StockWatch (Oct 27-31, 2008): PSEi

PSEi (Chart: Weekly Resistance: 2060 Support: 1850/1800)

Unfortunately the index is still looking for a bottom. It has recently broken support at 2030 which is a previous low of 2006. Looking closely at the chart, it has not only broken the previous low support, but it has also broken a large downward channel that has been formed since the start of the index’s decline Oct 2007. There is still no clear indication of any major reversal but for the following weeks to come, watchout for the following: a) The next support at 1850-1800. This is the target price of the symmetrical triangle break down (symmetrical triangle formation marked as orange lines) and at the same time, 1800 is a previous low from June 2005. If this support level holds, then there is a possibility for the start of a return move towards 2030-2070 level (the support-turned-resistance of the large downward channel) b.) Watch out for a possible island reversal for the short term. The chart has already shown 3 gaps formed since the start of October, so at the current level, we are already in the exhaustion gap phase, so a gap up rally is also a possibility.

A lot of stocks has broken and has gone way below major support lines and most haven’t had any rally from their current lows yet, so watchout for these stocks as these will most likely make a return move near the support-turned-resistance levels. However, there is still no clear major reversal pattern and MACD is still below the center line, so if you are to enter the market, strategy is still to hold only for the short term and sell on the first sign of weakness, or much better, just wait for a clear reversal before entering the market.

StockWatch (Oct 20-24, 2008) : PSEi, GLO, DGTL, PLTL

PSEi (Chart: Daily Resistance: 2176/2292 Support: 2080)

The index experienced a temporary relief during the beginning of last week, but this was capped by the resistance near 2270 and the index again fell and created a big gap. As of current, the index is still respecting the support line formed from August of 2007 connecting the trough of July 2008 and recently also connecting the last 2 week’s low. This week will be the judgement week for that support line to see if it would still hold.

There is currently a manifestation of a possible double bottom. But this double bottom may be a reversal only for the short term trend. Its neckline is at 2176, with a possible target price at around 2500. If the support line is broken, then the possible double bottom will be invalidated.
Still, there is no clear reversal for the current bear market. The MACD is still below the centerline so this means hold only for the short term. The market is still very much oversold, a lot of stocks are still below the RSI 30, so there is s higher probability of another short rally by this week.

GLO (Chart: Daily Resistance: 980 Support: 820)

GLO just recently turned very bearish as the standing support line connecting the troughs from 2002 was broken with large spread and good volume. The support line was initially tested last Sept 2008 and it stood its ground. Two weeks ago, it was again tested and broken with significant volume. The stock was able to rally for a short time and moved above the support line, but went further down last Thursday and Friday again with big spread and good volume. The break down that happened last week is further confirmation of the breakdown that happened 2 weeks ago.

The next support for this stock is at 820, which is the previous low from around June of 2006.

DGTL (Chart: Daily Resistance: 1.28 Support: 1.12/1.10)

Looks like all communications are down from the current bear market storm. DGTL, like GLO also broke down from its standing support line since 2002. The symmetrical triangle that I was previously so much hoping to breakout, went down instead. Its official, DGTL, GLO and TEL are all in the very bearish region. TEL broke its support line since June. PLTL is the only communications stock that still hasn’t broken its support line from 2003, although, it has already broken its support line from 2006. (See chart below)

Next support line for DGTL is at 1.10 which is a previous low from 2007.

PLTL (Chart: Daily Resistance: 7.40 Support:6.50)

PLTL unlike TEL,GLO and DGTL still has a long way to go before breaking the support from 2003. But it has already broken support from 2006. Compared to the other telecoms stock, I can say that PLTL still has hope amidst the bearish market, but, were still not out of the woods, so let’s further observe the movements for this stock. Next support for this stock is at 6.50 which is a previous low.

StockWatch (Oct 13-17, 2008): PSEi, TEL

PSEi (Chart: Daily Resistance: 2270/2360 Support: 2036/1900)

Last week has been one of the biggest drop in the market since Aug of 2007 when the current credit crisis started to become a buzzword. The index shed 400 points and broke the support at around 2350, which is the support line of the symmetrical triangle formation. Possible target price for the drop is around 1900. Next support is at 2036, which was the previous low of June 2006.

