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