StockWatch (Dec 17-21, 2012): PSEi, PX

 PSEi (Chart: Daily    Resistance: 5866   Support: 5650/5511)

Looks like the index has now reached its highest level for the year when it started to fall last week.   The downward action of the index was expected because the market has long been overbought since the last week of November.

The index crossed lower than the 10 day Moving Average, the next support would be near 5650 which is an extension of the previous support since last Sept and then the next support level is at 5511 which is the 50 day Moving Average.

Expect a long sideways movement for the index on January once it finds support because it is unlikely that the index will continue with its recent bullish action, given that the MACD, RSI and Stochastics are all going or opening down.

PX (Chart: Daily   Resistance: 15.30    Support: 14.50/12.50)

Since the mine tailings disaster that PX got involved in, the stock was something to avoid.   But with the recent market activity for this stock,  it seems that there a new lease on this stock’s chances of making some big money.

Recent market activity showed a possible inverse head and shoulder formation. The left shoulder and head is already formed, and with the brewing downward action of the market, it might help with the right shoulder formation. But breakout might not happen until after 2 months, as the left shoulder and head took about 2 months each to be formed.

This is definitely something to watch out for, not just for the possible area formation, but also because of the recent spike in volume since the start of December.

If the inverse head and shoulder materializes, the possible upside target would be somewhere near 18.00.

StockWatch (Dec 3-7, 2012): PSEi

PSEi (Chart: Daily     Resistance: 5650/5700     Support: 5540)

The index made a new all time high last week, however, it has now reached RSI of 75 and may start pulling down by this week.

I would suggest put a hold on the buying activity.  If index pulls down and the support provided by the 10 day MA near 5540 is breached, you need to start considering selling portions of your portfolio.

StockWatch (Nov 26-30, 2012): PSEi, JGS, GLO

 PSEi (Chart:  Daily Resistance: 5580   Support: 5480)

The index broke out from the ascending triangle earlier than expected.  I was still expecting it to consolidate for another week before breaking out.  But trading sentiment seems to be positive, probably due to the yearly window dressing by fund managers and buy backs by the companies.

Fundamentally the companies are still the same and company profit is not the main reason why the stock market index is breaking new highs.   While there is an advantage of profiting from the new bullish state of the market, do not however expect that this will last long.  Usually, by Jan or Feb, the stock market goes down again after the window dressing period is over.

When the RSI reaches 70, expect a pull back to happen with the index anytime by first week of December.

JGS (Chart: Daily   Resistance: 38.50    Support: 35.25)

Last week JGS had a sudden increase in volume and price creating a possible flag/pennant area pattern.

As long as the stock does not go below the 10 day moving average or around 36 price level, this stock is a good candidate to acquire considering the possible pennant or flag area pattern, which could take the stock near 45 giving a possible 10% return in a short span of time.

 GLO (Chart:  Daily    Resistance:  1150    Support: 1121)

There seems to be something brewing with GLO.   The stock has been consolidating for the past 5-6 months and it looks like in 2- 3 weeks time, something will happen to this stock.   Although I am not sure what will happen as it could either be positive of negative considering the symmetrical triangle the stock has been manifesting in its consolidation.
If a break out happens, we can see this stock moving towards 1400 level, otherwise, this could go as low as 900.

StockWatch (Nov 19-23, 2012): PSEi, CEB, ABS, ABSP

 PSEi (Chart: Daily  Resistance: 5490 Support: 5412)

Two weeks ago, an ascending triangle formation was seen from the index’s chart; however, it was still unsure whether it was an ascending triangle or just a sideways channel.    But as of trading action last week, we can somehow say that the ascending triangle formation is now more credible as the index stopped near the support line of the ascending triangle and rallied back on the last trading day.

I suggest keeping an eye on the ascending triangle formation, the breakout of the ascending triangle should happen in 2-3 weeks time.

 CEB (Chart: Daily Resistance: 62.26/67.50   Support: 59)

As I have previously posted, CEB is one stock that is good to accumulate for the long hold or for the cost averaging strategy.

CEB has been moving slow but steadily since October and the stock now seems to be forming a rounding bottom formation,  with resistance near 67.50. The target price for the rounding bottom formation is somewhere near 85.

