PSEi (Chart: Daily Resistance: 2970/3000/3200 Support: 2870/2770)The index had a rally last week, a respite from the continuous selling that has been the general sentiment since February. The index bounced from the low of around 2770 and proceeded to move up until around 2950. As of last Friday’s trading, a long white candle has formed which indicates bullishness. But the question is how long can this bullishness last? Last Friday’s trading for DJIA saw the US index closing lower on further fears of recession. Will the PSEi follow? In my opinion, with last Friday’s trading, there is still a possibility that the rally may extend for this coming week. The index still has room to move a little higher in the very short term before possibly being stopped by a resistance. The index is currently 20 points away from a possible resistance at 2970 which is the short term trend line from Feb 2008 and 50 points away from 3000 which is another short term trend line connecting the troughs of Aug 2007 and Jan 2008. If the index is able to successfully take out the 3000 level, then we may be able to see the index go higher to around 3200-3300. There is still no sign of a reversal, and the downward trend since Feb is still intact so it would still be best to be cautious and stay liquid for now. If the index is able to successfully take out the 3000 level, then probably it would be a buy for the short term hold only.
FPH (Chart: Daily Resistance: 45-50 Support: 39.50/33)FPH seems to have broken beyond the short term resistance line from Jan 2008. It is interesting to note that the volume on the way up is increasing which gives more credibility to the upward movement. We can probably consider the levels where there is increase in volume as a good support area later on. With the increase in volume on the upward move, there is still a possibility for the price to move higher, probably up to 45-50, level before encountering resistance at 47-50 levels which is the downward trend line from Dec 2008.
FGEN (Chart: Daily Resistance: 45-50 Support: 36.50/29)FGEN like its parent company FPH also broke out from a short term resistance which is the downward trend line from Dec 2008. Volume is also notably increasing on the upward move. It is also possible that price may move towards 45-50 level before encountering resistance at near 50 which is the downward trend line from October 2008. From the charts there are also 3 successive notable long white candles that formed last week, the 3 advancing soldiers. This is a sign of strength for the stock especially because the pattern is found at the lower end of the price range. How long that strength can last is still not clear as the recent general sentiment of this stock is bearish so the stock will definitely encounter resistance along its way up.
General Note for FPH and FGEN:
Just like other stocks, FPH and FGEN suffered a beating by the bears, so it is not likely that the price will just shoot up to a new high one day. These stocks would still take time to consolidate and will definitely move with in a range. As of the moment, these stock are trading within a downward channel. For those who are willing to take the risk, you can trade that range for these stocks. However one should be cautious and aware that the general sentiment of the market is still bearish and that even if there are signs of strength for these stocks, this does not guarantee immunity from the ill-effects a of general bearish market sentiment.
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