its way up. A visible sign for this is that the third day of advance has a shorter white body and longer wicker than the first 2. It opened higher, tried to move higher in the middle of the trading, but just wasn’t strong enough to hold its position, it receded, was not able to recover and closed just higher than the opening price leaving a longer wicker. Again this is just a warning sign, so suggested action maybe to move your stops higher just incase the market went sour you can immediately trigger a sell or for the risk averse, selling some of your positions might be a better idea. Watch out for the upcoming resistances: 2630, which is the previous support line of the descending triangle; 2685, which is the 130 day MA; and 2700, the resistance line extending from May 2008. The RSI may also be posing a resistance for the index as it is near the 50 level.
Again as pointed before, this is still not the time to go long on your positions, the MACD is still below the zero line but is currently showing good signs of a possible cross above the signal line.

JFC (Chart: Daily Resistance: 57.50/59 Support: 44.50)

JFC, just like a dormant volcano, blew its top off sky high, consecutively moving higher for the 5 trading days last week. The bullish move broke the 260 day MA and also the resistance of the downward channel established since April 2007 all with large volume. Possible target price for this stock is at 57.50. I’m not sure what’s going on financially with this stock, but whatever it is, looks like investor confidence came in by the truckloads. Following the Elliot wave pattern, we may now be in the 3rd wave on a small scale with the first and second wave formed from July to Sept 2008. Looking on a larger scale, we may now also be on the 3rd wave with the first and second wave formed from 2004 to 2008. Looking at other indicators, we have the MACD still above the center line, so this means we can now go long on this stock, especially in the light of the recent breakout. Although for the RSI, the stock might be on the overbought level so this means a possible correction is near. This may give us a chance to jump in on the stock when it moves lower. Watchout for support at 44.50, as long as the stock does not go below this level on its correction phase, we are still safe. As the stock moves higher, the MA’s will further confirm this bullishness with crossovers.

FGEN (Chart: Daily Resistance: 25/27/31 Support: 15.25)

FGEN traded last week with large volume. There is no visible area pattern from which a breakout might have happened. The indication of a large volume makes this stock viable for a short term hold. A good signal to start buying would be if the MACD crossed above the signal line. Watchout for the following resistance: 25, which is the 65 day MA; 27 which is the resistance line formed from April 2008; 31 which is the previous high.

EDC (Chart: Daily Resistance: 4.20/4.50/4.70 Support: 2.95)

EDC had a very good bullish rally last week accompanied with large volume. A gap was formed also with good volume. Watch out for further gaps happening in this stock. This stock is good to hold for the short term only. We have the MACD crossing over the signal line, but still below the center line indicating a short term bullishness. The stock currently stopped short of breaking the resistance at 4.20 which is the resistance line formed from Jan 2008. Also watch out for other resistance levels at 4.50 which is the 65 day MA and 4.70 which is the resistance line formed from October 2007. If resistance line from Oct 2007 is broken, there is a possible of stock reaching target price of 6.50.

SPH (Chart: Daily Resistance: 5.40 Support: 4.40)

SPH closed successively higher for the past 2 weeks, breaking a possible sideways channel formation. Target price for this channel is at 5.40. Current level is at 5.20 and is not a good entry level, especially looking at the RSI which is very much overbought. The MACD on the other hand, is indicating a long term hold, so if you are to get in on this stock for the long term hold, wait for the correction before buying.

StockWatch (Sept 22-26, 2008): PSEi, AC, MEG

PSEi (Chart: Weekly)

PSEi (Chart: Daily Resistance: 2470/2520/2630/2780 Support:2340/2289)

The PSE index felt the shockwave of the global sell down due to the successive bankruptcy announcements of the large US financial institutions. The index fell 200 points for two trading days and even moving way below the target price of the previously observed descending triangle. On the last trading day there was a reprieve from the sell down with the index gapping up and closing higher. This gap up formed a small island reversal pattern and even with a very good volume. The question is, now that we have an island reversal is it now the time to get in the market again? Probably if your investment objective is for the short term, I would say YES as the island reversal is a very clear indication that things will start to move the other way around. But for the long term, I would suggest to wait it out first before moving in the market, for the reason that the MACD is now below the center line suggesting a bearish outlook. Also looking at the weekly PSEi chart, we can see that the sell down that happened for the past two weeks had a very significant volume. With that large sell down volume, the index will find it a little bit harder to move past the resistances and it may take a while before investor confidence returns.

In the previous weeks, I have been pointing out a possible inverse head and shoulder formation. With the 2 week sell down, the inverse head and shoulder pattern that we are following got invalidated. But on the bright side, we may be seeing a formation of another possible reversal pattern, which is a double bottom. The sell down last week could probably have formed the second bottom of the double bottom formation. The possible neckline for this formation is at 2780. The complete formation of the possible second leg may take some time, probably around 1-2 months.

