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).