It is still a long while before this stock breaks out, but I believe this is worth waiting for specially if you have been steadily accumulating this stock.

 ABS  (Chart: Daily)

ABSP (Chart: Daily  Resistance: 35.60/50   Support: 30)

ABS and ABSP  is rallying from its low of the year and there seems to be an active trading action with these stocks as it can be clearly seen that volume has accumulated since Aug.  

It might be that the current value of the stock deems it cheap for the actual worth of the company which is why trading volume has increased.  

But whatever reason it may be, the recent activity in these stocks show a possible breakout from a symmetrical triangle.  For ABSP it has a target price of near 45 while for ABS the target price is near 42.    However, there are lots of hurdles along the way for both stocks as traders who lost during its decline from May to Aug maybe selling while the stock moves back to their average price.

StockWatch (Nov 12-16, 2012): PSEi, FPH

 PSEi (Chart: Daily Resistance: 5490 Support: 5410)

The index almost created a new high last week, unfortunately it was not supported much that it fell and closed lower.

The current area pattern being formed by the index hints on a possible ascending triangle. The resistance level of the ascending triangle is at the previous high of 5484.   However, anything can still happen and the current ascending triangle seen on the chart may turn out to be a sideways channel after all.

FPH (Chart: Daily Resistance:  94.50 Support: 80.20)

FPH had a rally for the last 2 weeks and it now looks like the upward momentum will decrease a bit as the stock is very much overbought, with RSI reaching 90.  The stock may also have been affected by a resistance line near 93; the resistance line was the previous high since 2007.   So for next week expect a sell down of the stock.

StockWatch (Nov 5-9, 2012): PSEi

PSEi ( Chart: Daily  Resistance: 5445/5460    Support: 5400/5353)

From the upward channel formed two weeks ago, the index has now broken the standing upward channel and has begun to move sideways.   The sideways movement seems to be forming a symmetrical triangle or, if the current resistance at 5445 is broken and the next resistance at 5460 holds, then it would be a horizontal channel.

So for next week, range trading strategy is still recommended.  Do watch out if the symmetrical triangle holds or if it materializes in to a horizontal channel and adjust your range/stops accordingly.

StockWatch (Oct 15-19, 2012): PSEi, PCOR

 PSEi (Chart: Daily Resistance: 5480/5510     Support: 5350)

Looks like upward channel is further confirmed with last week’s trading action when the index went back inside the existing channel and found support near the support line of the channel.

With the white candle appearing on the last trading day, it is highly probable that the index would bounce from the support line and try to reach the resistance line of the channel near 5510.   The stochastic momentum index seems to support this idea as it positions itself for a cross above its %D moving average or the slow stochastic.  The RSI also supports this idea as it now starts to move upward again.

With the channel further confirmed, a range trading strategy is recommended.

 PCOR Weekly Chart

PCOR (Chart: Daily   Resistance: 11.10 Support: 10.80/10.48)

PCOR is one stock that seems to be turning around and is slowly starting a positive upward trend.

Looking at the weekly chart, the past two weeks were witnesses to the sudden increase in trading volume for this stock, the latest positive trading action since the start of the year.  The weekly MACD is also hinting on the possible positive upward movement for this stock as it nears the center line.

However, on the daily chart, the indicators are starting to point to a negative event as  all indicators are now moving downward.

So to sum up,  the general view for this stock is positive as shown by the weekly chart, but the daily chart, as of the moment is negative.  So for those whose objective is long term hold for this stock, the possible negative/downward movement next week would be good for entering this stock.   For those looking for a short term hold for this stock, you might need to sell for now and buy back near the support line at 10.48.

StockWatch (Oct 8-12, 2012): PSEi, GMA7

 PSEi (Chart: Daily Resistance: 5480   Support: 5350)

The index reached a new all time high last week, and none of the negative divergences were seen in the different indicators.  This is a good sign for the index, however, there is only one stumbling block to the index’s ascent, and that is the existing resistance line connecting the lows of June and July 2012.

The index was able to move above that resistance line last week, but it was unable to maintain its foothold and closed below the resistance line.

The standing upward channel formation still holds and it might be that the index would be moving within that channel, between 5480 and 5350.

