StockWatch (Dec 19-23, 2011): PSEi, CEB, MEG

PSEi (Chart: Daily  Resistance: 4340/4390  Support: 4260/4200)

Looks like the index is making a very wide sideways movement as evidenced by the 6 trading weeks where the index is just moving within 4340 and 4200.  This is probably as expected because if the head and shoulder formation is to be taken into consideration, the right shoulder may be completed within the same amount of time. The left shoulder took about 5-6 months to form, so taking cues from there; the right shoulder might also span that long before it gets realized.  Currently, we are now into the 3rd month since the right shoulder bounced from the low last Sep 26, so we probably have another 2-3 months before the right shoulder gets realized. 

I would suggest to keenly observe the channel (parallel lines) between 4390 and 4200. A breach below 4200 line may indicate the start of the downward movement for the index and the realization of the head and shoulder formation.

For next week, the index would most probably continue to move sideways to upward, still within the range of the channel.

CEB (Chart: Daily  Resistance: 67  Support: 62 )

CEB’s chart looks very depressing as it has been on a downward trend since its IPO last 2010.   However, even though this stock is depressing, there is a sliver of light for this stock as last week as volume has spiked on the last three trading days. 

The increase in volume might be a sign of capitulation for this stock as those that have been holding on long for this stock may have given up and has started to sell their positions at a loss. Bargain hunters on the other hand, as evidenced by the volume, are very much welcoming the opportunity of buying this stock at a low price.

Looking at the Relative Strength Index (RSI, 3^rd chart from the bottom), the stock is now way oversold, even going below 20 level.  Usually an RSI of 30 means the stock is oversold, but in this stock’s case, this is way too oversold.  So for a stock that is way too oversold, the next possible move on this stock is a bounce from the low.    This stock would definitely provide you with some gains for the short term. 

You can buy at the current level of 63.15 and sell near 70 for a decent 9+% gain.

For those who wouldn’t mind going on long term hold for this stock, I believe that this stock is also good for the long term, as this stock has nowhere to go but up.

MEG(Chart: Daily      Resistance: 1.75   Support: 1.66/1.51/1.47)

MEG is one stock that you need to avoid for the mean time.   As of last week’s trading action, MEG has completely formed and broken a head-and-shoulders formation.  The downward target price for this area formation is near 1.47.  It can also be seen that the break down from the neckline was accompanied by large volume, so this means the break down is credible, not just an event created by a few sellers.

For next week, expect the stock price to move sideways to upward. This stock may retrace its previous price levels and may fall short of moving past the resistance at 1.75.  After which, it may  continue its downward movement.   If the retracing happens next week, this would be the best time to unload your positions for this stock.

StockWatch (Dec 05-09, 2011): PSEi, MPI, LC, LCB

PSEi (Chart: Daily      Resistance: 4340/4390            Support: 4200)

The support for 4200 held its ground last week and has prevented the index from crossing below that support level.  The lowest that the index dived is at around 4211, just a few points away from the previous low at 4207.  Bullishness went back to the index as it gapped up on trading last Thursday and continued on to Friday.

Looking at the value turnover on the lowest index level for last week, there was considerable increase in value turnover for the black candle formed last Tuesday.  This however was countered by an almost same value turnover on Thursday, the day when the index gapped up.  We can see here that bullish sentiment was able to reverse the effects of the trading last Tuesday and somehow was able to maintain its level.

The bullishness will definitely continue next week with an upward to sideways movement, but its strength is something that one should closely monitor as it approaches the previous highs at 4340 and 4390.  It is possible that the index is just moving in a wide sideways movement between 4200 and 4390.  Remember that there is still the possibility of the index forming a big head-and-shoulder formation (neck line at the low of Feb and Sep 2011) and the ranging movement may just be part of the bigger picture.

Another thing to look out for the coming days is the formation of a small head-and-shoulder area pattern.  Possible necklines have been established on Nov 3 and Nov 29.  The only thing missing from the area pattern is the right shoulder.  If resistance level at 4340 proves to be strong, then this might aid in fulfilling the area pattern.  The possible target level for this area pattern is near 4000 level.

MPI (Chart: Daily       Resistance: 3.60/3.75  Support: 3.41)

MPI has been moving upwards since October and what is remarkable about this stock is that volume on most of the days when white candle is created is exceptionally high.  Also comparing the volume prior to October, we can see that there is a lot of action in this stock from October onwards which means there is an established bullish sentiment for this stock.  The only area pattern that could be deduced from the chart is the upward channel, which confirms the bullishness of this stock. 

Last Friday’s trading once again triggered a bullish sentiment for this stock as it registered relatively high volume. So for next week, we may be in for the continuation of this bullishness if current support holds. 

Immediate resistance for this stock is near 3.60 which is the resistance line from the peak of July and peak of Nov.  If the stock surpasses that level, then next resistance will be near 3.75 which is the upper line of the channel or the resistance line of the current upward movement.

