StockWatch (Jul 04-06, 2011): PSEi, APO

PSEi (Chart: Daily Resistance: 4351/4413 Support: 4250)

The index moved sideways for the week, but made a remarkable comeback on the last trading day. The index was able to move beyond the standing resistance level of around 4340 and at the same time create a new high for the year.

The MACD is now above the signal line and above the center line as well. RSI is not that much oversold and still has room for a little bit more upward movement before it reaches overbought area. Value turnover for the 2 succeeding white candle days were significant enough.

All things are on the bright side, and this could be the start of a continued upward movement for the market. However, I would still err on the side of caution and wait for the follow through of bullish sentiments, if indeed this is the start of the upward movement. For all we know this might just be a continued sideways movement with a wider sideways channel, similar to what happened on the bearish actions two weeks ago, where the bearish action broke the support line and 65 day Moving average but was not sustained.

For next week, I suggest treating the recent breaking of resistance line as part of wider ranging movement of the index. This means keeping your stock positions small (i.e. maintaining a larger cash position) and sell when a resistance level is reached or when RSI reaches 70.

APO (Chart: Daily Resistance: 2.90 Support: 2.30)

APO recently had a very unusual volume last June 24 which created a gap up and a long white candle. The first trading day last week could have well been the start of the stock retracing the gap, but remarkably, it only dipped for 2 days and has since recovered the loss. What is remarkable is that the volume during the recovery period, though decreasing, is still relatively large; large enough to almost cover for the volume on the black candle day.

Looking at the chart from Oct 2010 up to the present, it seems that a rounding bottom was formed and at the same time broken last June 24. Target price for this formation is around 3.50.

Zooming out further, the chart, looking from June of 2007, seems to also have formed a rather big-wide rounding bottom with a resistance of 2.90. If the stock continues to move upward for next week, the big-wide rounding bottom would also be broken. The target price for this formation is around 5.00. You could also interpret the big-wide rounding bottom as either a wide channel or a wide inverse head-and-shoulder formation, either way, all formations have the same target price.

If your investment objective is for the long term, this stock is for you.

StockWatch (Jun 27- Jul 1, 2011): PSEi, CEB

PSEi (Chart: Daily Resistance: 4290/4340 Support: 4217/4130)

The index moved higher for the trading last week and it was able to recoup more than half of the downward movement for the past 2 weeks. It was quite strong considering that we only had 4 days of trading last week.

This recent action was the least that I was expecting. I was expecting either a continuation of the sideways movement or downward movement considering that the index has breached the support line of the channel or neckline of the triple top formation, but looks like the 65 day Moving average is providing strong support for the index preventing it from moving further downward.

As of current the index is just below a resistance line (connecting the troughs from Feb 9-Mar 25, 2010 with the peaks of Feb 18 & Mar 10, 2011). The next resistance after that is the standing resistance line for the triple top which is around 4340.

I’m not so sure how the index would move next week, but in a general sense, we are still on a sideways movement, trading between 4340 and 4130, a much wider channel than before.

The current state of the index could either spur an ascending triangle, an inverse head-and-shoulder, or just a simple sideways channel. So it’s anybody’s guess, which means, with either of the possible formations, we could still be in for longer sideways movement.

For the coming week, range trading is recommended since we might be in for longer sideways movement, but definitely keep your positions at the minimum.

CEB (Chart: Daily Resistance: 96.55/ 100 Support: 82.80/90)

Looks like there is a window of opportunity for CEB, as of last Friday’s trading, the stock may have formed and broken out of a flag formation.

Measuring the height of the pole ( run up from June 15-17), the probable target price for this break out formation is near 100.

The stock could still go beyond 100 if we would consider the small inverse head-and-shoulder formation that may also breakout, in line with the breakout of flag formation.

In a general outlook, this stock seems to be promising even for the long term as we can see that it is now able to create higher lows, considering the successive downward movement that it made from the start of its IPO trading up to Feb 2011. We might be seeing the formation of the 3rd count of the Elliot wave.

StockWatch (Jun 20-24, 2011): PSEi

PSEi (Chart: Daily Resistance: 4200/4340 Support: 4080/3950)

The index has now breached the support line from April 2011 as well as the 65 day Moving Average. The index is currently retesting the support-turned-resistance line and based from the candle sticks formed, the bears are winning the battle. Specially last Friday, the bulls tried to move the index higher, but were unable to do so and the bears event went further with their victory, reclaiming the advances made by the white candle last Wed.

The breaking of the channel has a downward target level of around 4000. But prior to reaching that level, there is support at 4080 level which is the 130 day moving average.

MACD on the daily chart is now below the center line and MACD on the weekly chart has now touched the signal line and is about to cross below.

If the bearish sentiment starts to steam roll the bulls, then keep your eyes peeled for the 3700 level, this is the neck line of a possible double top formation.

I would suggest making use of the short rallies to get rid of your stocks and still keep liquid for the time being.

StockWatch (Jun 13-17, 2010): PSEi

PSEi –Weekly

PSEi (Chart: Daily Resistance: 4340 Support: 4180)

As of trading last week, we are still on sideways movement trading between the range of 4180 and 4340. There are more negative technical instances than positive ones, so it would still be best to keep liquid if you do not plan on trading the range.

First negative thing that can be seen on the chart is a possible triple top formation. Support line for this triple top is the 4180 level. If the index goes below that support line, possible downward target level would be around 4000.

Second negative thing that can be seen on the chart is the MACD on the daily chart which is about to cross below the center line. While on the weekly chart, we can also see the MACD about to cross below the signal line.
Third negative thing that can be seen on the stock, particularly visible on the weekly chart is the possibility of the 5th wave in the Elliot wave count as well as the inability of the index to create higher high.

For the positive, first, we are still above the support line of 4180 and the 65 day moving average is about to converge with that support level. This could provide strong support for the index cancelling out the triple top formation that is looming.

Second, the stochastics on the daily chart would most likely start to move upwards again, this could materialize if the first positive mentioned above happens.

While it is most likely that for next week we could expect a rally towards the resistance line, this is just a positive action on the index for the short term. The first and second positive items I have mentioned above will just cancel out the first negative item, but this still leaves us with a negative signal for the MACD on both daily and weekly charts and the 5th Elliot wave. The odds are stacked in favor of the bears, so exercise caution on your range trades.

StockWatch (Jun 06-10, 2011): PSEi

PSEi (Chart: Daily Resistance: 4340 Support: 4180)

The index generally moved sideways with an upward bias last week, and as of last Friday, the upward movement stopped short of moving beyond the resistance line.

There is still no significant signal that can be seen from the index that would suggest that it would be able to break above the resistance line. As of current, there is higher possibility for the index to move sideways again with a downward bias by next week as it nears the resistance line. Expect further range trading next week between 4180 and 4340. I would still suggest keeping liquid for the moment until probably the index is able to move above the resistance line.