Except for the RSI, which is now on overbought level, all the other indicators does not show any negative sign for the index.  So I guess this might be the start of the index’s bullish movement, all that is left blocking is the resistance line.

GMA7 (Chart: Daily Resistance: 9.30/8.99 Support: 8.20/8.00)

The chart clearly shows the effects of the news release of the failed talks regarding the sale GMA.  

Technically, the stock broke down from a downward channel and its target price has been reached last Thursday.  This stock is definitely something to avoid, but for the fast draw traders out there, this is an opportunity to take advantage of the possible bounce that could happen for this stock, considering that the RSI is now at 13, far way below the oversold level of 30.

We could see the stock retracing back to near 8.99 before being stopped by the resistance line of the channel where it broke down from.

StockWatch (Oct 01-05, 2012): PSEi

PSEi (Chart: Daily  Resistance: 5400/5420 Support: 5310)

The index is currently being supported by the 10 day MA, preventing it from moving further down.

What seems to be forming now is an upward channel instead of a rising wedge because of the sideways movement that the index generated last week.

We see that the index is now just a few points away from reaching the index’s all time high near 5403 and this would definitely be a serious resistance for the index.

Right now the R-squared (blue line) is starting to dip, which means the index is losing strength, but the Stochastic Momentum index, RSI and MACD are all climbing up, so be on the lookout for a possible divergence, where the index moves higher than the  recent high, but other indicators are unable to do the same.

StockWatch (Sep 24-28, 2012): PSEi

PSEi (Chart: Daily      Resistance: 5370   Support: 5400)

The existing resistance line proved to be a strong hindrance to the upward movement of the index.  The index was only able to go as high as 5367 before buckling down to close at 5350.  

The bears have shown their strength through the resistance line, it is now a wait and see if the bulls will also be able to show their strength if the index is supported from falling further by either the 10 or 50 day MA.   If the bulls are able to do so, then we may be seeing our index trade in an upward biased trading range between the resistance line and 10 day MA.

If the bulls and bears battle it out, then we may have a possible upward channel or worst case a rising wedge, which is a bearish formation.

For now I would suggest to hold off any plans of buying until probably the index is able to move above the resistance line and the MACD is able to hold its position above the zero line.

It is not yet time to unload, but if the rising wedge does materialize, then start thinking of unloading on the way up.

StockWatch (Sep 17-21, 2012): PSEi

PSEi (Chart: Daily      Resistance: 5360         Support: 5230)

The index was able to gain some positive movement on the last trading day last week, but stopped short just below the support-turned-resistance line.

All indicators are confirming the recent positive movement.  We now only have the support-turned-resistance line to conquer and it is a wait and see moment if the index has the strength to sustain the recent upward movement and cross above that resistance line.

If the index is able to move above the resistance line, this can be a signal to get in the market once again.

Do watch out for the RSI, as it nears the overbought level.  If the index has the strength, RSI @70 would not even matter, but if otherwise, that RSI level can be a resistance for the index.

StockWatch (Sep 10-14, 2012): PSEi

PSEi (Chart: Daily      Resistance: 5230/5320            Support: 5170/5110)

It has been three weeks now and the index is still moving sideways.  The general sentiment of the market, expressed by the chart is one of indecision.

Looking at the R-squared and Line regression slope, we could see the green line(linear regression slope) just a few ticks away from its centerline (green horizontal line), which means we may have a positive trend, albeit for the short term, but the blue line (r-squared) is now near its lowest.  So we might be having a positive movement for the index, but something that might not be sustainable.

The MACD seems to be confirming the positive movement as it is about to cross above its signal line.  But the small opening or distance of the MACD to the signal line seems to also confirm that the cross over might not have the strength to sustain its position.

Do watch out for the following resistance line on its way up: 5230- 50 day MA and 5320 the support-turned-resistance line connecting the troughs of June to July.

StockWatch (Sep 3-7, 2012): PSEi

PSEi (Chart: Daily      Resistance:5230/5280             Support: 5110/4880)

The index broke down from the symmetrical triangle 2 weeks ago, and its downward target level is near 4880 which is also the line of the 200 day moving average.  

So the question is, will the index plunge down to the 280 day moving average? 

Currently, thanks to the 100 day moving average, the index is still hanging on that line. We could see that even if the index moves lower than the 100 day moving average, it still manages to close near the 100 day MA.  So there are still a relatively stronger force in the market that is preventing the index from further breaking down.