LC (Chart: Daily         Resistance: 1.82          Support: 1.35)

LCB (Chart: Daily      Resistance: 1.90          Support: 1.45)

Both LC and LCB have been in a bullish mode for the past weeks and as of last Friday, it has again registered high volume on the white candle.  There is no doubt about it that these stocks are on the run, but a possible resistance may put a stop to this bull run. And this possible party pooper is the previous high from Aug at 1.82 for LC and 1.92 for LCB.  Those resistance levels are definitely something that one would need to observe. 

One thing is for sure, whether or not the resistance levels prove to be strong, you should be on the lookout for signs of weakness like longer wicker for white candles and decreasing volume on the upward movement considering that both stocks are now way beyond over bought level. 

StockWatch (Nov 21 – 25, 2011): PSEi

PSEi (Chart: Daily   Resistance: 4390/4410/4560   Support: 4280/4200/4180)

The index had a short lived rally on the first 2 days of trading last week, but reversed on Wed and has been moving downwards since.   With the upward movement made by the index on the first 2 days of trading, this confirms a bearish divergence for the index, with the index moving higher and both RSI and Stochastics moving lower.

It is also evident on the chart that the index is no longer able to sustain upward movement as seen on the black candle stick formed on Wed, having a short real body and a long wicker.  This means there were bullish sentiments during the day, but were overcome by bearish sentiments.

Up until when this bearish sentiments would continue is still something to be observed.  As of current, a rising wedge can be seen on the chart and the recent bearish move could be interpreted as a break down from the area pattern.  The possible target level for this area pattern is near 4200.  This is the same level as the previous low last Nov 3.  

It is still a wait and see whether this recent bearish movements in the index would become a full blown bearish sentiment or if support at 4280/4200/4180 would prevent this bearish sentiment to continue.  As of current, the MACD seems to be siding on bearish sentiment, with the signal line just about to cross below the moving average line.

For next week, expect the index to move downward to sideways. Keep watch of the support at 4200, if index moves below that level, it would be prudent to sell for the moment.  Remember that there is still the possibility for the big head-and-shoulder formation to materialize and the index moving below that level would already be 1/3 of its way to accomplishing that area pattern. 

StockWatch (Nov 14 – 18, 2011): PSEi, GLO

PSEi (Chart: Daily Resistance: 4346 Support: 4260/4207)

The index moved sideways last week with the moving averages providing support for the index. It looks like we will be on a sideways movement again next week as several support areas are just near the current index level. Two moving averages are currently providing support, the 10 and 100 day moving average. Just a little bit below that, we can see the support line from Sep of this year at 4260. Then afterwards, there is another possible support line, which is the previous low at 4207 and just a little bit down below that level are the 50 and 200 day moving average. With a lot of support along the way down, it is highly possible we may see the index moving sideways between 4207 and 4346.

One of the things to look out for the coming weeks is the possibility of a bearish divergence happening. Currently the stochastics and the RSI are moving downwards, if the index makes a short rally upward and the indicators still continues to move downwards, we may be seeing a bearish divergence happening. But again, this is just a possibility that we need to closely monitor.

GLO (Chart: Daily Resistance: 965 Support: 890)

GLO seems to have formed a small inverse head-and-shoulder (see the small markings on the right side) area pattern. This is a bullish pattern and when this breaks out, we can project the price to reach near 1100. As of current, this stock may have already broken out of this pattern, with trading action last Friday creating a considerable spread with large volume.

When the target price is reached, we may be one step closer to a much larger opportunity for this stock. Zooming out of the chart, we can see that this stock has a double bottom formation, just waiting to breakout. The break out from the inverse head-and-shoulder would put the double bottom formation nearer the resistance or breakout line. But unfortunately, this is still to be seen and it may take maybe more than a month before this materializes.

StockWatch (Nov 8-11, 2011): PSEi

PSEi (Chart: Daily Resistance: 4345 Support: 4180/4055)

I honestly have been having a hard time determining where the index would likely go for the past weeks. All those times, I was expecting the index to move lower since the index has unceasingly rallied so high for the first 2 weeks of October, and it again unexpectedly continued rallying up until the end of October. However, last week, it looks like reality is catching up with the index, with all the resistances along the way (e.g. the moving averages, the previous highs and the resistance line of the current upward trend), the index seems to be unable to maintain anymore rallies, as evidenced by the big 2 day drop for last week.

For the coming week, expect the index to move sideways to downward. There may be support for the index at the current level as the moving averages are all converging between 4270 and 4160. If not, next support is near 4180, the support line for the current trend and next is near 4055, the resistance-turned-support line connecting the peaks from Aug to Sep.

Note that the big head-and-shoulder formation (with left shoulder from Sept 2010-Mar 2011, head from Mar-Sep 2011) is still a possibility, so keep your eyes peeled especially as the index nears 3715, the previous low from Sept.

StockWatch (Oct 24 – 28, 2011): PSEi

PSEi-Weekly Chart

PSEi (Chart: Daily Resistance: 4218 Support: 4003)

The index moved upward on the start of the trading day last week. It was a welcomed surprise, but unfortunately, value turnover on that day was relatively lower. For the remainder of the week, the index moved sideways, treading the line of resistance connecting the peaks from Aug.