The question probably in everyone’s mind is when will the selling end? Well from the chart, it seems that we are about to see a rebound from the lows of last week. The RSI is pointing to a very oversold market and it is possible that next week will be bargain hunting week for those who still have the money and the guts to get in the market.
The MACD is still in the bearish territory, so trading strategy would be to hold only for the short term. There are still no signs of reversal, so watchout for this. It is possible that an island reversal or a double bottom may form as a reversal for the short term downward trend.

TEL (Chart: Daily Resistance: 2350/2425/2550 Support: 2245/2000)

TEL broke the support line at 2500. Possible downward target price is at 2000. With RSI at a very oversold level, it is highly probably that a rally will first happen for this stock before either proceeding towards the target price or if the bulls are able to take control, this stock may be able to move above the previous support line. Price levels at 2400 -2500 are critical as these are resistance levels for the possible rally.

If the support at the current level holds, then there might be a possibility of a double bottom formation for this stock. But this is still too early to confirm. If your are to take advantage of the rally, hold on to this stock for the short term only. Sell if it is unable to break above the previous support line.

StockWatch (Oct 6-10, 2008): PSEi, MEG, BPI

PSEi (Chart: Daily Resistance: 2627/2700 Support: 2654/2447)

The DJIA ironically went down with three lucky sevens, and the local index followed. Amazingly it was not as bad as I was expecting. With that huge drop in the DJIA I was expecting a drop of around 200 points for that day. Yes, the index did plunge to 200 points below the previous close, but it went back up and closed just above the 65 day MA. The volume was significant and was followed by another up day with nearly 100 points also with significant volume.

So what does this mean? This points us to three types of traders who were present that day, those who panicked sold down their positions. Those who got lucky are the one’s who were able to scoop up positions near the bottom of the trading day. And lastly those who wished they can still be lucky are the one’s who bought near the top of the action, these are probably traders who are still betting on better gains or those who upon seeing the index rebound from the lows started to get in again.

If you were the trader who panicked and sold down their position, there’s nothing bad about that. It’s a natural reaction, it’s acceptable and it is playing safe. Don’t feel bad about selling your position, cash is also a position. But if you sold down and bought back your position. Then that I think is a recipe for disaster. Selling at a loss is a very emotional event, which sometimes clouds our decision. Usually after selling at a loss, we are still hesitant to enter the market again. But if you entered the market because of renewed confidence within the day, usually it puts us in the situation where we are already buying too late and near the top. Selling at a loss and buying back again within the same day, is not a recommended action, not unless you have already mastered your emotions and are able to act immediately on sudden turn of events. Otherwise, I would advise for you to cool down a bit before moving in again in the market.

If you were the trader who was able to buy near the bottom, then good for you. Better check your stops and adjust them accordingly to protect your profits. This rally is definitely something that will not last.

If you were the trader who bought near the top, you should have already sold your position last week. Even if the rally was good, the market is still considered to be very volatile. Riding the momentum is ok, since there was significant volume and spread for the two days. But on the last day of trading, this should have been a warning to you to already protect your profits and sell for the mean time. The last trading day was accompanied also by significant volume, just ¼ volume away from matching the volume on the 2 day rally. This is already a sign that a lot of traders have started to cash in, and you should have also done the same if you bought near the top. Otherwise, brace your self to be long term investors, if the market turns sour.
The trading last Friday was accompanied by large volume, it is highly possible that selling will still continue next week. A symmetrical triangle can be seen in the chart, but it is still too early for a breakout. The symmetrical triangle is only pointing to us that we are still to encounter ranging actions from the market.

MEG (Chart: Daily Resistance: 1.50 Support: 1.30)

MEG is now in a tight squeeze near the apex of a possible symmetrical triangle. Breakout or breakdown may happen anytime within 1 to 2 weeks. Otherwise if this does not materialize, then we can expect further consolidation for this stock. Breakout point is at 1.50 and a good volume breakout would be 200M shares traded.

BPI (Chart: Daily Resistance: 50 Support: 40)

BPI seems to be forming an inverse head and shoulder formation. Breakout price is at 50. Target price is around 65. Wait for the breakout. It is still possible that this stock may still consolidate a few more days.