StockWatch (Sept. 01-05, 2008): PSEi, MBT, ALI, AGI, PLTL

PSEi (Chart: Daily Resistance: 2740/2750/2775 Support: 2632)

Looks like we can again say “this is it!”. We have indications that good things are about to come. The island reversal pattern that is being observed was invalidated as we now have a pullback from the low of 2632. Support at RSI 50 level did hold, which indicates a bullish outlook. Stochastics is pointing to a buy indication. And most importantly, there was a good spread last Friday, a good white candle formed accompanied by with large volume! The only thing that is not pointing to a bullish outlook is the MACD still below the signal line, but on the otherhand, even if it is below the signal line, the whole MACD is still above the centerline which suggests a bullish outlook for the long term. Due to those indications, it is highly probable that we will be seeing a good run for the coming week. Upcoming resistance is within the range of 2740 to 2750, which are points in the resistance line from May to Aug 2008. The same resistance line is acting as the resistance for an Inverse Head and Shoulder formation. A break above that line with large volume is definitely a welcome event. So watch out for the resistance line. Target price for the inverse head and shoulder is around 3300 level. If the inverse head and shoulder is broken, this may be a full confirmation of the reversal of trend. Watch out for stocks that may be displaying the same signs as with the inverse head and shoulder formation.

MBT (Chart: Weekly)

MBT (Chart: Daily Resistance: 41.50 Support: 36.50)

MBT is one of the stocks displaying similar characteristics of an inverse head and shoulder formation. Looking at the daily and weekly charts, the resistance is at 41.50 to 42 with possible target price at 52. What’s good about this stock is that the price is now above the 2 MA’s and only the 260 day MA at 45 is left which is also the same area of resistance from the downward trend line connecting the previous highs of June to Dec 2007. Trading last Friday was accompanied with large volume. Breakout may happen within 1 to 3 weeks.

ALI (Chart: Weekly)

ALI (Chart: Daily Resistance: 11.25 Support: 10)

ALI is also one of those stock exhibiting an inverse head and shoulder formation. Resistance is at 11.25 with a possible TP of around 14.50. Right shoulder is still not fully formed and may also take 1 to 3 weeks to form.

AGI (Chart: Daily Resistance: 5.5 Support: 3.80)

AGI broke out from an inverse head and shoulder formation. It is now halfway to the target price of 5.50. The stock is very bullish with the breakout having a large spread and volume. It also broke the 260 day MA. This stock is definitely a buy, but since the stock is now halfway thru the target price, caution should be exercised when getting in the stock.

PLTL (Chart: Daily Resistance: 8.60/9.90 Support: 8.40)

PLTL looks ripe for the picking, last Friday’s trading had a large volume and price at 8.40 and RSI at level 50 are holding on as support. Stochastics and the 3 MA’s are looking good and it is possible that the stock may rise for the coming week. It has a possible target price of around 10.50 to 11.00. Recommendation is buy at current price of 8.50, cutloss at 8.30.

StockWatch (Aug 26-29, 2008): PSEi, PLTL

PSEi (Chart: Daily Resistance: 2775 Support: 2634/2615)

The index had a sell down week last week, with the index breaking support established from July. One of the possible patterns we were observing last week was an island reversal. Currently, the index is still respecting the gap that was formed on the first week of August so the possible island reversal that we are observing is still neither confirmed nor invalidated. It will be invalidated if the gap is closed or a pull up happens for this week. Also the rising wedge that we have observed and whose support was broken last week is almost near its target price of 2615, which is also a point in the support line from July. The MACD is not looking good as a cross below the signal line already happened, but on the other hand the RSI is looking better. It is possible that at RSI 50 we may experience some respite from the continuous selling action last week, because RSI 50 is sometimes a support area especially after a bullish action, which is what happened with the index for the past weeks prior to the sell down. Also looking at the volume towards the end of the trading week last week, we are seeing a decrease in volume, which is a good indication that selling action is dwindling, but it is still not an assurance that selling action will cease. So for the coming week, a cautious trading is recommended, it is still possible that the index would still move down to sideways. Watch out for 2615, if this is broken, it is best to stay on the sidelines again for the mean time. Watch out also for a possible inverse head and shoulder formation.