Where the market will head to on the short term is something that could not be ascertained, as we have been moving sideways on the short term for the past 2 weeks. 

On the long term outlook, we have a strong downward trend given that the index broke down not just from the symmetrical triangle, but the 10 and 50 day moving average.  If the index breaks above the 10 day moving average (or the 50 day MA), this is not yet a sign of resumption of the upward movement because we still have the previous support turned resistance line blocking the index’s way.

On the top of the chart, you could see a blue and green line. The blue line represents the R-squared and the green line represents the linear regression slope.   The green line shows the trend, a positive (above zero green line) or negative trend (below zero). The blue line shows the strength of the current trend. 

The green line confirms that we are on a downward trend. The blue line tells the strength of the downward trend, and right now, it confirms that the downward trend is strong, which re-affirms the break down from the symmetrical triangle, 10 and 50 day MA. 

What is interesting though is that the green line seems to be arching its way upward, which means we are having some positive trend, the big BUT is that the blue line seems to be moving downward.  Putting those two lines together means, we may be having some positive upward movement, BUT, the movement might not be that strong. 

Do watch out for a bounce and retracing of the index back to the resistance line near 5230.   If the index is unable to move above the resistance line, it confirms what the green and blue line seems to be indicating.

StockWatch (Aug 13-17, 2012): PSEi

PSEi (Chart: Daily  Resistance: 5330  Support: 5210)

For the past 2 weeks the index has been moving sideways, mostly flat. Connecting the peaks and lows for June and July, it seems that the index may be in a symmetrical triangle formation. 

As of the moment, we may be seeing further downward movement from the index as the stochastic momentum index line is now below the moving average.   MACD also seems to be at a point where it is about to move below its moving average line.

Do watch out if the index moves below 5210, which is near the support line connecting the lowest level in June and July.  A move below the support line would indicate the symmetrical triangle breaking downward. 

StockWatch (Aug 5-9, 2012): PX

PX (Chart: Daily   Resistance: 23.10   Support: 19.86)

Even before the tailings leak that happened last week for Philex, this stock is already on its way down after breaking down from a symmetrical triangle.   The recent news only sealed the fate of this stock as volume increased selling the stock down.

With the symmetrical triangle, the downward target price for this stock is near 18.   Expect another dead cat bounce by next week as the stock is already below the RSI oversold level.

StockWatch (Jul 23-27, 2012): PSEi

PSEi (Chart: Daily      Resistance: 5252         Support: 5180/5070)

It seems that the recent 3 week bullish activity that propelled the index to new highs was unable to sustain its upward momentum and right now with the past 2 weeks of downward movement, the gains made on that 3 week bullishness is now 50% gone.

The index is now below the 10 day moving average, which previously stood as a support line and is now a resistance for the index.   As long as the index is below the 10 day moving average, I would like to suggest avoid buying and just maintain your position or lessen it.  

Do watch out for the 50 and 100 day moving average that is just a few points away from the current index level. If the index moves below that 2 moving average lines, be prepared for a long wait before the index is able to create a new high.

StockWatch (Jul 09-13, 2012): PSEi, PX

 PSEi (Chart: Daily      Resistance: 5400         Support: 5287)

Last week, the index proved me wrong on all possible area patterns that I saw and instead pushed further upward creating a new high.  I am a little bit skeptic on the bullishness that the index is displaying now.   After large drops on previous weeks of trading, I was surprised to see the index creating a new record high and even gapping up on the start of last week’s trading.  I was expecting the index to meet strong resistance on approaching the previous high, especially because of the drop that happened on the second week of May.  But I guess a lot of traders are bullish on the market right now, hence the previous high being easily overtaken.

For next week, do observe the market, we can see that the RSI is now near overbought level with three weeks of upward movement for the index, it is possible that it would succumb to the resistance brought about by the RSI  near level 70.

Support is near 5287 which is the 10 day moving average for the index. For the past 3 weeks, the 10 day moving average has been providing support, so if the index moves below that, do sell a portion for the mean time.

