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.