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.

StockWatch (May 16-20, 2011): PSEi

PSEi Weekly

PSEi (Chart: Daily Resistance: 4340 Support:4180/4200/4050/4000)

The index bounced back from the low of RSI 50 and had a short 3 day run-up to retrace its previous support-turned-resistance line. The last 2 trading days shows us a not so good sign as the last 2 days had sell downs accompanied with larger value turnover relative to the first 3 days of trading. A negative/bearish divergence can also be seen between the RSI and the index, where the index rallied higher but failed to create a higher peak for the RSI. Expect that by next week, this bearishness would continue.

Looking at the daily chart, it looks like either a double top or a head-and-shoulder formation is starting to emerge from the picture. Either way, its neckline and support is around the level of 4180-4200. If the index moves lower than that support level, this might be a confirmation of the double top or head and shoulder formation, both of which has a target level of around 4050-4000.

Although the double top or head-and-shoulder formations on the daily chart are bearish formations, there is a possibility that this could be a blessing in disguise. Looking at weekly chart, we can see that an inverse head-and-shoulder formation is also starting to emerge. If the breakdown of the double-top/head-and-shoulder formation on the daily chart does materialize, this may contribute to the weekly chart forming the right shoulder of the inverse head-and-shoulder formation, giving higher possibility for the continuation of the upward trend since last year. The formation of the right shoulder on the weekly chart would take anywhere from 2-4 weeks to materialize so don’t bet yet on this happening immediately. For the coming weeks it would be best to keep liquid and watch for buying opportunities near support level of 4050-4000.

StockWatch (May 9-13, 2011): PSEi, CEB

PSEi (Chart: Daily Resistance: 4340 Support: 4170/4150)

Looks like the bears won on the standing sideways movement of the index. The sell down brought the index lower by around 100 points.

Although the sell down made a considerable effect on the index, there seems to be a light on this gloomy scenario. Trading last Friday saw the index creating a hammer formation. This means there was a considerable pull back effort made by the bulls preventing the index from slipping lower. Also considering the channel created during the sideways movement of the index, the sell down last week broke the support line of the channel but the target level of the break down was already reached last Friday. In addition to this, coming from an RSI of above 70, support is usually found when RSI reaches 50. All of these signs are pointing to a possible pull back by next week. The question of whether this pull back would be a continuation of the upward trend is still unknown, but at the very least, if you got stuck with your position, there is a chance for you to sell by next week.

CEB Chart: Daily Resistance: 94.50/100/105 Support: 89.10)

CEB had a bullish run last week creating large spread on the white candles accompanied by increasing volume. This is definitely a unique showcase of strength considering that the market in general was down most of the days last week.

As of current, the stock is exhibiting signs of a pennant formation and a break out that happened last Friday. This break out has a target price of around 105. However, there is a strong resistance at 100.

Watch out for signs of divergence as the stock goes up.