PX (Chart: Daily         Resistance: 24.90        Support: 23.20)

PX is exhibiting characteristics of a symmetrical triangle.  This is supported by the diminishing volume as the triangle nears completion.   Right now, this stock is almost near 1/3 away from the formation of the triangle’s apex, so watch out for either a break out or break down of this stock in the coming weeks.

Upward target price for this stock is near P30, while downward target price is near P18.

StockWatch (Jul 01-06, 2012): PSEi

PSEi (Chart: Daily      Resistance: 5330         Support: 5180/4860)

Just as we are getting the hang of the ranging movement of the index, the index made an unexpected move last week, where instead of following the ranging movement that it has been doing, it broke above the channel area pattern.

As of Thursday and Friday last week, the index has created a new resistance level, almost reaching the previous high created last May.

So what is the index now up to?  Couples of area patterns are fitting the current conditions of the index. The very evident is a possible big and wide ranging movement.   Second that I could see is a possible cup and handle formation, a bullish continuation pattern, considering the previous trend is upward. The third is a possible double top formation if the index is unable to go beyond the previous high.

All of the possible area patterns that can be matched for the index’s current situation have something in common, that is, its next movement would be a downward movement. So expect further downward movement next week.  Succeeding downward movement will eliminate one by one the 3 patterns that matched the current conditions. 

StockWatch (Jun 25-29, 2012): PSEi, MEG

 PSEi (Chart: Daily      Resistance: 5156         Support: 4964)

Events from last week’s trading was positive, with the index regaining its loses from the previous week. 

We can now see a possible slight upward shift in the sideways movement of the index as it was able to create a new high since the major downward trend that happened last May.  Albeit slightly upward, this is still a sideways movement for the index ranging between approximately 5156 and 4964.

There are no negative divergences that can be seen from the chart; both MACD and RSI are in-synch with the movement of the index.

The index has now established a pattern, that of a sideways movement, and it is currently following resistances and support areas.  So for the coming weeks, range trading strategy is recommended.

MEG (Chart: Daily     Resistance: 2.26          Support: 1.90)

MEG caught my attention because of a very noticeable volume and price pattern.  The ongoing trading action for MEG seems to be forming a cup and handle formation, with volume increasing as the right side of the cup is being formed.  

With the inability of the stock to support further upward movement last Friday, this may signal the start of the handle formation.

Generally a cup and handle formation is a bullish continuation pattern. Considering the recent upward trading activity in MEG since the start of the year, we may be seeing the return of MEG towards the previous high created last Nov 2010.   However, there are still a lot of resistance levels that it needs to overcome, but nonetheless, MEG is slowly knocking out one level at a time.

If the cup and handle formation does materialize, it has a potential upward target price of 2.55, slightly just above another resistance level at 2.48.

StockWatch (Jun 18-22, 2012) PSEi

 PSEi  Weekly Chart

PSEi (Chart: Daily      Resistance: 5109         Support: 4929/4909)

Apologies if I haven’t been posting any analysis on the blog for a month. I was on a month long job assignment outside of the country and I wasn’t able to monitor the local stock market.

I was surprised that a lot has happened for a month, particularly with the index falling 400 points on May and more recently the 200 point drop from last week’s trading.

A lot may be wondering where the index is headed, and from the looks of the daily chart, the index is still in a sideways movement between 5109 and 4909.   With the RSI chart, we can see that the index is definitely undecided where to go as seen by the zigzagging action, crossing above and below the 50 RSI level for 3 weeks now.

However, looking at the weekly chart, particularly the MACD opening wide downward, the index is more likely to move lower in the long term, so it is possible that what we are seeing now is just a pause before the continuation of the downward movement.

For next week, if the index continues to move lower than the support line at 4909, then this would be a breakdown of the current sideways channel. Target level for this would be near 4700.   I would suggest staying on the sidelines for the mean time until at least the MACD has crossed above the center line again.

StockWatch (Apr 16-20, 2012): PSEi

PSEi (Chart: Daily      Resistance: 5100         Support: 4980)

The index is now starting to form a downward trend.   We can see from the chart that the index has bounced off from a new support line which is part of the downward channel.

The last two trading days of last week created white candles but it still remains to be seen if the index can move above the resistance line near 5100.   If it does move above that level, it is a welcome move for the index. However, if it is unable to move above the resistance line, then it confirms the strength of the newly formed downward trend.

