StockWatch (Oct 25-29, 2010): PSEi, APO, SLI, MER

PSEi-Weekly Chart

PSEi (Chart: Daily Resistance: 4330/4350 Support: 4161)

Last week the index moved lower, but was able to recoup losses on the last 2 days of trading and was even able to break above the sideways movement (line A-B) for the past 3 weeks. The breakout that happened last Friday on the sideways channel gives a possibility of the index moving higher towards 4350. The question though is whether there will be enough momentum to propel the index beyond successive resistance areas. One of the upcoming resistances is at 4330, if this proves to be a strong resistance the index might move in a ranging movement within a slightly upward leaning channel (line C-D).

Looking at the weekly chart, though the bearish confirmation for the hanging man candle stick formation did not appear, there is another hanging man that formed for last week so it’s a wait and see what will happen for the coming week whether the index would still move upward or whether another hanging man would appear. But as long as the hanging man formation appears, this means caution in trading.

APO (Chart: Daily Resistance: 2.45 Support: 2.15)

APO has broken above the upward channel with very large volume. The only problem is that the target price at 2.45 is already near the closing price last Friday. Also the stock is very much overbought, so a correction will happen anytime soon. It would be best to wait for the stock to correct first before buying. Buy near the support at 2.15

SLI (Chart: Daily Resistance: 2.35/2.50 Support: 2.00)

SLI’s unusually large volume last Friday caught my attention. Even if there is no formation broken, the large volume I believe is enough for the stock to move higher. This stock is good for a short term hold up to the previous high of 2.50. Things may start to move the other direction once it gets near the RSI of 70. Look out for a possible head and shoulder formation if the stock moves downward when it reaches near 2.35.

MER (Chart: Daily Resistance: 236 Support: 206)

MER had 2 long white candles formed Thurs and Fri last week. Volume is relatively larger than the volume during the downward movement so this is a candidate for buying. Observe the volume as the stock moves higher, if the volume is increasing together with the price this means momentum is intact, but if the volume is diminishing as the stock moves higher, upcoming resistance at 236 might prove a strong resistance.

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StockWacth (Oct 18-22, 2010): PSEi

PSEi – Weekly

PSEi (Chart: Daily Resistance: 4246 Support: 4146)

The index is now showing further signs of bearishness. Looking at the weekly chart, we are now seeing a hang-man candlestick formation which is a bearish indication. A hangman formation usually needs a confirmation on the next trading day/week, that if the open and close is lower than the hangman formation’s values, it would be a confirmation of a bearish event. However, even if we do not wait for that confirmation, it is very much evident in the chart that we are now in a bearish state with the MACD in the daily chart already lower than the MACD signal line. RSI also shows a negative divergence. So for next week, it would be best to sell for now and just recoup your positions later.

StockWatch (Oct 11-15, 2010): PSEi, GMA7, APC

PSEi – Weekly chart

PSEi (Chart: Daily Resistance: 4350 Support: 4222)

The index has been continuously moving upward with intermittent short downward movement. It looks as if this kind of action in the market may continue for 2weeks to another month before a major correction happens. The daily chart is showing negative divergence between the RSI and the index which could signal an upcoming downward movement. Looking at the weekly chart, the RSI shows an overbought level that supports the possibility of an upcoming correction. For the coming week, you could either stop accumulating for the mean time or start disposing a portion of your portfolio and buy back after the upcoming correction.

Note: A lot of stocks have reached or about to reach their previous high which means strong resistance is being encountered or will be encountered thus a possibility of sideways to downward movement.

GMA7 (Chart: Daily Resistance: 8.80 Support: 7.25)

GMA7 had a breakout from a downward channel with trading last Friday creating a gap and a tall white candle accompanied with large volume. It looks like this upward movement is a bounce from support near RSI of 50 coming from the RSI high. The MACD is also looking good with a possibility of a cross above the signal line. The only problem with this stock is that resistance is near at 8.80 (previous high).

APC (Chart: Daily Resistance: 0.95 /1.28 Support: 0.84)

APC also had a breakout from a sideways channel accompanied with a large volume and a gap. Target price is near 0.95. The MACD is also about to cross above the signal line, so there may be more to this stock beyond the target price.