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.