StockWatch (Nov 24-28, 2008): PSEi, BPI

PSEi (Chart: Daily Resistance: 1990 Support: 1684)

The downward action that happened last week was not a surprise because 2 weeks before, the index did not have much volume when it tried to re-test the resistance line. So as expected, it did not have a chance against the selling action that happened last week.

So far nothing much has changed and the index is still bearish. A thing to look out for this week is the MACD’s possible cross below the signal line. This may spur further selling action. Also observe the RSI, we are still oversold, but during bearish market, the RSI 30 level acts as either a resistance or a support. In this case we are looking at RSI 30 to act as a support.

Aside from the RSI and the MACD, observe also a possible double bottom pattern, with support at 1684.

There is nothing much to be joyous about the index. We still don’t have a clear reversal sign, so were still in bearish territory. The only good thing that I could think of with last week’s selling action is that it was not accompanied by volume. But usually, volume is not important when it’s a downward action. Selling action may still continue even if there is no volume. It probably is just an indication that a lot of traders are still on the sideline.


BPI (Chart: Daily Resistance: 44/41 Support: 34)

BPI, although very volatile, is one very resilient stock. I consider it resilient because it is probably one of the few stocks that still hasn’t formed a new lower low. While others have broken support lines one after another forming new lows, BPI has a very good support at 33-34 level. From the looks of it, the current downward action for the past two weeks will try to re-test this support. For this coming week, we will be able to see if the impending move towards the support will push thru or not. If the low last week at 36 holds as a support, then watch out for a possible inverse head and shoulder formation (left shoulder Oct 10, head Oct 28).

PSEi (Chart: Daily Resistance: 2070 Support: 1890)

Last week the index formed a higher low. It was something that I though would be good, however the succeeding trading days had very low volume and I would guess that the higher low that was formed may not be able to handle selling pressure when it happens.

The current resistance near 2070 is still a problem for the index and from the looks of the chart the index is moving is a tight range between 1890 and 2070, probably forming a small triangle formation before making another move.

There are still no signs of reversal. The MACD is opening upward which indicates bullishness for the short term, but it is still below the center line. RSI is still on the oversold side and it looks like it going to take some more time before it is able to move above the 50 level.
Usually in a bearish market, the MACD will not be able to immediately move past the center line. It would usually take some time at re-testing the center line before being able to move past it. And from the looks of the MACD, it is just half way thru its course to re-test the centerline.

MEG (Chart: Daily Resistance: 0.85 Support: 0.59 )

MEG is either forming a double bottom or a descending triangle. The neckline for the double bottom is at 0.85, while the support line for the descending triangle would be at 0.59. If the double bottom does materialize, then it has a target price of around 1.10. The descending triangle on the other hand has a target price of 0.30. The spread for the breakout of the double bottom is very small, but it would be good because it means this stock may have found bottom.



General Note: A lot of other stocks have the same chart as MEG having a possible double bottom formation (e.g. AC). But the neckline is near the support line so possible spread for the breakout is also small. It would be best to just observe where this would end.

StockWatch (Nov 10-14, 2008): PSEi, JGS, BPC

PSEi (Chart: Daily Resistance: 2070 Support: 1850/1680)

The index continued its rally Monday last week only to be stopped by the support-turned-resistance line near 2030. Looks like this rally is just a short return move to re-test the resistance line and unfortunately the resistance line held its ground. For the succeeding trading days, the index went down and even creating an island reversal.

Aside from the island reversal, we can see that last Friday’s trading created a short white candle. But unfortunately again, the volume was not that significant. With this, it is highly probable that the index will continue to move further down and may probably close the gap that was created by the rally 2 weeks ago.

Still there is no major sign of a reversal from the current bearish conditions. The MACD, even though it has crossed above the signal line, is still in bearish territory. In a bearish market, the RSI at 50 level is usually a resistance area, which for last week has proven such.
For the coming week watch out for the following: a.) If support at 1850 holds, then this is a very good indication of good things to come as a higher low might be formed if the support holds. b.) Otherwise if the index still moves past 1850, then there is a possibility for a double bottom formation if support at 1680 holds. If this materializes, this might be the reversal sign that we are hoping. c.) If the index still moves past the previous low, then were headed for more selling action.

JGS( Chart: Daily Resistance: 3.15/6.00 Support: 2.55)

JGS just caught my attention due to high volume. I’m not sure what is going on with this stock, but technically it is very much oversold and it hasn’t been able to move significantly with the rally last week. I believe there is still a large potential for a rally in this stock. The MACD is about to cross above the signal line and if it does it may probably spur buy signals for some. Resistance is currently at 6.00, which is the level of the 65 day MA and at the same time, one of the points in the resistance line from Aug of 2007. If you are to get in this stock, recommendation would be to hold only for the short term and sell near 6.00

BPC (Chart: Daily Resistance: 1.70 Support: 0.96)

BPC is showing characteristics of a double bottom formation or a possible descending triangle. Which of the 2 formations will it be is still left to be seen. The double bottom formation has a neckline of 1.70, while the descending triangle formation has support line of 0.96. Just watch this stock for now and wait for either break out or break down.

StockWatch (Nov 3-7, 2008): PSEi

PSEi (Chart: Daily Resistance: 2030/2350-2400 Support: 1684)

Looks like the long awaited correction is here. The index plunged further on the first trading day last week, but was able to regain losses by the end of the week. The index is now approaching possible resistance at 2030, which is probably a retest of the previous support-turned-resistance. If this is broken, the next possible resistance is at 2030-2400 then 2680.

The last trading day ended with a white candle recovering all losses last Monday. If my chart is correct, we can see that the volume was very significant on the last trading day. This may be an indication that this rally may last for a couple of weeks more before doing a return move downward.

Looking at the weekly charts, it can be seen that a last week’s trading was a hammer which is a bullish sign if found at the bottom of a trend, which is what we currently have. Up until when will this bullishness remain in the market is anyone’s guess.

The MACD is poised to cross above the signal line in probably a week’s time and this may spur further buy signals. However, the whole MACD is still below the center line, so if you are to enter the market, keep the stock only for the short term. Sell on signs of weakness.

There are a lot of resistances along the way up, so don’t expect that the index will immediately recoup its loses. I would like to see the index go up, rest a little, then go up again, rather than zoom is way up with out a rest.

General Note:
There are a lot of stocks that are currently reacting positive to the recent rally. Since the market is still generally bearish and the rally last week may well just be a reversal for the short term trend and not a reversal on a bigger picture. Observe possible resistance lines where the stock previously broke down. It is highly likely that the current rally is just a return move to test the resistance. If you are to enter some stocks with these characteristics, it would be best to sell near the resistance and lock-in profits immediately.