PLTL (Chart: Daily Resistance: 9.90 Support: 8.40/8.00)

PLTL is showing 2 patterns, one is a slightly skewed symmetrical triangle; the other is a rounding bottom pattern from Oct 2007. In both patterns, a breakout occurred with sufficient volume with a possible target price of 10.00. But looking at the chart, the target price has already been reached with the highest at 9.90. If one is to follow a strict observance of entry and exit price levels, any one who is holding this stock should have already sold near the highest price since the target price is considered to have been reached already. For those who have not yet sold their positions, I would advise to observe the support level at 8.40. If price for next week goes below the support line, sell immediately. For those who are going long for this stock, observe the same support level. If support holds, then this is a good indication for the stock. Another good indication is that the 3 MA’s are in its correct bullish position plus the MACD is now way above the center line. Aside from those, it can also be observed from this stock that we are currently in a bullish phase of the stock. (Bullish phase is characterized by the RSI always oscillating above the 50 level and MACD always oscillating above the centerline). Even if the RSI goes below the 50 level as long as it is able to pull itself back above that level, it will still be a good indication of the continuation of the bullish phase. As of current, there seem to have formed an island reversal, but this is just for the short term. For those going long on the stock and would like to keep safe, the break of support at 8.40 is a signal to sell. For those observing the Elliot wave pattern, if my analysis is correct, we are now in Wave 4, so there is still hope for this stock as Wave 5 is still not formed. Price level at 8.00 is critical for Wave 4, it must not overlap the peak of Wave 1 for it to be considered as a correct Wave 4.

For the coming week, judging from the stochastics and the RSI, there is a higher possibility of either a sideways or upward movement of price. Still, cautious trading should be observed as support level is still being tested and it still hasn’t proven its strength.

StockWatch (Aug 19-22, 2008): PSEi, MEG, EDC

PSEi (Chart: Daily Resistance: 2780 Support: 2620/2600)

The index managed to gap up on the first day of trading last week, but only to be stopped by the resistance at that level. There are 2 resistances hindering the index at that level: the support line turned resistance from 2003 and the 130 day MA. The gap up on Monday was equaled in volume when the sell down happened the next day. And the following days also had large volume on the sell down days, which is a not so good indication. Plotting the troughs and peaks, we can see that there seemed to have formed a rising wedge. The characteristics of a rising wedge seem to fit the current market situation where rising wedges can be seen on a downward trending condition, which is what we recently had. And to add, the index may have already broken a short term support line, when it moved sideways last week. If this is indeed a valid rising wedge formation, then downward target price is around 2600, which is a point support line connecting the troughs in July and also the 38.2% Fib retracement level. I hope that this is an invalid rising wedge, otherwise, this might be an indication of worst things to come (rising wedges are considered bearish indications). Aside from the rising wedge formation, there may also be a possible island reversal. But this is still not confirmed as the island hasn’t been formed yet. To complete the island reversal picture, a gap down is needed. So for next week, still watch out for a possible continuation of the sell down as volume was noticeably large on the down days last week and the RSI is still very much oversold. Watch out also for a possible inverse head and shoulder formation if the support at 2600 holds.

MEG (Chart: Daily Resistance: 1.72 Support: 1.30/1.20)

MEG is not in a good position currently with a large volume and large spread on the sell down last Friday. A rising wedge can also be seen in the chart which was broken last week. The target price of the rising wedge was also reached. This is a stock to avoid for now given the large spread and volume on the sell down. Next support is at 1.30 which is the previous resistance on the small ascending triangle, while 1.20 is a point in the support line connecting the troughs in July.

EDC (Chart: Daily Resistance: 4.75 Support: 4.40)

EDC is showing some signs of positive divergence with the price going lower and RSI and MACD creating higher lows. Aside from the positive divergence, the stock seems to be forming a falling wedege, which is a bullish indicator. A peculiar thing about this falling wedge is that it can be found in a downward trending action. A falling wedge in a downward trending stock is a bullish indication and may probably indicate a possible reversal. What we are waiting for now is a break in the resistance line. Possible breakout point is at 4.70. If broken with volume target price is around 5.70. Now an important ingredient for the breakout is volume. Since this stock is trending downwards, in order to pull out of its dive, we need a very large volume to consider that we will be having a prosperous breakout. Current price level at 4.55 is already a good entry level, just watch out for support at 4.40 and sell if support is broken.

