StockWatch (Sept 29-Oct 03, 2008): PSEi, JFC, FGEN, EDC, SPH

PSEi (Chart: Daily Resistance: 2630/2685/2700/2780 Support: 2468/2342)

The island reversal that showed up in the PSEi chart delivered on its promise with the index moving higher. The index had a little bit of a wobbly start for last week and ended with a bang. The last 3 trading days we saw successive days with the index closing higher. It is worth noting that the index’s advance broke the 65 day MA resistance with high volume, which is a very good break. The next question is whether the index can sustain this bullishness this coming week. The 3 day advance that happened last week maybe showing us signs that we should be protecting our gains. The 3 white candles are similar to the three advancing soldiers’ formation in the Candlestick charting technique. The formation is most of the time pointing to a warning sign that recent upward movement may start to encounter problems on its further bid for its way up. A visible sign for this is that the third day of advance has a shorter white body and longer wicker than the first 2. It opened higher, tried to move higher in the middle of the trading, but just wasn’t strong enough to hold its position, it receded, was not able to recover and closed just higher than the opening price leaving a longer wicker. Again this is just a warning sign, so suggested action maybe to move your stops higher just incase the market went sour you can immediately trigger a sell or for the risk averse, selling some of your positions might be a better idea. Watch out for the upcoming resistances: 2630, which is the previous support line of the descending triangle; 2685, which is the 130 day MA; and 2700, the resistance line extending from May 2008. The RSI may also be posing a resistance for the index as it is near the 50 level.
Again as pointed before, this is still not the time to go long on your positions, the MACD is still below the zero line but is currently showing good signs of a possible cross above the signal line.

JFC (Chart: Daily Resistance: 57.50/59 Support: 44.50)

JFC, just like a dormant volcano, blew its top off sky high, consecutively moving higher for the 5 trading days last week. The bullish move broke the 260 day MA and also the resistance of the downward channel established since April 2007 all with large volume. Possible target price for this stock is at 57.50. I’m not sure what’s going on financially with this stock, but whatever it is, looks like investor confidence came in by the truckloads. Following the Elliot wave pattern, we may now be in the 3rd wave on a small scale with the first and second wave formed from July to Sept 2008. Looking on a larger scale, we may now also be on the 3rd wave with the first and second wave formed from 2004 to 2008. Looking at other indicators, we have the MACD still above the center line, so this means we can now go long on this stock, especially in the light of the recent breakout. Although for the RSI, the stock might be on the overbought level so this means a possible correction is near. This may give us a chance to jump in on the stock when it moves lower. Watchout for support at 44.50, as long as the stock does not go below this level on its correction phase, we are still safe. As the stock moves higher, the MA’s will further confirm this bullishness with crossovers.

FGEN (Chart: Daily Resistance: 25/27/31 Support: 15.25)

FGEN traded last week with large volume. There is no visible area pattern from which a breakout might have happened. The indication of a large volume makes this stock viable for a short term hold. A good signal to start buying would be if the MACD crossed above the signal line. Watchout for the following resistance: 25, which is the 65 day MA; 27 which is the resistance line formed from April 2008; 31 which is the previous high.

EDC (Chart: Daily Resistance: 4.20/4.50/4.70 Support: 2.95)

EDC had a very good bullish rally last week accompanied with large volume. A gap was formed also with good volume. Watch out for further gaps happening in this stock. This stock is good to hold for the short term only. We have the MACD crossing over the signal line, but still below the center line indicating a short term bullishness. The stock currently stopped short of breaking the resistance at 4.20 which is the resistance line formed from Jan 2008. Also watch out for other resistance levels at 4.50 which is the 65 day MA and 4.70 which is the resistance line formed from October 2007. If resistance line from Oct 2007 is broken, there is a possible of stock reaching target price of 6.50.