Of the 3 scenarios that I was looking out for last week, I think scenario 3 would best fit what happened last week, where the current bullishness in the market is labeled as wave 3 count. The projected end point of wave 3 was supposedly near 4260 and that was just barely reached last Monday when it peaked at 4218. So if we consider this recent bullishness as wave 3, then wave 4 would bring our index down to near 4003, but not going any further below.

Looking at the weekly chart, as wave 4 materializes, we are getting closer to seeing a possible head and shoulder formation. But this is probably 1-2 months down the road before it peaks. This is something to observe as the formation progresses.

For next week, it is still recommended to stay on the sidelines. If one would try to ride wave 5, then you could probably look for opportunities when the index nears the 4003 level.

StockWatch (Oct 17-21, 2011): PSEi, MPI

PSEi (Chart: Daily Resistance: 4170 Support: 4003/3798/3715)

The index rallied last week, stopping just short of crossing above the 200 day moving average. I didn’t expect the index to rally beyond the 4050 projected peak of the 4th wave (green bar on the chart). I was more of expecting a sideways movement when it reaches that level. Instead the index pushed beyond 4050 and even beyond the previous low of 4129 (labeled F1).

The 4129 level is supposedly the 1st wave count, and based on rules for counting, wave 4 should not overlap wave 1. The recent market activity had invalidated our standing 5-wave count (labels F1-F4). So what does this translate to?

Scenario 1: Some Elliot wave practitioners point out that if the 4th and 1st wave overlap happens, then we would have to re-label our wave count, changing our previous wave 3 as wave A of the A-B-C pattern. This now makes our previous 4th wave, as wave B. This gives us a projection of near 3650 (61.8% of the length of wave A) as the nearest end point of our wave C. The next possible end point of wave C would be near 3350 (100% of the length of wave A).

Scenario 2: Some Elliott wave practitioner acknowledges the occurrence of a wave 4 and wave 1 overlap. They believe on a more lenient interpretation such that wave 4 is allowed to overlap no more than 10-15% of wave 1. With this consideration, wave 5 projections can go near 3600 (127% of wave 4) or 3450 (162% of wave 4).

Either way, both scenarios point to a possible downward trend and both point to nearly the same level.

Scenario 3: Now considering we start labeling F3 as wave 0, then we have wave 1 (labeled (1)) at 4003, then wave 2 (labeled (2)) at 3798. The projected wave 3 would be near 4260 and the projected wave 4 would be just above wave 1 near 4028. This wave counting also points to a downward movement as we near the peak of wave 3. Albeit, this would be a more positive outlook (on the short term) than scenario 1 and 2 for the reason that the projected downward movement is shorter and it also has the possibility of forming wave 5.

The stochastics alone also points to a possible downward movement for next week as well as the RSI reaching 50 level. Add to that the current 200 day moving average acting as resistance. So with all those consideration, we could expect the market to move lower by next week.

As one might be tempted to get in the market because of the rally last week, I would suggest to hold on to your cash for now until we have more indicators supporting last week’s rally. One of the things to observe for next week is the support near 4003. If the downward movement does not go below 4003, then this gives scenario 4 more credence for short term bullishness as wave 5 starts to form.

MPI (Chart: Daily Resistance: 3.14 Support: 2.78/2.56)

MPI caught my attention because of the large increase in volume for the past 2 weeks. There has been a lot of interest on this stock as shown by the unusually large volume on the upward movement.

However, as of current, this stock is now on its way down. Do observe this stock on its way down. As long as the volume on the downward movement does not increase, this stock may be a viable item to buy later.

There are several scenarios that could play into this stock. One scenario would be if the stock is able to hold its price above 2.78 (which is the 62% retracement), then there is a possibility that the 3rd wave could materialize which could bring this stock back up to near 3.72.

Otherwise, if the 62% retracement at 2.78 does not hold and the stock continues to move downward, the next support will be at 2.56, which is the previous low. If the support at that level holds, then we might be seeing a reversal pattern here, which is a double bottom.

As of current, I am a bit skeptical on the possibility of the 3rd wave to materialize as there is no reversal pattern that I could see that would support the 3rd wave to reach 3.72, way past above all the moving averages. What I think would more likely to happen is for this stock to move sideways, because it has been on a downward trend for almost a year now and possibly the sideways movement would start forming a reversal pattern.

Would this be a stock to buy? Possibly if the support at 2.78 holds and price starts to move upward again with large volume, otherwise I would wait for a reversal pattern to materialize.

StockWatch (Oct 10-14, 2011): PSEi

PSEi (Chart: Daily Resistance: 4050/4100  Support: 3860/3715/3630)

The index made a dip on the first half of the week and recovered on the second half.   From the looks of it, the index is moving sideways with large swings. If the resistance at 4050 still holds by next week, this may lead to the sideways ranging movement of the index.

