StockWatch (Jan 07-11, 2008): PSEi, GLO, PEP

PSEi (Chart : Daily Support: 3400/3200 Resistance: 3660)

We’re in a not so good start for the year with the index plunging 140 points lower. Currently the index is trading in a downward range with support at 3400. I’d rather like to see the index trade in a downward range than see it violently breakdown, but of course were not in control of the market. Couple of things worth observing, first, MACD is below centerline and below signal line, both confirming the current bearish sentiment. Second, a bullish divergence seems to have formed, price formed a lower low, while RSI and MACD formed a higher low, but I’m skeptical with this observation because the divergence is not very well defined or noticeable. Third, volume in the index seems to be diminishing. If selling continues with diminishing volume, this might be good, because this means selling pressure is diminishing and the index may have a chance of recovering. However, this ‘chance’ of recovery is not 100% sure, because once selling momentum is started, the index can continue to go lower even with low volume, it can only be stopped with increased buying sentiment. What we can expect for next week is for the index to continue its downward movement considering that DJIA went 200 points lower last Friday, this will definitely have an effect in the local market. Let’s just hope that support at 3400 will endure the selling pressure and hold off any further downward movement.

GLO (Chart: Daily Resistance: 1605/1640 Support: 1475/1445/1405)

GLO is interestingly consolidating in a symmetrical triangle. Still too early for a breakout and anything can still happen. This coming week, this stock will still probably trade lower, so watchout for support at 1475/1445/1405, the previous lows. Watchout also for buying sentiment accompanied by volume of above 100T shares traded. This could indicate a bullish move in the making.

PEP (Chart: Daily Resistance: 1.52 Support:1.26)

PEP seems to have moved considerably last Friday with price gapping up 0.02 pts and volume at 14M. The only pattern I could see with the stock is a descending triangle and if you would consider the pole formed, the descending triangle might also be a flag formation. A descending triangle is still similar to a symmetrical triangle and can also unusually break out instead of breaking down, which indicates bullishness for the stock. If you would consider the triangle, target price is at 1.60, if you would consider the flag formation, the target price is at 1.80. If you buy in at 1.34, cutloss would be 1.24.