StockWatch (Mar 16-20, 2009): PSEi, TUNA, EDC, FGEN

PSEi (Chart: Daily Resistance: 1940 Support: 1800)

Just as I was jubilant that market had already reacted positively 2 weeks ago, the market action last week doused my joy and we’re now back below the 65 day MA. We’re still in the long standing sideways movement of the market and for the following week expect that this sideways to downward movement will continue.

Most are waiting for the market capitulation, and in my opinion, the chart is giving us mixed signs on this. As can be seen in the chart, the market has been on a sideways movement since October of last year, and eversince the low of October 2008, the market has not gone back to that low, which suggests that there is very strong support. With that strong support, there is lesser probability of a market capitulation. However, we’ve been on a sideways movement for nearly 5 months and we are not sure up until when the support will last to prevent market capitulation. This long standing sideways movement is probably contributing to a possible market capitulation with players slowly loosing interest with the sideways movement of the market. We are also seeing shorter rallies as observed from the chart, which might also be contributing to a possible market capitualtion. So as you can see, the current market activity is not pointing to a market capitulation, but the current activity is probably contributing to that possibility. But ofcourse who knows? We’ll probably only know we’re in market capitulation if we realize that we ourselves are also part of selling panic.

TUNA (Chart: Daily Resistance: 1.30 Support: 1.26)

TUNA moved more than what I was expecting. I was just expecting for TUNA to just move and stop just above the resistance line, but it went further to a high of 1.40. The amazing thing was that the move towards 1.40 was accompanied with volume. This is definitely a breakout of falling wedge, but I can’t really say if this is the reversal of the long standing downward trend of the stock or a continuation of the recent shorter upward trend from Jul of 2008. Target price for the falling wedge pattern is at 1.70. As of current,there is a possibility that this stock is also forming a pennant formation with a target price of 1.55. If you plan on getting this stock, buy near support at 1.26. Observe the volume on breakout, there has to be a large volume on the pennant pattern breakout. If you buy at 1.30, cutloss when the stock moves below 1.30. Sell for profit near 1.50. Watch out for the moving averages at around 1.45. If the stock shows signs of weakness at that level, like large volumes on sell down, better sell for a small profit for the mean time.

Note: I have made a mistake last week of positng the TUNA chart for the PSEi analysis and the PSEi chart for the TUNA analysis.

EDC (Chart: Daily Resistance: 3.25 Support: 2.50)

EDC is showing a big smile: characteristics of a rounding bottom pattern. However, I’m not seeing a breakout of this pattern anytime soon because the stock is very much overbought. However, this pattern may still transform into a cup and handle pattern in the future, so watchout for this stock.

FGEN (Chart: Daily Resistance: 21.50 Support: 19.50)

FGEN also showing patterns of a rounding bottom and may have already broken-out of this formation. There is good build-up of volume as the stock pushed beyond the resistance line. Looking also at the weekly and monthly charts, both are also displaying a very good picture of the strength for this stock. FGEN is one of the very few stocks that made it near the 260 day MA(green line). Looking at the MACD, this is a candidate stock to hold for the long haul as long as the MACD stays above the center line. However, the stock is already overbought, so expect some further selling to happen. Target price for the rounding bottom pattern is at 28. If you buy at 20, cutloss is at 19.00 if the stock turns sour.