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.