StockWatch (Dec 01-05, 2008): PSEi, PX

PSEi (Chart: Daily Resistance: 1990-2000 Support: 1760/1830)

The trading last week was very impressive, compared to the situation of the index 2 weeks ago. A new higher low was formed last week and a very impressive rally started on Tuesday which gave the index a 70 point boost in just a day. This was accompanied with a good volume compared with the volume the previous week, but probably not sufficient enough to hold upward momentum. The resistance line is still proving to be a very strong resistance line as it is currently being tested for the third time. It still is any body’s guess on what will happen to the resistance line. Technical indicators are showing us mixed signs. Bullish signs coming from the MACD and stochastics while bearish signs coming from the RSI (50 level is usually a resistance for bearish markets) and the volume on the market action last week (volume is probably not good enough to sustain the rally as evidenced by the last 2 trading days where the index went flat).

It is definitely a welcome sight if the index is able to move above the resistance line. If it is able to move above the resistance line, check for the volume. If the volume is high, then it may probably be a breakout of a double bottom formation ( not your text book double bottom) or a symmetrical triangle. Both formations have a target level of around 2400. Otherwise, if the index moves south, let’s hope that support near 1830-1820 would hold.


PX (Chart: Daily Resistance: 5.70 Support: 4.85/4.40)

PX had an unusually large spread accompanied with large volume on the last trading day last week. It is possibly a breakout from a symmetrical triangle, with a target price of around 6.70. There are however upcoming resistances at 5.70, the previous high; 6.10 the 65 day MA and 6.60 the 130 day MA.

If you are to get in this stock, do take note that the MACD is still on the bearish side, so trading strategy would be only for a short term hold.