StockWatch (May 26-30, 2008): PSEi, ALI

PSEi (Chart: Weekly)

PSEi (Chart: Daily Resistance: 2900 Support: 2760)

The index had a very good 2 week rally which ended last week. Currently the index is seen to have gapped down last Thursday, forming a possible island reversal of the recent rally. Some points to take note: A.) The index broke above the long term resistance line from December 2007. This I think is a positive move for the index, even though the index recently created a lower low, it is now above 2 resistance line, one from Feb 2008 and the other from Dec 2007. It’s one small step at a time towards the index’s recovery. B.) The MACD is now just a few points away from crossing the center line. But the bulls would still have to fight for the right to cross the center line, as it is common during bearish market that the MACD center line usually acts as a resistance. We can expect that there will be further MACD consolidation near the center line, before it moves above. C.) Just like the center line of the MACD chart, the 50 RSI level usually acts as a resistance area during bearish market. We can expect the RSI to form a higher low this time, probably encountering support at around 30-35 RSI level. D.) Looking at the weekly chart, we can see a positive move by the MACD, which is in position to cross the signal line.

For the coming week, the index may move lower as an effect of the gap down. So it is better to lock in any gains that were made for the past 2 week’s rally. For those trading the volatility, next possible entry is when the RSI reaches 30-35 levels.

ALI (Chart: Daily Resistance: 11.50 Support: 9.50)

ALI is showing signs of a possible double bottom. The neck line of the double bottom is at 11.50. However, it seems that resistance is now being encountered even at current price level of 11. The general market sentiment is still bearish, and this double bottom that we are seeing might not materialize. But a positive thing to point out is that MACD is now above the center line and price is now above the 65 day MA. Hopefully the 65 day MA would provide support and MACD would stay above the center line.

StockWatch (May 12-16, 2008): PSEi, ASIA

PSEi (Chart: Daily Resistance: 3050 Support: 2710/2670)

The index had a good 2 day rally last week. Volume for the last 2 days of trading was significant and it looks like it may continue for the coming week. The trough for the price and indicators is already visible and we are seeing a positive divergence on the MACD, RSI and Price. It is again good to note that the MACD never went lower and is currently oscillating near the zero line. Also the MACD is about to cross the signal line, so we can probably see more buying action next week. Still no sign of a reversal area pattern, so it’s still generally a downward trending index for now.


ASIA (Chart: Daily Resistance: 10 Support: 7.20/6.00)

ASIA is now out of a downward trend since Feb 2007 as it broke out from the resistance line and also a falling wedge area pattern. The target price for the area pattern breakout is around 16.00. The last 3 days of buying action was accompanied with a very significant volume. The only resistance on its way up is the 260 day MA at 10.00. Also looking at a larger picture, this stock seems to be forming a cup and handle formation. Watchout though for some profit taking action this coming week as RSI is very much overbought. MACD is looking good as it now crossed above the center line. You could probably buy the dips, but watch out if the price heads back to the breakout level at 7.20

Blogsite: Life, Money and Images by David Hanson

David Hason has a new Blogsite titled "Life, Money and Images" (http://davidhanson88.blogspot.com/). It's not just about trading and technical analysis, but it's a consolidation of all of his passions in life.

StockWatch (May 5-9, 2008): PSEi

PSEi (Chart: Daily Resistance: 2777/3050 Support: 2720/2670)

PSEi (Chart: Weekly)

The index is currently not looking good as the action last week pushed the index below the previous low of 2777 reaching the lowest at 2721. The index is now dangerously near the next support at 2670 which is the support line drawn from 2003 (see Weekly chart). If that support line still does not hold and the index still continues to slide below it, then it may indicate the end of the upward movement that started from 2003. But a couple of good things to note about the index are: A.) The index is now very much oversold, so a rally may happen in the coming weeks. B.) We are starting to see positive divergence in the RSI and MACD in the daily chart. Price formed lower low while the indicators might be forming a higher low. But this is still to be confirmed as the troughs of the indicators are not yet formed.

The index is still very much volatile, so trading strategy would still be to stay on the sidelines. As the index approaches the support line at 2670, watch out for the price action and volume. If the support holds and the index bounces from the support with large volume, then this may provide a good direction for the index for the coming weeks.