PSEi (Chart: Daily Resistance: 3370 Support: 2870)
The index had a distressing action last week. I was earlier expecting that the index would somehow follow its usual ranging pattern, however, things started to go haywire on the third trading day with the index successively gapping down. The week ended with another gap down accompanied by large volume. Last week’s action broke 2 important support lines. The first is the support line from Sept 2007, second is the support line since June 2006. This obviously suggests a very bearish market and for the risk averse it would be best to stay as an observer for the mean time. Friday’s trading seem to have formed a hammer, coupled with the index’s oversold state, it may be possible to see a rally next week. For those who are not risk averse, you can take advantage of the rally for some short gains. For those staying on the sidelines for the moment, be on the look out for stocks with bullish divergences and those that are moving positively against the bearish market sentiment.
BPI (Chart: Daily Resistance: 58.50/60/62/64 Support: 53)
BPI is showing signs of bullish divergence with the MACD and RSI creating higher lows and price creating lower lows. The stock bounced off from support at 53 with volume near the average volume of 1.9M shares traded. The bullish divergence and the bounce off from support may suggest that this might be the bottom or a reversal. Observe the volume for the coming week, if the volume exceeds 2M shares on an upward move, this is a good indication that there is strength in the upward movement and we may see this stock move higher. If there is no volume on the upward movement, then it would be best sell immediately. Expect resistance between 58.50 and 60; if it breaks resistance at 60 with volume of above 2M shares, price may reach 64.
FPH (Chart: Daily Resistance: 60/65 Support: 52)FPH is also showing signs of bullish divergence. Last Friday’s trading was accompanied with above average volume at 1.1M shares traded. It is possible that the stock will move upwards this coming week. Watch out for resistance at 60 and 65.
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