For those with short term investment objectives, watch out for resistances at 2530, 2630, 2700. Liquidate immediately if the index shows signs of weakness on those levels.

For those with long term investment objectives, watch out for the MACD moving above the centerline before getting in the market.

AC (Chart: Daily Resistance: 320/305 Support: 260/250)

AC seems to have formed a strong support line extending from July 2008. The stock bounced off from this support line,which may possibly be part of a symmetrical triangle. It is still too early for the breakout or breakdown of the symmetrical triangle, but it is worth following.

MEG (Chart: Quarterly)

MEG (Chart: Daily Resistance: 1.50/1.60 Support: 1.28)

Looks like MEG survived the market sell down with the help from the support line that extended from July 2008. This support line was tested for the third time and it has proven its strength against the recent market turmoil. Looking into the quarterly chart, it seems that this stock will be ending the third quarter with a superb performance. As we can see, the quarterly chart is displaying a white candle with a large volume, larger than the sell down volume of the previous two quarters. So what does this mean? Well in my opinion, we are seeing investor confidence going back into this stock. This is not yet conclusive, but it is a positive indicator for the stock. Given that indicator, and at the current price level, this may be a good find for those who would like to go long for this stock. Watch the small symmetrical triangle, breakout may happen within the next 2 weeks. Modest target price for the symmetrical triangle is at 2.10.

StockWatch (Sept 15-19, 2008): PSEi, CHIB, SMC

PSEi (Chart: Weekly )

PSEi (Chart: Daily Resistance: 2730/2755 Support: 2630/2575) 

The index isn’t looking good after a week’s sell down. The worst that we are expecting had already occurred with the index breaking the standing support line from July of this year. To further aggravate the situation, the support line was broken with large volume.  The break of the support line from July can also be regarded as a break down from the upward channel, with a possible downward target price at 2530. Next possible support is at 2630, which is the previous low. Support at 2630 is acting as the support line for a descending triangle. If this descending triangle is broken, the possible target price is at 2470. The next support after 2630 is at 2575 which is the 65day MA. As you can see, it’s a double whammy waiting to happen for the index. The weekly chart also confirms this impending further bearish action. As it is seen in the weekly chart, the price action for last week is short of a bearish engulfing pattern with a large black candle forming with a very large volume.  The other indicators are also not looking good, with stochastics still opening downward, as well as the MACD moving below the signal line. For the risk averse it would be best to avoid the market until a possible support is formed. The long term outlook is still not as grim as the short term, but it is dangerously moving towards a bearish outlook, with the MACD moving near the center line.

CHIB (Chart: Weekly)

CHIB (Chart: Daily Resistance: 560/565/575  Support: 545)

CHIB seems to have gone against the prevailing market trend with a surge in volume for the last 3 trading days last week. I’m not sure whether this surge in volume is just due to some cross trades and there is also no area pattern from which it might have broken out from.  The only possible pattern that I can see from the chart is a small double rounding bottom with the neck line at 575.  But even if there is no area pattern, this stock is worth following as other good things are showing up in the indicators for this stock. The MACD alone is above the signal line both for the weekly and daily charts, which suggests a bullish outlook. The only problem the both MACDs is that it is still below the center line. But for the daily chart, it is near the center line and is in position to cross above it.  Watch out for resistance at 565 which is near the 65 day MA and resistance line formed from Oct 2007.  If this resistance line is broken, this means this stock is now out of the bearish dive. Next resistance is at 575, which is the previous high and the neckline of a possible double rounding bottom.  If this neck line is broken, the possible TP is at 605.  Price below 560 is a good entry point for this stock assuming a possible target price of 605. Watch out also for the other MA’s acting as resistance along its way up. 

SMC (Chart: Daily Resistance: 52/53.50  Support: 50/48) 

SMC successfully broke the resistance of the inverse head and shoulder confirming a reversal form the previous downward trend. Target price for the pattern is at 57. The breakout also moved past the 260 day MA. Looking closely at the trading for the last 3 days, there seems to be another area patter, a flag pattern, forming, with the target price nearly the same as the inverse head and shoulder target price.  A word of caution though, the price of the stock is nearly halfway its target price, so if you are investing for the short term, there might not be enough  good profit to receive from this stock. For the coming week, there is a possibility that a sell down may further happen. For those planning to enter, a good entry point would be from 48-50 as long as it does not go below 48. 