SPH (Chart: Daily Resistance: 5.40 Support: 4.40)

SPH closed successively higher for the past 2 weeks, breaking a possible sideways channel formation. Target price for this channel is at 5.40. Current level is at 5.20 and is not a good entry level, especially looking at the RSI which is very much overbought. The MACD on the other hand, is indicating a long term hold, so if you are to get in on this stock for the long term hold, wait for the correction before buying.

StockWatch (Sept 22-26, 2008): PSEi, AC, MEG

PSEi (Chart: Weekly)

PSEi (Chart: Daily Resistance: 2470/2520/2630/2780 Support:2340/2289)

The PSE index felt the shockwave of the global sell down due to the successive bankruptcy announcements of the large US financial institutions. The index fell 200 points for two trading days and even moving way below the target price of the previously observed descending triangle. On the last trading day there was a reprieve from the sell down with the index gapping up and closing higher. This gap up formed a small island reversal pattern and even with a very good volume. The question is, now that we have an island reversal is it now the time to get in the market again? Probably if your investment objective is for the short term, I would say YES as the island reversal is a very clear indication that things will start to move the other way around. But for the long term, I would suggest to wait it out first before moving in the market, for the reason that the MACD is now below the center line suggesting a bearish outlook. Also looking at the weekly PSEi chart, we can see that the sell down that happened for the past two weeks had a very significant volume. With that large sell down volume, the index will find it a little bit harder to move past the resistances and it may take a while before investor confidence returns.

In the previous weeks, I have been pointing out a possible inverse head and shoulder formation. With the 2 week sell down, the inverse head and shoulder pattern that we are following got invalidated. But on the bright side, we may be seeing a formation of another possible reversal pattern, which is a double bottom. The sell down last week could probably have formed the second bottom of the double bottom formation. The possible neckline for this formation is at 2780. The complete formation of the possible second leg may take some time, probably around 1-2 months.

For those with short term investment objectives, watch out for resistances at 2530, 2630, 2700. Liquidate immediately if the index shows signs of weakness on those levels.

For those with long term investment objectives, watch out for the MACD moving above the centerline before getting in the market.

AC (Chart: Daily Resistance: 320/305 Support: 260/250)

AC seems to have formed a strong support line extending from July 2008. The stock bounced off from this support line,which may possibly be part of a symmetrical triangle. It is still too early for the breakout or breakdown of the symmetrical triangle, but it is worth following.

MEG (Chart: Quarterly)

MEG (Chart: Daily Resistance: 1.50/1.60 Support: 1.28)

Looks like MEG survived the market sell down with the help from the support line that extended from July 2008. This support line was tested for the third time and it has proven its strength against the recent market turmoil. Looking into the quarterly chart, it seems that this stock will be ending the third quarter with a superb performance. As we can see, the quarterly chart is displaying a white candle with a large volume, larger than the sell down volume of the previous two quarters. So what does this mean? Well in my opinion, we are seeing investor confidence going back into this stock. This is not yet conclusive, but it is a positive indicator for the stock. Given that indicator, and at the current price level, this may be a good find for those who would like to go long for this stock. Watch the small symmetrical triangle, breakout may happen within the next 2 weeks. Modest target price for the symmetrical triangle is at 2.10.

StockWatch (Sept 15-19, 2008): PSEi, CHIB, SMC

PSEi (Chart: Weekly )

PSEi (Chart: Daily Resistance: 2730/2755 Support: 2630/2575) 

The index isn’t looking good after a week’s sell down. The worst that we are expecting had already occurred with the index breaking the standing support line from July of this year. To further aggravate the situation, the support line was broken with large volume.  The break of the support line from July can also be regarded as a break down from the upward channel, with a possible downward target price at 2530. Next possible support is at 2630, which is the previous low. Support at 2630 is acting as the support line for a descending triangle. If this descending triangle is broken, the possible target price is at 2470. The next support after 2630 is at 2575 which is the 65day MA. As you can see, it’s a double whammy waiting to happen for the index. The weekly chart also confirms this impending further bearish action. As it is seen in the weekly chart, the price action for last week is short of a bearish engulfing pattern with a large black candle forming with a very large volume.  The other indicators are also not looking good, with stochastics still opening downward, as well as the MACD moving below the signal line. For the risk averse it would be best to avoid the market until a possible support is formed. The long term outlook is still not as grim as the short term, but it is dangerously moving towards a bearish outlook, with the MACD moving near the center line.