The index seems to be bullish on the second half of last week, but it is still not recommended to get in the market, as we are unsure of the index’s trend for the past 2 weeks.  If the index rallies, I would suggest that you sell your positions rather than holding on to them.  There are a lot of other resistances along the way and you would be holding on to those stocks for a long time and also, when the 5^th wave materializes, you would incur more loss.

Observe as well the RSI reaching 50 level, as of current it is still possible that the index would encounter resistance when that level is reached.

StockWatch (Oct 03-07, 2011): PSEi, SMPH, FGEN, AGI, DIZ

PSEi (Chart: Daily Resistance: 4060/ 4130 Support: 3715/3630)

The downward target level of the head and shoulder formation and the projected length of the 3rd wave near 3700 were reached on the first trading day of last week, with the index going as low as 3715. And right after reaching the target level, the index did bounce back on the latter half of the week.

The 4th wave was projected to top on either of the following levels: 4050/3970/3870. But as of current index level, we have gone past the 2 projections; 28% and 34% of the length of wave 3, which leaves us with the remaining 4050 level (50% of wave 3 = 4059; thick green line on the chart) as the potential resistance to the current 4th wave.

However looking at the RSI, there is a possibility that the 4th wave would go beyond the projected resistance at 4050. Usually, when coming from an RSI of below 30, RSI 50 acts as resistance and from the current RSI the index still has some room to move before reaching RSI 50. The index can possibly move near the previous low, at around 4120 (4129 was the previous low on Aug 9).

For next week, expect the index to move upward on the first half of the week and on the second half, probably move sideways for some time before starting with the 5th wave.

For those who are still contemplating on selling their positions, one must act fast as the window of opportunity is becoming smaller as the index nears 4050 and 4120, before the 5th wave starts its downward movement.

If assuming the projected top of the 4th wave near 4050 holds, the projected 5th wave can go as low as any of the following projected target levels; 3620, 3350, 2920 (100, 162 and 262 percent of the length of wave 1 respectively; considering wave 3 a normal extended wave).

There are a couple of stocks that were unusually strong in a generally bearish condition, like SMPH, FGEN, AGI and DIZ. These stocks had the common characteristic of having larger volume on the upward movement, relatively larger than the volume on the downward movement during the creation of the 3rd wave on the index. Aside from the volume, I could not see any bullish area pattern that could be attributed to the strength of the upward movement.

The only thing I could deduce from those stocks is that traders seem to give high value to those stocks (this is very evident on SMPH and FGEN, but a little on DIZ and AGI) and are probably considered as bargain stocks at their current price level. I would not recommend buying them currently, but rather continue to observe those stocks as they may be the first few stocks to pull out from the current bearish cycle.

SMPH

FGEN

AGI

DIZ

StockWatch (Sep 26-30, 2011): PSEi

PSEi (Chart: Daily Resistance: 4050/3970/3870 Support: 3700)

The index had the biggest drop in a day since Oct of 2008. This floored my jaw as my hopes were shattered for the index maintaining a sideways movement.

The previous support near 4130 and the 130 and 260 day moving averages were also wiped out last week.

On hind sight, the drop is expected as the index has formed a head and shoulder formation whose neck near 4129 was broken last week. The target level for the head and shoulder formation is near 3700.

Counting the Elliott wave, we are now on the 3rd bearish wave and based on projected length of wave 3 which is 162% of the length of wave 1; this wave may reach up to the same level as the target level for the broken head and shoulder formation which is also 3700.

For the current index level at 3885, we still have way more space to drop to reach near 3700, so buckle up for further downward movement next week.

Observing the RSI, the index is now way oversold. The typical reaction to a very oversold equity is a bounce up once it goes below RSI 30. At current, RSI is now at 21, so we may also see a bounce up by next, but I don’t expect this bounce to be the 4th wave. This would probably be a short bounce with a little sideways movement.

Assuming the 3rd wave reaches the level near 3700, the 4th wave is projected to top anywhere between 3870, 3970 and 4050 (24%, 38%, 50% of the length of wave 3; Green bar on the graph).

In conclusion, we’re definitely on a bearish cycle now, so if you were stuck and wanted to get out, the 4th wave maybe the chance for you to move out of your positions. There is opportunity to profit riding the 4th wave, but for the risk averse, it would be best to continue sitting on the sidelines.

StockWatch (Sep 19-23, 2011): PSEi, NI

PSEi (Chart: Daily Resistance: 4360/4400 Support: 4260/4230)

The index’s situation slightly deteriorated last week. For the past 3 weeks the index has never gone below the standing support line of the sideways channel near 4290, but last week, the index breached that level forming a new low.

It looks like the channel might be redrawn/shifted lower, with the support near 4260 (130 day moving average) and resistance near 4360 (65 day moving average).

Trading strategy would still be the same, which is to play the possible range on certain stocks (for example DIZ) and not to hold your positions for long term.

Although the actions last week maybe a little bit discouraging, the index is still on a safe middle ground. I am just hoping that the index would be able to sustain the current sideways movement and not create a new low that is lower than the previous low of 4130 (Aug 9 low). If it does go below that level, then we may be seeing the start or confirmation of the bearish cycle.