StockWatch (Aug 11-15, 2008): PSEi, DGTL, AC, MBT

PSEi (Chart: Daily Resistance: 2760/2800/2876/3019 Support: 2650/2613/2570)

The index had a very good bullish action last week. I was expecting the index to buckle to selling pressure last week as RSI is near overbought, but it kept on moving upward. A gap up also happened last week breaking the 65 day MA resistance as well as the previous high of 2650, this was accompanied by a very large volume. Although there was significant market action from the previous days, there are still a couple of resistances that the index would have to deal along the way up. An upcoming resistance level is the broken support line from an upward channel extending from 2003 (2760). Next is the 130 day MA (2800), followed by broken support neck line of the double top formation last year (2876), and last is another broken support line from a down channel (3019). Since the correction did not happen last week, expect that the correction may happen anytime within the coming week. We are currently seeing an increase in volume for the past days, hopefully this is sustained for the coming weeks so that the index may clear those resistances.

DGTL (Chart: Monthly Resistance: 1.60 Support: 1.26)

I noticed that zooming out and looking at the Monthly charts for DGTL shows a very good cup and handle formation. The handle has a resistance or breakout point at 1.60 and has a TP of 2.70. However, since we are looking at a monthly view of the chart, this break out may not happen for atleast another 1 to 3 months. For those going long, this is a good stock to get into.

AC (Chart: Daily Resistance: 320/352.50/380 Support: 305)

I never thought that AC would break the neckline of a double bottom, but it did and trading last week also saw a gap up with volume. Target price for the double bottom is at 325. The only problem that is bothering me for this stock is that there isn’t enough volume on breakout of the double bottom. Hopefully volume for the coming days would pick up. Next resistance is at 320 which is the 130 day MA then followed by 352.50 which is the previous high. Correction may happen this coming week, so for those who would like to get in this stock, this would be a good opportunity. For the next trading days, watch out as there may be a possibility of a bigger inverse H&S formation. The left should formed in between April to June, if the resistance at 352.50 holds, then this may be the formation of the neck line of the inverse head and shoulder formation.

MBT (Chart: Daily Resistance: 41 Support: 36)

The positive divergence seen previously for this stock materialized into a break from the downward channel. Aside from the break out from the downward channel, the stock also managed to move past the 65 and 130 day MA. There was sufficient volume on breakout of the channel. However, succeeding trading days where a white candle can be found has lesser volume. What I am hoping to see is more volume on white candles. Currently, the stock is overbought and there is a possibility of a correct for the coming week, this would be a great opportunity for getting into the stock. There is a possibility that an inverse head and shoulder may be forming. The left shoulder formed in between April to June. If the resistance is strong at the current level, then it is possible that we may have formed as neckline. The left should is still to be formed so watch out for this.

StockWatch (Aug 05-08, 2008): PSEi, DGTL

PSEi (Chart: Daily Resistance: 2620/2650/2715 Support: 2507)

Looks like the index is having a hard time moving past the 65 day MA. Trading last Thursday saw the index close lower with larger volume. Succeeding trading after that only had small volume. Also given the current RSI level, the index is near overbought and we may see some correction within the week. Watch out for support at 2507, as long as the index respects that support level, the index is still in a good condition. The support at 2507 is one of the points in the support line connecting the troughs in July. Almost all of the stocks currently are having a hard time moving past their 65 day MA’s, so it would be best to lock in the profit for today.

DGTL (Chart: Daily Resistance: 1.46 Support: 1.22)

DGTL seems to have formed a rounding bottom, but we may not be able to see a breakout for the coming days as the RSI is now very much oversold. It is good to observe this stock for the coming days, as this may transform into a cup formation. The stock is currently consolidating as seen in the 3 MA’s. It is also worth noting that the stock stood its ground when the general market was being battered. It did not continue moving lower than the support line. So if you are going long on this stock, current price level is already good as it is near the support line from extending from 2004.