StockWatch (Jul 28 – Aug 01, 2008): PSEi, MEG, MBT, BPC

PSEi (Chart: Daily Resistance: 2650 Support: 2507)

Looks like this is it! No, not a bull run, but a respite from the continuous downward movement by the index. The support was respected last week with the index moving higher. We now have a higher low, which is a very good sign. But that is not the only good sign we’re seeing in the chart, last Thursday, the index broke resistance at 2507 with a big spread and large volume! And it looks like the resistance that was broken was part of an ascending triangle with a possible TP @ 2710. The trading last Friday saw the index lower, however, even if it is lower, it was able to stay above the resistance-turned-support line. We will be able to confirm next week if the break will push through or whether it will buck the selling pressure and fall below the support. I am certain that this is now the start of the consolidation phase, so watchout for stocks trading within a range. For those going long on the stocks, this might be the best time to catch some bargain stocks, just look for stocks that are able to form a higher low with good volume.

MEG (Chart: Daily Resistance: 1.46/1.66/2.24 Support: 1.10/1.06)

MEG had 2 gap ups for last week, breaking resistance at 1.30. The break was accompanied by good volume and may have broken an ascending triangle with a possible TP @ 1.54. The current price level is already near the TP price, so it is quite late to get into the stock. Since the market is going into consolidation phase, it is good to observe possible peaks and troughs for this stock for a possible range trade strategy. Watch out for the 65 day MA which is also a resistance. The volume for the past 4 weeks has been good so it is also a good indication that this stock is pulling out of the bearish dive.

MBT (Chart: Daily Resistance: 36.50 Support: 30.50)

MBT has been trading within a downward trending channel. Currently a positive divergence can be seen from the chart with the price moving lower while the MACD moving higher. What made this divergence significant is that the it can be seen within a shorter time frame unlike other instances of divergence where in the time frame was wider. Watchout for the MACD of this stock as it is now near the zero line and it is possible that this may have some potential when the zero line is broken. As of current, it is not recommended to get in this stock at the current price level, a good entry point would be near support at 30.

BPC (Chart: Daily Resistance: 1.66/2.60 Support: 1.16)

BPC had a breakout from a small sideways channel. Possible TP at 1.34, however at the current price level, the TP is already near. Volume has been great at the breakout, so the support may hold if it is tested. Watchout for the 65 day MA at 1.66 as this is a resistance level. Also, for this stock, observe the possible peak and trough to determine the possible range trade strategy.

StockWatch (Jul 21-25, 2008): PSEi, AC

PSEi (Chart : Daily Resistance: 2507 Support: 2372)

Looks like the much awaited respite from the bearish market is starting to materialize, as we see the index finding support at 2372. The low of 2372 is still not yet confirmed as a valid trough, but as of current the index is respecting the support line formed from Jan 2008. If a trough is formed, then this is a very good sign for the index that it is now starting to stabilize. For the coming week, the index may move sideways in between the range of 2372 to 2507 level. Still there is no sign of reversal and the index is still probably in its early stage of consolidation. If you are to enter the market, keep an eye on your stops if incase the market turns sour and observe possible resistance areas or trading range when a consolidation phase is confirmed.

AC (Chart: Daily Resistance: 285 Support: 248)

AC looks as if forming a double bottom, however this is still not confirmed, not until its neckline at 275 is broken. Currently, resistance may be strong at its neckline at 285 as this was the price level of 2 gap-downs that happened for this stock. For this stock to break that level, and considering that the stock is bearish, it needs a very large volume to propel it beyond that price level. With that, I am more inclined to say that this may not materialize as a double bottom formation. This stock may have to consolidate further before moving higher. For now it is a welcome relief for this stock to be able to move sideways rather than down

StockWatch (Jul 14-18, 2008) : PSEi, ISM, LCB, PA, BSC

PSEi (Chart: Daily Resistance: 2500/2650 Support: 2330/2290)

The index had a good rally that lasted 3 days before succumbing to selling activities. There are a couple of things worth noting on the action last week, first is the closing of the gap down that happened last Jul 3 (Gap 2) on the first day of trading last week. It indicated strength in the upward move as it was able to go past the gap down area. Second is the nearly closing of yet another gap down on June 27 (Gap 1), on the third day of trading. It would have been good indication, if on the fourth day of trading, that the index totally closed the gap and created a new high. However, the index was sold down for that day, leaving the gap unclosed, which indicates weakness in the index. Last Friday saw the index move further down nearly closing the gap created in the rally (Gap 3). And looking from the RSI, it is near the 50 line which indicates resistance. An RSI of 50 is already considered as a resistance if the trend of the index is bearish. With that it is possible that on the first trading day next week, we may see the gap up be totally closed. What I can see as a good indication in the chart is that the RSI has now created a new higher high. In a severely bearish market, an RSI of 30 and 50 are considered areas of resistance. In previous instances, RSI was able to move beyond 30 RSI but is unable to create a new high. For last week’s case, RSI was able to move above 30 and create a new high. This is good indication, because it means RSI 30 has been eliminated as an area of resistance and can now possibly act as an area of support. So for the coming week, expect that the index would still continue to move further down, but expect that when the RSI reaches near 30, there might be support at that price level (possibly at 2330). Trading strategy is still to keep liquid. Any small amount of profit should be protected from a bearish market. Still no signs of reversal, but hopefully if the support at 2330/2290 holds, then we might see a reprieve from the bearish market and move to a consolidation phase.

