StockWatch (Jan 12-16, 2009): PSEi

PSEi (Chart: Daily Resistance: 1990 Support: 1850)

The market amazingly opened positively for 2009. I was expecting a retest of the previous support line and then a continuation of the short term downward trend. But apparently I was wrong as the chart pulled back from the breakdown and even breaking the resistance line and falling short of breaking above the 65 day MA. Can this be considered a breakout? In my opinion this is not a breakout, judging only from the volume, it was not that large to consider a good breakout and it was not sustained until the end of the trading week. As of current there are still a couple of resistance along the way up, the nearest is the 65 day MA is acting as a resistance level and the previous high of 2070 has not yet been elimated. The MACD just barely crossed above the centerline, which is good. We have to watchout if the MACD is able to hold above the centerline, if it does, then it is a further positive indication of recovery for the index.

There is still no reversal sign and as of last Friday, the DJIA closed lower so expect a reaction from the local market come Monday. I believe that we will still be seeing more volatility as the market consolidates further.
Note: Scanning through all the local stocks, there are lots of stocks that are moving upward having lenghty white candles, but some of those stocks doesn’t have good volume to sustain its upward move. Be cautious of those stocks as the volume is a good indicator that the sharp rise may just be a bull trap.