StockWatch (Mar 17-19, 2008): PSEi

PSEi (Chart : Daily Resistance: 3000 Support: 2870)

The index went lower than the recent previous low of 2950 and proceeded to its lowest for the week at 2890. Next support is the previous low of August 2007 at 2874. Looks like a double top, but ofcourse this is still not confirmed not until the support line (which is the previous low) is broken. However, a lot of stocks are already very much oversold and badly sold down since January 2008, so there is still the possibility of a bounce from the previous low. Looking at the RSI and MACD, we can also see a possible bullish divergence. Watch out for UP days that are not accompanied with large volume. With the recent continuous downward movement of the index, as well as most of the stocks, a large volume is very much important to validate an upward move. Trading strategy would still be to stay on the sidelines, watch out for a possible bounce from the support or break of resistance line with volume. Trading for this week might be lethargic sideways movement as a lot may be on vacation mode already for the coming long weekend.

The following stocks exhibit very low RSI’s: ALI(20) , FPH(18), PNB(19), VLL(14). Watchout for possible bounce from the recent downward move, but ofcourse the low RSI does not guarantee this bounce as the price may still move lower even if RSI is already the lowest of all stocks. Look for large volume on upward movements.