NI- Weekly Chart

NI (Chart: Daily Resistance: 4.0/ 4.5 Support: 3.40)

NI showed a spectacular show of force Friday last week with the volume exceeding recorded volume since the start of this bullish trend for NI.

Looking at the weekly chart, we can see that the volume on the downward movement of the stock for the first 2 weeks of September is dwarfed by the volume of trades last week. This only means that the bullish sentiment for this stock is still preserved and may continue for this week.

I could not see any possible pattern to be the basis of a target price for this bullish activity, but basing on the Elliot wave pattern alone on the weekly chart, we may be on the 3rd wave. Usually the 3rd wave is the longest of all waves and measuring the length of the first wave as the minimum target price relative to the start of the 3rd wave, the 3rd wave could potentially reach at least up to 5.50.

Amidst the ranging movement of the index, this stock seems to go against general sentiment and is a viable candidate for going long. The MACD on both the weekly and daily chart seem to confirm the bullishness of this stock.

Again as with any stock, be on the lookout for dips on this stock that is accompanied by large volume (those that exceed 20M trades). If any such occurrences appear, then start unloading your position.

StockWatch (Sep 12-16, 2011): PSEi, DIZ

PSEi (Chart: Daily Resistance: 4400 Support: 4290/4250)

Just when I thought that the index is moving up beyond the current sideways channel, the index again fell within the small channel between 4400 and 4290. The recent activity only shows how volatile the market is.

As of current, the sideways channel between 4400 and 4290 still holds. There are a couple of stocks that you can play on this ranging market, but for the risk averse, it would be better to stay on the sidelines until the index is able to breach beyond the 4400 resistance line with high value turnover

DIZ (Chart: Daily Resistance: 14.40 Support: 9.80/8.40)

DIZ had a spectacular run up with large volume even going beyond the resistance line and reaching 14.40. With that kind of volume, this may definitely go way beyond the channel that it has created since July.

As of current, the stock is very much over bought. It would be prudent to lock in profits for now, probably sell ¾ of your position. This stock definitely has the potential to go beyond 14.40, but it would eventually fall back one of these days and I would rather recommend to sell now and buy later when the stock reaches near 11.50 (50% retracement).

Do not forget to observe the volume, any increase in volume on the downward movement would be a sign to cancel the idea of a buy back near 11.50.

StockWatch (Sep 5-9, 2011): PSEi, DIZ

PSEi (Chart: Daily Resistance: 4400 Support: 4350/4290)

The index is still treading the line plotted by the 65 day moving average and it seems that it has confirmed a sideways channel between 4400 and 4290.

If the index breaks out of that small sideways channel we could see the index moving back up to the previous high near 4550.

Considering the stochastics, RSI and MACD, all three are giving a higher credence to the possibility that we may be seeing some upward movement for next week.

However, I wouldn’t go long for now. I would rather go long only when the index is able to create a higher peak with no signs of bearish divergence. For now just trade the range.

DIZ (Chart: Daily Resistance: 11.76 Support: 8.10)

DIZ is an eye catcher for its long spread and large volume on the last trading day last week. There is an upward potential of up to P13 based on the resistance line connecting the previous peaks.

Buying at the current price 9.50 and selling near the previous high at 11 would already give you around 14% net profit.

This is definitely a buy but only for the short term.

StockWatch (Aug 29 – Sep 2): PSEi, ORE

PSEi (Chart: Daily Resistance: 4400 Support: 4300/4220/4180)

The index is still on a sideways movement, treading the line plotted by the 65 day moving average. Whatever gains made on Tuesday was taken down on the succeeding days of the week. So it’s still a power play between the bulls and the bears, with the bears slightly winning because the upward movement of the index was not sustained (i.e unable to create higher peak).

The only solace that we could find in the current condition is the fact that the index still hasn’t nose dived again like it did in the second week of August. So we might be seeing a slow decline in the index for the succeeding weeks, but at least it is not a sudden decline.

Again expect the index to move sideways ranging between the 65 day moving average (4340) and the 130 day moving average (4220).

ORE (Chart: Daily Resistance: 5.74 Support: 5.00/4.80/4.00)
If you are still riding ORE, now is the time to get out of the stock temporarily. ORE has had a good run up for the past 2 months. Even with the recent general decline in the market ORE has continued to move higher. But unfortunately the ride will come to a stop and it looks like this is it.

As seen in the chart, it is very evident with the RSI, MACD, and stochastics that the stock is now exhibiting bearish divergence with the stock moving higher, creating a higher peak, while all 3 indicators are creating lower peaks.

The next support for this stock in near 4.80, if support holds, then you could buy back a smaller portion just to take advantage of the possible bounce, but do not hold it for long.

StockWatch (Aug 22-26, 2011): PSEi

PSEi (Chart: Daily Resistance: 4440/4500 Support: 4340/4200)

The index made no progress for last week. It went flatly sideways with high instability. Progress made by the index on one day is taken back on the next day. The sideways movement of the index last week would definitely be an indication that the bounce from the market crash 2 weeks ago has reached the maximum height. There are no bullish indications on the chart that says otherwise.