Do observe the RSI, lately the index has been respecting the significant levels of the RSI, particularly the 50 and 70 level. Since early Feb of this year, the RSI has been moving between 70 and 50 level.  Every time the RSI hits 70, it starts to go down, and does the opposite when it hits 50 level.  Right now RSI is moving towards 70 level, so expect a possible reversal when it hits near 70. 

StockWatch(Apr 09-13, 2012) : PSEi, MEG

 PSEi – Weekly Chart

 PSEi (Chart: Daily Resistance: 5146 Support: 4920/4600)

The index seems unable to move further upward since the highest recorded level at 5146.  Since then, the index has been sluggishly moving in small increments at a time compared to previous weeks.  We may be seeing a slowing down of the index and for the coming weeks, with the index moving sideways to downwards.

The MACD is now opening wide downwards, which is a bearish indicator. MACD seems to be pointing to the possibility that the index’s sluggishness and inability to move higher may be the starting point of the downward movement of the index.  The MACD on the weekly chart seems to support this idea as the MACD is now starting to move closer to the signal line.  

If the index starts to move downward, the next support would be near 4920, which is the level of the 50 day moving average. Should the index move further down from this level, next support would be near 4600 which is the 38.2% Fibonacci retrace from the start of the index’s rise from Sep 2011 up to the index’s highest in Mar 2012.

MEG (Chart: Daily Resistance: 2.10 Support: 1.96)

MEG recently had a milestone improvement. The standing resistance line from more than a year of downward trend was broken last Mar 12, but the problem then was that there was no volume on the breakout event and so the stock price fell down below the previous resistance line.

On the next breakout event though, things have changed. The stock steadily rose to a new high for the year at 2.10 accompanied with significant volume on every step of the way.  This confirms that this stock is now again the in the buy list of traders.

The recent downward movement last week was a healthy correction and we can see that 1.96 seems to be a strong support for this stock in the recent trading.

Trading for next week would confirm the strength of this stock if it continues to move upward.  If it does move upward next week, I can say that this stock would be a good stock to hold if you need a stock to park a portion of your money for the long haul. It has the potential of moving up towards its previous high near 2.84 which is near 50% profit.   Its short term target price would be near 2.25

StockWatch (Mar 12-16, 2012) : PSEi (Hanging man on PSEi Weekly Chart)

 PSEi Weekly Chart

PSEi (Chart: Daily Resistance: 5040/5090 Support: 4960)

The index is still following the upward channel that was established since Jan of this year.  The good thing is that the market is a little bit predictable because it is following a channel pattern.  But the bad news is that the index is still creating more negative divergence as the index creates new highs.

The new negative divergence is again visible in RSI, MACD and Stochastics, with the index moving higher, but those indicators are moving lower.

Aside from the negative divergence, it seems also that there is relatively lesser value turnover compared to value turnovers for the past month, which means lesser money is being played in the market.

Looking at the weekly chart, we can see that there is now a hanging man formation. A hanging man formation is a bearish indicator and is usually seen on upward trends. This usually marks the top of the trend.  However, a hanging man still needs to be validated by further indicators.

For next week, for the risk averse, I would suggest that you stay on the sidelines for now. There are lots of negative indicators being displayed in the chart and if you are not quick enough to react, this may cost you.   For those who still would want to ride the market, I would suggest that you religiously observe the current resistance and support levels of the upward channel.

StockWatch (Mar 05 – 09): PSEi

PSEi(Chart: Daily Resistance: 5090 Support: 4900)

The index dropped 100 points on the first trading day last week, but proved to be non deterrent for bullish traders who pushed the index from the low of 4790 up and beyond the 5000 level ending at 5016.

From the chart, the index was able to get back inside an upward channel with resistance near 5090 and support near 4900. We have to wait and see if the index is able to move above the resistance line.

If you got in the market again last week, I would recommend going back in a range trading strategy, but as of the moment hold off the buying as the index is near the resistance line and then start selling when the index nears the resistance near 5090.

I would also suggest to appropriate lesser portion in trading. I still see that there is imminent danger, considering that the index is moving higher but the MACD, RSI and Stochastics are generally moving lower.   Be on the watch for negative divergence when the index reaches resistance near 5090.