ISM (Chart: Daily Resistance: 0.039-0.040 Support: 0.033/0.029)

ISM had a good run last week, from the low of 0.026, the stock sky rocketed to 0.039, a 50% increase in price. It is also worth noting that the price also broke above 3 moving averages, and the break was accompanied by large volume, a sign that the sky rocketing action has credibility and is not just some result of speculations. Aside from breaking the 3 moving averages, the stock also broke a resistance line from Jun 2007, which is part of what seems like a falling wedge formation, with a target price of nearly 0.06. However, the stock is very much overbought as the RSI is now above 80. Aside from being overbought, the stock is also facing resistance at around 0.040, which is a support line turned resistance from 2003. For now if you have this stock, sell for the mean time. If you plan to get into this stock, a good entry would be at 0.035 and 0.33. Watch out if the stock falls further below 0.33, there might be signs of weakness of such case happens.

LCB (Chart: Daily Resistance: 0.26/0.34 Support: 0.22)

LCB is showing some activity. Last Friday’s trading saw the stock moving higher with above average volume. It may or may not mean something, but it is worth watching as support at 0.22 held, which is a previous low. Current resistance is at 0.26, which is the start of the previous gap down.

PA (Chart: Daily Resistance: 0.13 Support: 0.07)

PA had a promising run up to Thursday, but things went the other way around come Friday. Large volume accompanied the break out from a falling wedge, but a larger volume accompanied the sell down last Friday. This definitely is a sign of weakness, so it is better to avoid this stock.

BSC (Chart: Daily Resistance: 0.23 Support: 0.16)

There seems to be some activity in BSC as the stock traded with large volume last Friday. Thing to watch out for this stock is its resistance line at 0.23, which if broken may give the possibility of it going to as high as 0.40.

StockWatch (Jul 07-11, 2008): PSEi, LR, RLC, DGTL

PSEi Weekly Chart

PSEi (Chart: Daily Resistance: 2425-2400 Support: 2289/2100)

The support line from Jan 2008 was tested for the 5th time last week and it was not able to contain the index’s downward move. The index, punched thru the support line moving downwards up to the lowest at 2289. Looking at the weekly chart, we can see that there was a support at that level, which was the 260-MA on the weekly chart at 2300. However, this may just be a temporary support for the index as judging from the break down from the channel, there is a possibility that the index could still move lower towards the downward channel’s target price near 2100. Last Friday’s upward move may just be a short rally as there was no volume to support the upward movement. Still trading strategy would be to keep liquid. No signs of reversal can be seen from the charts.

Note: There are a lot of stocks that are very much oversold, be careful on trading these stocks, as any upward move might just be a short rally from being very oversold. If you are to trade these kinds of stocks, keep an eye on your stops as the market is still very bearish.

LR (Chart: Daily Resistance: 2.80 Support: 2.24/2.06)

LR seems to be a promising stock to follow. The stock had a large spread and large volume last Friday. Also worth noting is the price which is now above the 3 moving averages. This denotes strength for the stock. Looking also at the MACD, the MACD is now above the zero line and now poised to cross above the signal line, both signs also indicate strength in the stock. But how long can this strength last is another question that may not have a definite answer. As of now, resistance is at 2.80, which is the previous high. We can assume for now that the strength that we are seeing can take this stock from 2.60 to 2.80, beyond that is still a wait and see. I am more inclined to call that 2.80 will be a strong resistance, judging from the RSI which is now near overbought.

RLC (Chart: Daily Resistance: 6.30-6.60/ 9.50 Support: 6.0)

RLC is one of those stocks that are very much oversold. What caught my attention for this stock is the unusual large volume last Friday which may translate to a strong support at 6.00. Resistance is currently at 6.30-6.60 which is the gap down formed last Thursday. If you are to trade this stock, keep track of your stops. It is possible that the stock may reach beyond 8.00, based only from the 38.2% fib retracement, which is at 8.30.

DGTL (Chart: Daily Resistance: 1.46 Support: 1.24)

Comparing DGTL with the PSEi, DGTL seems to be in a better position than the index. As we can see, the recent downward movement of the stock is not really part of a bearish cycle, but more part of the consolidation that is happening for this stock. Looking at the chart, we can see that the MACD has been oscillating near the zero line which indicates consolidation and it is also evident on the price action. Currently there is an upcoming support at 1.24; it would be good if the stock is able to stay above this support line from Sept 2004. Otherwise, if the stock moves lower than the support line, then this might probably be the end of the consolidation phase for this stock and may move to a bearish phase. But judging again from the RSI which is very much oversold, it is highly probable that the support at 1.24 may hold.