For next week expect further sideways to downward movement. It is highly possible that the index would just range between the current high and the 130 day moving average.

StockWatch (Aug 15-19, 2011): PSEi

PSEi (Chart: Daily Resistance: 4330/4440/4650 Support: 4170/4080)

The index continued its downward movement creating a very large downward gap on the second day of trading.

The support that I was expecting near 4330 which is the 65 day moving average was not able to contain the strength of the bears which resulted into further downward movement towards the 130 day moving average near 4170. Luckily, support at the level of the 130 day moving average was able to hold the bearish action from further strengthening.

The succeeding trading days saw the index bounce from the 130 day moving average and even closing the gap that was formed on Tuesday. Question is whether this incident would usher the continued upward movement for the index? Well, I believe otherwise. Even though the gap was closed, that incident is not a veritable comeback of the bulls. It was just a natural reaction to the RSI level reaching the low of 30 level. If that was a real comeback for the bulls, then the last trading day would not have formed a short real body with a very long upper shadow; preventing the index to move above the 65 day moving average. The last trading day showed that bears still have influence over the index.

For the succeeding days expect a ranging action in the market. We will be seeing a battle between bulls and bears as the index move between the 65 day (red line) and 130 day(yellow line) moving averages.

StockWatch (Aug 8-12, 2011): PSEi

PSEi ( Chart: Daily Resistance: 4560 Support: 4400/4330)

The index had a short upward movement last week, but was probably capped by financial events occurring in foreign markets. After the short 1st day upward movement, the index went down and broke the standing rising wedge.

Downward target value for the rising wedge would be near 4260. However, the 65 day moving average is on the downward path of the index and this may provide support for the index. The strength of support at 4260 is still something to see, but I’m hoping that the index does not go below that level so that the upward movement of the index would remain intact.

Expect continued downward movement for next week. A bounce may occur probably towards the end of next week or once RSI level reaches near 40 level. Sell for now, or you could wait for the bounce to happen before completely unloading your stuck positions.

SotckWatch (Aug 1-5, 2011) PSEi, ISM

PSEi (Chart: Daily Resistance: 4515/4580 Support: 4450)

The index moved sideways last week and regaining losses on the last trading day.

As of current there is no significant area formation except for a possible rising wedge and this formation seems to be supported by the RSI and the MACD as of the moment. The RSI is near overbought level while the MACD has crossed below the signal line.

One good thing to point out though is that value turnover on the days when black candles are formed are significantly lesser than value turnover for days when a white candle is formed. This may mean that the bears still do not have the full strength to pull the index downward. But on the other hand, value turnover on the white candle days are noticeably lower than those from the previous 2 weeks which may indicate weakness in the upward movement.

For next week expect a short upward movement or sideways movement for the index. A resistance line is now established at 4580 ( connecting the previous peaks). There is lesser possibility for the index to breach that resistance line if the value turnover continues to be lower than what we had last week.

ISM (Chart: Daily Resistance: 5.19 Support: 4.50/4.00)

ISM went very bullish and created large spreads and gaps on the last 2 trading days for last week. On both days, the white candles were accompanied by very large volume.

This stock is definitely bullish, however, on the last trading day, the stock was not able to create a full body for the white candle, which means weakness on its upward movement.

For those going long on this stock, this definitely has the potential to go up to 8.00 level. But for those whose objective is short term, it would be best to sell for now and buy back probably near 4.00.

StockWatch (Jul 25-29, 2011): PSEi, GLO

PSEi(Chart: Daily Resistance: 4550/4580 Support: 4470/4330)

The run up for the index for the past trading days was capped off with a sell down on the last 2 trading days for this week.

The run up during the past 2 weeks gives us a good indication that the index is well on its way to create more new peaks. As long as the index is creating new higher lows as well, we can go long on our positions.

For the coming week, we may see downward to sideways movement for the index.

Watch out for support at 4330, as long as the index stays above that support level, we still have a good chance of continued upward movement.

GLO (Chart: Daily Resistance: 964/1035 Support: 907)
Looks like GLO has a new lease on life. Since being in a downward trend since 2007, GLO is now showing signs of resuscitated life. The run up that happened this week seems to be further confirmation of the bullishness on the last days of Mar 2011.

The breakout last Wed from the sideways channel has a target price of around 1000. However, the stock is now overbought so expect some dips to happen this coming week.

There are a couple of good signs that affirms that this stock may be on its way to recovery. One of the sign is the 65 day Moving Average, now seen on top of the other two moving averages. The 130 day Moving Average, though not yet in its bullish position, is getting there and is about to cross above the 260 day moving average. Aside from the moving averages, the MACD is now opening upwards. So the possible dip that could happen this week may be a perfect time to get in the stock for those who are willing to take long positions on GLO.

StockWatch (Jul 11-15, 2011): PSEi, PCOR

PSEi (Chart: Daily Resistance: 4460/4520 Support: 4340/4410)

The index had a bullish follow through this week confirming the bullish actions the other week. Aside from the significant follow through, the index was also able to break above the previous high for last year and create a new all time high for the index.