StockWatch (Feb 27 – Mar 2) :PSEi (Doji on the weekly chart)

 PSEi Weekly chart

PSEi (Chart: Daily Resistance: 5000 Support: 4855/4790/4730)

Some good news and bad news happened last week.  Good news is that the index is able to create a new high just 3points shy away from 5000. The bad news is that it was not able to sustain that new high and then created black candles.

The trading action last week also created a negative divergence, with the index moving higher and the RSI moving lower.  It looks like we are seeing more and more of the negative divergence these past weeks.

Another signal worth observing is the black spinning top created last Friday.  Spinning tops in general are signs of indecision.  And as you can see, the spinning top last Friday is clearly validated by the trading action for that week where the index moved sideways.  However, spinning tops found on upward trends should light up a warning signal. This means that traders previously bullish about the market are now having doubts and are pulling away from the market.

Looking at the weekly chart, we can see a stronger warning signal flashing right before our eyes: a Doji.  A Doji also denotes indecision, BUT relatively stronger than a spinning top.   When found on upward trends, this sometimes signals impending reversals, but of course one needs to qualify that with other signals.   From the weekly charts, the Doji’s claim or warning is somehow being supported by the RSI as well, which is now beyond the overbought level of 70.

For next week, I would recommend to cease buying, hold what you have for now or better yet, start selling portions of it.   We have our next support near 4855 (blue short horizontal line) which was the previous high and almost near the support line connecting the troughs from Jan 26 to Feb 16 (blue diagonal line).  If the index moves lower than that support line, that should also serve as a signal to start disposing you positions as we may be seeing the index move lower towards near 4730. 4730 is the previous resistance turned support line connecting the peaks from Feb 6 to Feb 16 (orange diagonal line).  If 4730 holds, then I believe that this would be a good time to get in the market again.

StockWatch(Feb 20-24, 2012): PSEi, RLC

 PSEi (Chart: Daily   Resistance: 4950  Support: 4790)

The index’s last trading day ended with a positive note.  It seems though that the index is now again on an upward movement.  The white candle formed last Friday gapped up around 65 points and close 30 points shy away from 4900.

For me it looks like a breakout from a small symmetrical triangle, with a target price level of around 4950.

I would still recommend a range trading strategy.   Although the index is on an upward movement, looking at the weekly chart, the index seems to be losing steam as value turnover for last week was the lowest on the past three weeks.  Also MACD on the weekly chart is opening(difference between MACD and signal line) at its widest and may indicate that any time soon things would start moving downwards.

RLC (Chart: Daily Resistance: 16.50 Support: 15.00)

RLC broke out from a symmetrical triangle accompanied with high volume. The target price of this break out is at 16.50.   The break out also took down this stock’s previous high at 15.67.

This stock is definitely a buy because of its strength, but there may not be enough profit for this stock as the target price is near.  If you still plan on acquiring this stock or if you already have this stock, do sell if a negative divergence is created; with the price moving higher but RSI or MACD is unable to move higher. Otherwise keep holding this stock, if this stock is able to create new highs for RSI and MACD.

StockWatch(Feb 13-17, 2012): PSEi, MEG, BHI

 PSEi (Chart: Daily  Resistance: 4855  Support:4740/4715/4615)

The index moved sideways last week and we are in a little bit of uncertainty as to where the index would be heading.  As of current, the index may probably move sideways between 4715-4855 range for the coming week.

The MACD  and stochastics are now in a bearish situation both moving downwards. Again I would advise caution in further buying. I would probably change my strategy to from medium term hold to range trading.

The critical levels to observe are the following: 4855-previous high; 4715- possible support; 4615 – support line connecting the troughs from Jan.  As long as the support at 4715 holds, the index may be able to continue its upward movement. Otherwise, a move below 4715 may push the index further down to the next support at 4615.  Do observe if a head and shoulder formation materializes when index reaches 4615.

 MEG (Chart: Daily  Resistance: 1.70  Support: 1.58/1.50)

MEG turned out to be a disappointment. Seeing a symmetrical triangle, coupled with the recent bullish market activity, I was personally expecting this stock to breakout.   Unfortunately, it went the other way and broke down.

