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.