StockWatch (May 18-22, 2009): PSEi, DMC

PSEI (Chart: Daily Resistance: 2350/2400 Support: 2256/2060)

The index moved sideways for a moment last week, but ended still strong by Friday, having successfully moved farther from the 260 day MA (green line).

There are two upcoming resistance at 2350 (orange horizontal line), which is the gap from Oct 2008 and 2400 which a point in the line connecting the peaks of May and Aug 2008.

There may still be some small upward movements next week, but trade cautiously. RSI is still very much overbought and a correction is due any time. Probably it would be best to sell a portion for the mean time to lock-in some of the profits.



DMC (Chart: Daily Resistance: 7.30 Support: 5.1)

DMC had a break out with volume from a rounding bottom pattern. Volume on breakout was large. Modest target price is at 8.5 . Upcoming resistance at 7.30 which is a previous high. If you buy at the current level of 6.9, cutloss is at around 6.5.

StockWatch (May 11-15, 2009): PSEi

PSEi (Chart: Daily Resistance: 2270 Support: 2060)

The index’s movement last week was very impressive. I was expecting that the trading last week would follow the same trend where a sell down would happen at the start of the week and recoup on the last trading days of the week. This time the index moved higher for the whole week and just fell short of moving past the 260 day MA (green line).

Next week’s action is anybody’s guess. The RSI is again overbought and currently the 260 day MA is acting as resistance for the index. I’m not sure if the bullishness can extend further next week, but I’d be cautious in trading just incase the recent bullishness does not follow through.

Also 2 gaps has already formed since the start of the rally, so I’d be on the look out for a possible island reversal.

I’m still skeptical on the recent bullishness, probably because I was fixated on the negative divergence between the RSI and the Index. But the chart is showing a different story now, so let’s see where this would take us for the following weeks.

StockWatch (May 04-08, 2009): PSEi

PSEi (Chart: Daily Resistance: 2120/2170 Support: 2057)

The index had a sell down for 2 days but was again able to recoup the loses on Thursday. Although it is not evident in the chart, the volume on Thursday’s recoup was less than the volume on the April 24 rally. The volume last Thursday was just bloated by block sales. Volume is still diminishing on every time the market is able to bouce back which I believe is not a very good sign.

Also, something not that evident in the chart is the MACD crossing below the signal line. For MACD followers, this means a signal to sell for the mean time, which I believe is what should be done.

The index also broke the standing support line (orange line) from March 2009. The recoup last Thursday just fell short of moving past that line so this is something to watchout for the coming week.

Overall, I still advise caution in trading or for the risk averse stay on the sidelines for now. Watch out for upward movements with low or diminishing volume