StockWatch (Sept 08-12, 2008): PSEi, SMC, GLO

PSEi (Chart: Daily Resistance: 2755 Support: 2630/2670)

The index had a very unstable rally last week. It was less than what I expected, given the large volume on the Friday prior to last week. It also fell short of breaking the resistance line for both the inverse head and shoulder formation and the upward channel from 2003 (red-dash lines). There is strong resistance in the levels of 2755 up to 2800 and it’s not looking good for the index as its RSI is now near overbought, stochatics is not that good either and MACD is currently undecided where it would proceed. So expect more volatility for the coming week. Watch out for resistance at 2755, if it is broken next week, with large volume, then this is a bullish sign, as it is the resistance of the inverse head and shoulder that was spotted. But if the index moves further below 2670, then it is possible that the inverse head and shoulder formation we are tracking may get invalidated and the standing support from July is violated. For the latter’s case, it will be better to stay on the sidelines if the break of support does happen. In the long term point of view, this volatility and uncertainty in the market is just temporary and the market is still generally good for long term investment outlook as long as the MACD is above the center line.

SMC (Chart: Daily Resistance: 47.50 Support: 43.50)

SMC is one of the stocks forming an inverse head and shoulder with resistance at 47.50. Currently MACD is poised to cross over the signal line and stochastics is displaying good signs. The only problem is the RSI with is now near overbought. Buy if resistance at 47.50 is broken with volume preferable above 200,000. Possible target price of around 57.

GLO (Chart : Daily Resistance: 1100, 1135, 1235 Support: 1060)

No area pattern for GLO, but if you are following an Elliot wave pattern, we might be on Wave 2, which means Wave 3, the longest wave, may be nearby. It is a buy if support at 1060 holds. It is possible for wave 3 to go beyond 1300 level.

StockWatch (Sept. 01-05, 2008): PSEi, MBT, ALI, AGI, PLTL

PSEi (Chart: Daily Resistance: 2740/2750/2775 Support: 2632)

Looks like we can again say “this is it!”. We have indications that good things are about to come. The island reversal pattern that is being observed was invalidated as we now have a pullback from the low of 2632. Support at RSI 50 level did hold, which indicates a bullish outlook. Stochastics is pointing to a buy indication. And most importantly, there was a good spread last Friday, a good white candle formed accompanied by with large volume! The only thing that is not pointing to a bullish outlook is the MACD still below the signal line, but on the otherhand, even if it is below the signal line, the whole MACD is still above the centerline which suggests a bullish outlook for the long term. Due to those indications, it is highly probable that we will be seeing a good run for the coming week. Upcoming resistance is within the range of 2740 to 2750, which are points in the resistance line from May to Aug 2008. The same resistance line is acting as the resistance for an Inverse Head and Shoulder formation. A break above that line with large volume is definitely a welcome event. So watch out for the resistance line. Target price for the inverse head and shoulder is around 3300 level. If the inverse head and shoulder is broken, this may be a full confirmation of the reversal of trend. Watch out for stocks that may be displaying the same signs as with the inverse head and shoulder formation.

MBT (Chart: Weekly)

MBT (Chart: Daily Resistance: 41.50 Support: 36.50)

MBT is one of the stocks displaying similar characteristics of an inverse head and shoulder formation. Looking at the daily and weekly charts, the resistance is at 41.50 to 42 with possible target price at 52. What’s good about this stock is that the price is now above the 2 MA’s and only the 260 day MA at 45 is left which is also the same area of resistance from the downward trend line connecting the previous highs of June to Dec 2007. Trading last Friday was accompanied with large volume. Breakout may happen within 1 to 3 weeks.

ALI (Chart: Weekly)

ALI (Chart: Daily Resistance: 11.25 Support: 10)

ALI is also one of those stock exhibiting an inverse head and shoulder formation. Resistance is at 11.25 with a possible TP of around 14.50. Right shoulder is still not fully formed and may also take 1 to 3 weeks to form.

AGI (Chart: Daily Resistance: 5.5 Support: 3.80)

AGI broke out from an inverse head and shoulder formation. It is now halfway to the target price of 5.50. The stock is very bullish with the breakout having a large spread and volume. It also broke the 260 day MA. This stock is definitely a buy, but since the stock is now halfway thru the target price, caution should be exercised when getting in the stock.

PLTL (Chart: Daily Resistance: 8.60/9.90 Support: 8.40)

PLTL looks ripe for the picking, last Friday’s trading had a large volume and price at 8.40 and RSI at level 50 are holding on as support. Stochastics and the 3 MA’s are looking good and it is possible that the stock may rise for the coming week. It has a possible target price of around 10.50 to 11.00. Recommendation is buy at current price of 8.50, cutloss at 8.30.