The target level for this stock is around 1.10.  A return move towards 1.70 is on the works. However, it is a wait and see if this stock would be able to further move upward as the white candle created last Friday clearly had no significant volume.

Next major support for this stock is near 1.50. This is also the same level with the previous low last Sept 2011.   If this support level holds, then we may be seeing some good future for this stock, a possible double bottom.

 BHI Weekly Chart

BHI (Chart: Daily Resistance: 0.215/0.315  Support: 0.163)

BHI’s chart became intriguing as two white candles were formed last week, both with unusual volume.  I couldn’t see any significant area pattern from which it broke out from, except a sideways channel, whose target price level has been reached last Friday near 0.20.

Based on the spread and volume alone, this is definitely a buy.  However, do observe if this recent bullishness is supported by further white candles with large volumes.  Based on the chart, BHI has a recent history of having white candles with large volumes that fizzles out after 1-3 days.   If the recent bullishness checks out, then the next resistance would be near 0.315 which is a previous high.

StockWatch (Feb 06-10, 2012): PSEi

PSEi (Chart: Daily Resistance: 4820  Support: 4700/4590)

The index created a new high last week, accompanied by high value turnover.  However, I would like to advise caution in further buying from this point forward, for the reason that all indicators are pointing to a negative (bearish) divergence.

Looking at the RSI and MACD, these indicators have created a lower high, the complete opposite of what the index created last week.   This means a negative divergence is happening and that the index may start to move south anytime in the very near future.

StockWatch (Jan 30-Feb 03, 2012) PSEi, CEB, ABS

 PSEi (Chart: Daily  Resistance: 4760   Support: 4590)

As observed, the negative divergence seen in the charts 2 weeks ago has manifested as the bearish event that happened last week.  The index took a dive but was able to recover on the last trading day.  

The white candle that was formed last Friday seems to have some backing of the bullish traders because the value turnover for that day was almost as high as the value turnover  on Thursday.

With regards to area patterns, we can see that the recent bearish activity broke the standing support line that was formed since the start of the year. That line can be interpreted as the lower line of an upwards channel which has a target level near 4550.

Now considering that the recent bearish activity broke the support line, it is possible that the continued “bullishness” last Friday is just a return move to the support-turned resistance line.  One thing to observe for the coming week, is if the index can rise above that support-turned resistance line.

Also, be on the lookout for the impending small head and shoulder formation.  It is possible that the return move might not be able to go above the resistance line and might turn into the right shoulder of the head and shoulder formation.

For next week, if you would try to take advantage of the “bullishness” that started last Friday, do dispose all of your positions IF the index is unable to move above the resistance line. If that occurs, that is a definite sign of weakness for the index.

 CEB (Chart: Daily Resistance: 69.80  Support: 65.25)

As I have posted last December,  for those who would like to go long on a stock, CEB is one stock that you could put in your long term hold list.   As of last Friday, this stock was able to create a new higher low, which means, this stock is now slowly moving its way back to the trader’s list of buy items.

Looking at the white candles formed, we can clearly see that volume is significant, which means there is a growing demand for this stock.  So if you would like to take advantage of this stock while in its early stages of growth, now is the time to do that, provided that you are willing to go long. Coming from a downward trend for more than 1 year, you definitely would not see this stock immediately skyrocket with its price.   There will be a sideways movement before this stock starts to trend upwards, that is why this stock is only for those who can hold this for the long term.  But definitely, your waiting will be rewarded later on.

ABS (Chart: Daily   Resistance: 34.60   Support: 32.32/30.30)

Looks like there is renewed interest for ABS. Coming from a downward trend for more than a year; this stock has started the year right by creating a new higher low, which means it is now slowly recovering from the bearish trend.

Seeing the volume on white candles formed in the past 2 weeks, I can say that like CEB, this stock is now slowly making its way to trader’s buy list.

As of the moment, the bullishness of this stock is stopped by the resistance line at 34.60.  RSI is very much overbought so expect that the resistance line would hold its ground and the stock would start going down this week, which would probably give you an opportunity to buy this stock between 31-32 price levels (or lower).

Observe by next week if the stock would be able to again create a new higher low, which is a further confirmation of the stock’s recovery.

If this stock remains bullish by next week and breaks the resistance line, the target level of the breakout of the channel area pattern would be near 39.