StockWatch (Apr 14-18, 2008): PSEi, LCB

PSEi (Chart: Daily Resistance: 3050 Support: 2880/2870/ 2770)

The index dropped to as low as 2931 last week and retraced more than 38.2% of its rally the previous weeks. Some positive things to note, the index is still above the support line of Feb 2008 and MACD is still above the signal line. What we want to hopefully see is the MACD to oscillate near the zero line, while RSI to oscillate near the 50 level. Otherwise if MACD went lower than its recent low and RSI brokedown from the 30 level, then this is a signal that the downtrend is likely to continue. Next support for the index is at 2880-2870, which is also the 61.8% retracement. With the US market again closing lower last Friday amidst further recession jitters, the PSEi will most likely follow its move this coming week.

LCB (Chart: Daily Resistance: 0.39 Support: 0.30)

LCB is showing signs of a bullish divergence, both RSI and MACD forming a higher low, while price forming a lower low. What’s also good to note about LCB is that the MACD is oscillating near center line. Hopefully, it would be able to move above the center line. Aside from those, there is also a possibility of an inverse head and shoulder formation, the left shoulder and head already formed, while the trough of the right shoulder is still being formed. We can confirm if this is a valid inverse h&s formation if it is able to break 0.39 with volume. As of now, it is better to just observe the stock.