StockWatch (Mar 28 – Apr 01, 2011): PSEi, MPI, MER

PSEi ( Chart: Daily Resistance: 3920/3950 Support:3850/3700)

The index generally moved sideways last week with a slight upward movement showing a lot of indecisiveness as evidenced by the cross and short body of the candle stick. However trading last Friday was a little bit different from the previous trading days last week, as a considerable spread was made in the index accompanied with average value turnover.

For next week, expect the index to still continue with its sideways movement with a slight upward bias. Upcoming resistance is at 3920 which is also the level of the 65 day moving average. If trading by Monday is still accompanied by low value turnover, the resistance at 3920 would definitely pose a serious resistance to the upward movement of the index.

MPI (Chart: Daily Resistance: 3.35/3.40/3.45/3.60 Support: 3.11)

Trading for MPI last Friday saw a big spread in the body of the white candle accompanied by a large volume (56 million trades). This is definitely a reversal indicator for this stock.

Watch out for the following upcoming resistance areas; 3.35 which is the 260 day moving average; 3.45 which is the resistance established from Jan 2011; 3.60 which is the previous high and also the 130 day moving average.

With the large spread and large volume, this stock is definitely a buy, but it would only yield a small profit on the short term assuming the immediate resistance (3.35) holds its ground.

What we wanted to see is a follow through of the trading last Friday, with this stock moving higher in price, accompanied with increasing volume to confirm the upward momentum. If that materializes, we can expect the price to reach as high as 3.60 making a good amount of profit. However, if there is no follow through for this stock, where the stock moves higher with very low volume, OR, if sell down accompanied with large volume (20 million trades or greater) is observed when price reaches the resistance areas, then be prepared to sell your position.

MER (Chart: Daily Resistance: 250/260/270 Support: 240/230)

MER seems to have broken out of a sideways channel. Target price for this stock is near 260. This is a very enticing buy considering the large spread and volume, however, at the current price, there is little room for profit for this stock.

Also, the stock is already near overbought level on the RSI, so expect this stock to make a return move towards 240 and 230 towards the end of this week.

Upcoming resistance areas also pose a problem for this stock. The three very visible large red candles formed last Jan 2011 would definitely act as strong resistance areas for this stock.

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StockWatch (Mar 21-25, 2011): PSEi

PSEi (Chart: Daily Resistance: 3950/3920 Support: 3690/3720/3820)

The confirmation of the hammer formation and the bearish indicators happened with the index moving downward last week.

Trading last Friday saw a white candle with a relatively large value turnover; A sliver of hope that the current downward movement by the index is countered by the bullish actions last Friday. However, though this may bring a respite to the downward movement, there is still no certainty that this will evolve into succeeding bullish actions. When I was looking at individual stocks, I did not see any significant trading actions that would support further bullish movement. The trading actions of the different stocks were mixed and it is most likely that the index would move sideways for the coming week, trading between 3820 and 3950.

Even if this is not a bullish scenario that we would like to happen, the sideways movement is something most welcome, considering the current crisis brought about by the recent disaster in Japan and turmoil in the middleeast, which logically should have caused a larger dip in the market.

If the sideways movement does materialize, do observe if the index is able to create a new higher low. A new higher low means were on the first step to a possible recovery path.

StockWatch (Mar 14-18, 2011): PSEi, GEO

PSEi (Chart: Daily Resistance: 3980 Support: 3700)

The index continued its upward movement last week but stopped short of moving beyond the resistance line near 3970, which is also the 65 day MA line.

The upward movement was accompanied with large value turn over, but it was not able to sustain its upward movement and created a black candle last Friday.

Though the value turn over last Friday was relatively low, it is still a little bit worrying as the black candle formed is a hammer. A Hammer usually seen on the upward movement may mean a toppish situation. Hammer found on the top is a reversal sign; this however needs to be confirmed by further downward trading next week.

But even if we do not wait for confirmation of the hammer, there are some other indicators telling us of a bearish situation. First is the MACD, which has currently reached the center line or zero line. When an MACD coming from the negative starts to move upwards, the center line usually acts as a resistance and is not easily breached. Second is the RSI, which is also displaying bearish signal as it is near the 70 oversold level. Last is the stochastic momentum index (top chart), which has crossed below the moving average line.

With the recent disaster in Japan, this would definitely be a factor in next week’s trading activity and add to the bearish activity. Up until when would the downward movement continue is anybody’s guess? Next level of support is at 3700, hopefully that would hold.

GEO (Chart: Daily Resistance: 0.65 Support: 0.57/0.53)

GEO seems to have broken out of a falling wedge with a large spread and volume last Friday. However, GEO has a history of creating bull traps. Almost all of the previous white candle with large volume and spread always falls back to previous levels creating a bull trap. So for this recent bullish activity, exercise caution as this may be another bull trap, considering that the index maybe on its way down next week.

StockWatch (Mar 7-11, 2011): PSEi, FGEN, LR, LPZ

PSEi –Weekly Chart

PSEi (Chart: Daily Resistance: 3950/3980 Support: 3705/3605)

The index made good progress last week starting the trading week with a white candle accompanied with large value turnover. The confirmation of the bullish start of the week came only on Thursday as the index was able to move higher with large value turnover compared to last week.

Looking at the weekly chart we can also see bullish engulfing pattern, where the white candle created last week engulfs the black candle created the previous week. The bullish engulfing pattern was also accompanied by large value turnover. They are bullish signs of reversal, but a confirmation is still needed.

For the coming week, there is a certainty that the index would continue its upward movement. However there is an upcoming resistance near the area of 3950 and 3980; these are areas from the resistance line stretching from Feb 2010. The same resistance line has been tested last Feb 18 but was unsuccessful at moving beyond that line. If the index is able to move beyond that line with large value turnover, this might be a sign that we might have a fighting chance to break above the standing downward channel; the resistance line since the start of the bearish trend last Nov 2010. We are still not out of the woods yet even if that happens, because there is still another major resistance near 4400, but at least we are gaining positive movements.

FGEN (Chart: Daily Resistance: 12.20/12.50 Support: 11.60/11.20)

FGEN broke out of a falling wedge formation accompanied with very large volume last Wed. At the same time the recent run up also broke above the 65 day MA. The target price for the breakout is around 13-13.50.

There is an upcoming resistance at 12.20 which is the 130 day MA. For the coming week, there is a high possibility for the stock to move sideways for the mean time. It is possible that the stock would just move in a range between 65 day MA (red) and 130 day MA (orange). As long as the downward movement does not have large volume, it is safe to assume that the sideways movement is just a pause before the stock further moves upward.

LR (Chart: Daily Resistance: 8.80 Support: 7.00/6.60)

LR also broke out of a falling wedge with large volume last Thursday. The target price for the formation is at 9.00. Upcoming resistance is near 8.80 which is the previous high.

LPZ (Chart: Daily Resistance: 6.00/6.60 Support: 5.00/4.40)

LPZ broke out of a sideways channel last Friday, accompanied with large volume. Target price for the channel breakout is at 6.80. There is however an upcoming resistance near 6.00. It is possible that the stock may move in range between 5.60 and 6.00 as the RSI is very much overbought. As always, if the volume on the downward movement is larger than the upward movement, that may be an indication of a bull trap.