However, the bears are still able to throw their weight on the index considering the large downward spread created on Wed and Thurs last week. Also the current bullishness is still not that widespread to most of the stocks.

This might be the start of the bullish phase of the index coming from a recent sideways movement, but with the still considerable influence of the bears, we’re probably in for an upward crawl or a ranging upward movement for the market.

One could get in the market now and pick stocks to position themselves during the dips. Do observe the support line, you can hold on to your positions as long as the index is creating higher lows

PCOR (Chart: Daily Resistance: 17.20/17.30 Support: 14.94/13.40)

PCOR has been exhibiting bullishness for the past two weeks. On both instances a white candle with large spread was created and was accompanied by large volume as well.

There is a horizontal channel formation with resistance near 17.20. Also with the past 2 weeks, a flag/pennant formation can be seen. The second flag formation is still ongoing, but if this pushes through to breakout, it can reach as high as 18.00.

What would be interesting to observe is that if the second flag formation is realized, the formation would create a large spread for the white candle and if accompanied with large volume, the pole part of the flag formation would also break the current resistance line for the horizontal channel giving the possibility for the stock to reach as high as 21.00, which is the target price for the horizontal channel. It’s like 2 birds hit with one pole. Otherwise, if the second flag formation does not materialize, then it’s just an ordinary ranging action between 13.40 to 17.20.

If you can buy at last week’s closing price of 16.24, there is still money to be made (around 4%) before the price reaches the resistance line, but again that price is very near the resistance line and the stock is very much overbought, so there is a higher possibility for sell down to happen anytime.

For the risk averse, I would suggest buying only when the stock breaks out of the channel. If the resistance proves to be strong, this means we might see continued ranging movement of the stock within the channel.

StockWatch (Jul 04-06, 2011): PSEi, APO

PSEi (Chart: Daily Resistance: 4351/4413 Support: 4250)

The index moved sideways for the week, but made a remarkable comeback on the last trading day. The index was able to move beyond the standing resistance level of around 4340 and at the same time create a new high for the year.

The MACD is now above the signal line and above the center line as well. RSI is not that much oversold and still has room for a little bit more upward movement before it reaches overbought area. Value turnover for the 2 succeeding white candle days were significant enough.

All things are on the bright side, and this could be the start of a continued upward movement for the market. However, I would still err on the side of caution and wait for the follow through of bullish sentiments, if indeed this is the start of the upward movement. For all we know this might just be a continued sideways movement with a wider sideways channel, similar to what happened on the bearish actions two weeks ago, where the bearish action broke the support line and 65 day Moving average but was not sustained.

For next week, I suggest treating the recent breaking of resistance line as part of wider ranging movement of the index. This means keeping your stock positions small (i.e. maintaining a larger cash position) and sell when a resistance level is reached or when RSI reaches 70.

APO (Chart: Daily Resistance: 2.90 Support: 2.30)

APO recently had a very unusual volume last June 24 which created a gap up and a long white candle. The first trading day last week could have well been the start of the stock retracing the gap, but remarkably, it only dipped for 2 days and has since recovered the loss. What is remarkable is that the volume during the recovery period, though decreasing, is still relatively large; large enough to almost cover for the volume on the black candle day.

Looking at the chart from Oct 2010 up to the present, it seems that a rounding bottom was formed and at the same time broken last June 24. Target price for this formation is around 3.50.

Zooming out further, the chart, looking from June of 2007, seems to also have formed a rather big-wide rounding bottom with a resistance of 2.90. If the stock continues to move upward for next week, the big-wide rounding bottom would also be broken. The target price for this formation is around 5.00. You could also interpret the big-wide rounding bottom as either a wide channel or a wide inverse head-and-shoulder formation, either way, all formations have the same target price.

If your investment objective is for the long term, this stock is for you.

StockWatch (Jun 27- Jul 1, 2011): PSEi, CEB

PSEi (Chart: Daily Resistance: 4290/4340 Support: 4217/4130)

The index moved higher for the trading last week and it was able to recoup more than half of the downward movement for the past 2 weeks. It was quite strong considering that we only had 4 days of trading last week.

This recent action was the least that I was expecting. I was expecting either a continuation of the sideways movement or downward movement considering that the index has breached the support line of the channel or neckline of the triple top formation, but looks like the 65 day Moving average is providing strong support for the index preventing it from moving further downward.

As of current the index is just below a resistance line (connecting the troughs from Feb 9-Mar 25, 2010 with the peaks of Feb 18 & Mar 10, 2011). The next resistance after that is the standing resistance line for the triple top which is around 4340.

I’m not so sure how the index would move next week, but in a general sense, we are still on a sideways movement, trading between 4340 and 4130, a much wider channel than before.

The current state of the index could either spur an ascending triangle, an inverse head-and-shoulder, or just a simple sideways channel. So it’s anybody’s guess, which means, with either of the possible formations, we could still be in for longer sideways movement.

