StockWatch (Dec 01-04, 2009): PSEi, MEG

PSEi (Chart: Daily Resistance: 3067 Support: 2974)

The index seem to have formed a rising wedge that broke down last Friday. If this is indeed a valid formation, we can expect the index to move lower next week. The breakdown is peculiar such that the breakdown formation last Friday was a white candle. This seems to be a mixed signal that I am having, since white candles are bullish, but the breakdown is definitely bearish, so I’d rather observe the coming trading days for confirmation (i.e. if it moves lower by Monday). Also observe the RSI as it moves towards the 50 level. Since March the RSI hasn’t fallen far below the 50 level, it has always managed to pull back up above 50. That RSI level may once again provide support for the index, so do observe it as it may signal a good time to buy for range trading.

On a general note, I’d recommend to lessen your position in the market because the market seems to be having a hard time moving futher upward since Aug and a large correction may happen anytime soon. So its good to limit trading to quick range trades and avoid going long for the mean time.


MEG (Chart: Daily Resistance: 1.48 Support: 1.24)

MEG seems to have broken down from a head and shoulder formation. Downward target price is around 1.10. MACD is now below the centerline and in bullish territory. Don’t be fooled by the long white candle that was created last Thursday. It was just a return move towards the breakdown price of 1.44. There was no folllow through last Friday, as it did not move higher with larger volume. The white candle last Thursday was more of bounce from the oversold RSI level of 30. For the coming week, the stock may move sideways to downward. Any chance of upward movement would be a good time to divest yourself of the stock.