PSEi (Chart: Daily Resistance: 2920 Support: 2826)
The downward target value for the double top formation of the index has nearly been reached with the lowest being registered last Friday at 2826. The index had a short rally only to be stopped by the 130 day MA. For those who were able to scoop up some stocks last Wed and Thurs but was caught off guard by the dip that occurred last Friday, I would advise them to hold on to their stocks for a while because I believe last Friday’s trading brings good news to those who were surprised by the turn of events.
Last Friday’s trading opened lower, dipped further in the middle of trading but was able to recoup from the big dip. This I believe is a sign of strength, this means bullish traders were able to counter the effects of the bearish traders by regaining the dip and closing near the opening value. This, together with the relatively large volume last Friday and the RSI oversold condition of the index will prop the index back to re-test the 130 day MA and possibly re-test the support-turned-resistance level at 2979 by next week.
The possible rally next week I believe will not last beyond the 2979 level or the 65 day MA level, so don’t go long on your positions. For those who were stuck due to Friday’s dip, this will be a good chance to sell.
General Note: There are a couple of stocks that are very much oversold (RSI below 30) like TEL and AC. These maybe opportunities for a quick and small profit, just don’t go long yet on the stocks.
CPM (Chart: Daily Resistance: 4.55/5.00 Support: 3.20)
CPM does not have any area pattern formation but last Friday, the stock had a white candle with relatively large volume. That incident, coupled with a very oversold RSI level of 15 will probably boost the stock upward next week. You can buy at the current level and wait for the stock to reach 4.50 to 5.00 before selling. Watchout for the volume, if the upward movement next week is not much supported by larger volumes, better sell your position even with just a small profit.
BPI (Chart : Daily Resistance: 45.50/47.50 Support: 43.50)
5 comments:
hello Mike;
I once thought last month that stocks would bottom out at around 2800...
but seems to day its going beyond that
Is this still a sentiment by our local mart from foreign markets like the DOW and Chinese and Euro markets...or more from local events?
Lately, US marts have posted a rally and same with China and Europe..
what could probably the most predictive point at which our local market would bottom out and start a less bumpy ride down the hill?
Hi Francisco,
I think the upward movement for today (Feb 10) is not yet an indication of an absolute bottom. I think the local market would just bounce from the oversold level of the RSI, but would still continue its downward movement later. Im guessing, based on the weekly chart, that bottom would probably be somewhere near 2500 after the first half of the year. Currently in the weekly chart, we're still in the middle (50 level) of the weekly RSI, which is why I am expecting further downward movement.
Hi Mikes:
wow, bottoming out at around 2500..that woould probably signal definitely a bearish tone and perhaps a slowdown or worst an extension of recession..
but looking at the brighter side..our inflation rate has improved fom 44.4 by end 2009 to about 4.3 by January...moreso, within this first half is a lot of infusin of money brought about by election spending....and the BSP has plans of not revising or adjusting interest rates upwards the most within the first six months of this year...
would it be good to just stay at the side for now...or perhaps dive in now to buy cheap shares and then reaps profits by the second half of the year?
Hi Franciso,
Well it's definitely bearish, but I think this is not a continuation of the recession. The index has been continuously rising from March of 2009, and since then there hasn't been much of a correction. I believe that what is happening now is just another (big?) healthy correction before the market pushes further upward.
But again it is generally bearish for now, not until we surpass the previous high. Is it good to buy stocks now? YES, but not for the purpose of holding it for the long term. Buy stocks now just to take advantage of the current bullish momentum and sell later on. I'm guessing that this recent start of bullishness in the market will be short lived and may top out when the index reaches near 3000 or the RSI reaches near 50 level
Mikes
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