For the coming week, range trading is recommended since we might be in for longer sideways movement, but definitely keep your positions at the minimum.

CEB (Chart: Daily Resistance: 96.55/ 100 Support: 82.80/90)

Looks like there is a window of opportunity for CEB, as of last Friday’s trading, the stock may have formed and broken out of a flag formation.

Measuring the height of the pole ( run up from June 15-17), the probable target price for this break out formation is near 100.

The stock could still go beyond 100 if we would consider the small inverse head-and-shoulder formation that may also breakout, in line with the breakout of flag formation.

In a general outlook, this stock seems to be promising even for the long term as we can see that it is now able to create higher lows, considering the successive downward movement that it made from the start of its IPO trading up to Feb 2011. We might be seeing the formation of the 3rd count of the Elliot wave.

StockWatch (Jun 20-24, 2011): PSEi

PSEi (Chart: Daily Resistance: 4200/4340 Support: 4080/3950)

The index has now breached the support line from April 2011 as well as the 65 day Moving Average. The index is currently retesting the support-turned-resistance line and based from the candle sticks formed, the bears are winning the battle. Specially last Friday, the bulls tried to move the index higher, but were unable to do so and the bears event went further with their victory, reclaiming the advances made by the white candle last Wed.

The breaking of the channel has a downward target level of around 4000. But prior to reaching that level, there is support at 4080 level which is the 130 day moving average.

MACD on the daily chart is now below the center line and MACD on the weekly chart has now touched the signal line and is about to cross below.

If the bearish sentiment starts to steam roll the bulls, then keep your eyes peeled for the 3700 level, this is the neck line of a possible double top formation.

I would suggest making use of the short rallies to get rid of your stocks and still keep liquid for the time being.

StockWatch (Jun 13-17, 2010): PSEi

PSEi –Weekly

PSEi (Chart: Daily Resistance: 4340 Support: 4180)

As of trading last week, we are still on sideways movement trading between the range of 4180 and 4340. There are more negative technical instances than positive ones, so it would still be best to keep liquid if you do not plan on trading the range.

First negative thing that can be seen on the chart is a possible triple top formation. Support line for this triple top is the 4180 level. If the index goes below that support line, possible downward target level would be around 4000.

Second negative thing that can be seen on the chart is the MACD on the daily chart which is about to cross below the center line. While on the weekly chart, we can also see the MACD about to cross below the signal line.
Third negative thing that can be seen on the stock, particularly visible on the weekly chart is the possibility of the 5th wave in the Elliot wave count as well as the inability of the index to create higher high.

For the positive, first, we are still above the support line of 4180 and the 65 day moving average is about to converge with that support level. This could provide strong support for the index cancelling out the triple top formation that is looming.

Second, the stochastics on the daily chart would most likely start to move upwards again, this could materialize if the first positive mentioned above happens.

While it is most likely that for next week we could expect a rally towards the resistance line, this is just a positive action on the index for the short term. The first and second positive items I have mentioned above will just cancel out the first negative item, but this still leaves us with a negative signal for the MACD on both daily and weekly charts and the 5th Elliot wave. The odds are stacked in favor of the bears, so exercise caution on your range trades.

StockWatch (Jun 06-10, 2011): PSEi

PSEi (Chart: Daily Resistance: 4340 Support: 4180)

The index generally moved sideways with an upward bias last week, and as of last Friday, the upward movement stopped short of moving beyond the resistance line.

There is still no significant signal that can be seen from the index that would suggest that it would be able to break above the resistance line. As of current, there is higher possibility for the index to move sideways again with a downward bias by next week as it nears the resistance line. Expect further range trading next week between 4180 and 4340. I would still suggest keeping liquid for the moment until probably the index is able to move above the resistance line.

StockWatch (May 30-Jun 03, 2011): PSEi

PSEi (Chart: Daily Resistance: 4340 Support: 4170)

The index continued to move downward at the start of last week, but was able to recoup losses on the last 2 trading days.

A question of whether this is already the continuation of the upward trend is still unanswered until it is able to break above previous high of 4340. As of current the pattern we are seeing now is a sideways movement trading between 4170 and 4340.

Most of the positive stocks last week were the index stocks and in general most of the other stocks did not react well to the 2 day index run. So for next week, keeping liquid is still best, but for those who would like to take advantage of the ranging action, it would be best to play only a small portion of your portfolio.

StockWatch (May 23-27, 2011):PSEi

PSEi (Chart: Daily Resistance: 4340 Support: 4260/4220)

The index just moved sideways last week, but the movement is marred with a lot of sell down action.

As I mentioned last week there is a potential for the index to form a double top or a head-and-shoulder formation. What I forgot to consider is that there is also a potential for the index to form a bullish ascending triangle. However, we are still to see higher lows to be formed for the ascending triangle. If the index continued to move lower towards 4200, this would somehow eliminate the possibility of the ascending triangle, giving more possibility for the double top or head-and-shoulder formation.

There is still no indication from either the stochastic or MACD that any bullish action is imminent, so continue to be liquid until we are able to see positive improvements on the index.