CHIB (Chart: Weekly)

CHIB (Chart: Daily Resistance: 560/565/575  Support: 545)

CHIB seems to have gone against the prevailing market trend with a surge in volume for the last 3 trading days last week. I’m not sure whether this surge in volume is just due to some cross trades and there is also no area pattern from which it might have broken out from.  The only possible pattern that I can see from the chart is a small double rounding bottom with the neck line at 575.  But even if there is no area pattern, this stock is worth following as other good things are showing up in the indicators for this stock. The MACD alone is above the signal line both for the weekly and daily charts, which suggests a bullish outlook. The only problem the both MACDs is that it is still below the center line. But for the daily chart, it is near the center line and is in position to cross above it.  Watch out for resistance at 565 which is near the 65 day MA and resistance line formed from Oct 2007.  If this resistance line is broken, this means this stock is now out of the bearish dive. Next resistance is at 575, which is the previous high and the neckline of a possible double rounding bottom.  If this neck line is broken, the possible TP is at 605.  Price below 560 is a good entry point for this stock assuming a possible target price of 605. Watch out also for the other MA’s acting as resistance along its way up. 

SMC (Chart: Daily Resistance: 52/53.50  Support: 50/48) 

SMC successfully broke the resistance of the inverse head and shoulder confirming a reversal form the previous downward trend. Target price for the pattern is at 57. The breakout also moved past the 260 day MA. Looking closely at the trading for the last 3 days, there seems to be another area patter, a flag pattern, forming, with the target price nearly the same as the inverse head and shoulder target price.  A word of caution though, the price of the stock is nearly halfway its target price, so if you are investing for the short term, there might not be enough  good profit to receive from this stock. For the coming week, there is a possibility that a sell down may further happen. For those planning to enter, a good entry point would be from 48-50 as long as it does not go below 48. 

StockWatch (Sept 08-12, 2008): PSEi, SMC, GLO

PSEi (Chart: Daily Resistance: 2755 Support: 2630/2670)

The index had a very unstable rally last week. It was less than what I expected, given the large volume on the Friday prior to last week. It also fell short of breaking the resistance line for both the inverse head and shoulder formation and the upward channel from 2003 (red-dash lines). There is strong resistance in the levels of 2755 up to 2800 and it’s not looking good for the index as its RSI is now near overbought, stochatics is not that good either and MACD is currently undecided where it would proceed. So expect more volatility for the coming week. Watch out for resistance at 2755, if it is broken next week, with large volume, then this is a bullish sign, as it is the resistance of the inverse head and shoulder that was spotted. But if the index moves further below 2670, then it is possible that the inverse head and shoulder formation we are tracking may get invalidated and the standing support from July is violated. For the latter’s case, it will be better to stay on the sidelines if the break of support does happen. In the long term point of view, this volatility and uncertainty in the market is just temporary and the market is still generally good for long term investment outlook as long as the MACD is above the center line.

SMC (Chart: Daily Resistance: 47.50 Support: 43.50)

SMC is one of the stocks forming an inverse head and shoulder with resistance at 47.50. Currently MACD is poised to cross over the signal line and stochastics is displaying good signs. The only problem is the RSI with is now near overbought. Buy if resistance at 47.50 is broken with volume preferable above 200,000. Possible target price of around 57.

GLO (Chart : Daily Resistance: 1100, 1135, 1235 Support: 1060)

No area pattern for GLO, but if you are following an Elliot wave pattern, we might be on Wave 2, which means Wave 3, the longest wave, may be nearby. It is a buy if support at 1060 holds. It is possible for wave 3 to go beyond 1300 level.