StockWatch (Jan 26-30, 2009): PSEi, MWC

PSEi (Chart: Daily Resistance: 1910/2000 Support:1830)

Just as things are looking good for the index, a series of unfortunte things happened. First, the index is still unable to move past the 65 day MA, second, a breakdown from the current support line occurred and lastly, this breakdown paved the way for the index to form a lower low. This is the second time that the break from the support line happened. The first is the break of support last Dec 22, 2008, but the index was able to recover the following week which is why I’ve redrawn my support line. From the looks of the index on the last 3 trading days for the past week, there maybe a correction that would happen for the coming week. Volume on the last 2 days were almost the same as the day the support line was broken, and the index was able to stay above the recently formed previous low. The RSI, currently near oversold and the stochastics seem to point to the possibility of a correction or a short rally.

However, the MACD is now below the signal line and below the centerline, a double whammy if I may consider, which is not a good thing to see. If a rally pushes through next week, this would be a good time to exit the market for a while.

Observe the following for the weeks to come: The 65 day MA seems to be a very strong resistance as of the moment. If the index would re-test the 65 day MA without sufficient volume, it may just be deflected again downwards, watchout for the formation a lower low. If the re-test is accompanied with good volume, then I believe it would be safe to get in the market again.


MWC(Chart: Daily Resistance: 12.50 Support:9.30)

For those who are fast on the trigger, MWC is presenting an opportunity to make profit for the short term. After breaking down from the symmetrical triangle, the stock was able to find a new support and correct from the lows. I think the correction is phenomenal as it had almost the same volume as the breakdown volume and a lengthy white candle. This is definitely showing strength, but probably only for the short term. The opportunity being presented here, for those who are fast on the trigger, would be the retest of the support-turned-resistance line at 12.50. You have to be fast on this one as the volume last Friday suggests that the return trip to the resistance line would be fast. If you are unable to get the stock at P10.50 – P11.00, it would be best to just observe. Sell near resistance of 12.50 if you were able to get the stock.