PSEi (Chart: Daily Resistance: 4390 Support: 4200)
A prosperous and happy New Year to all of you!
The index ended the year 2011 with high hopes as action on the last trading day brought in bulls which created a considerably large spread between the open and closing price.
Looks like a lot are optimistic that things would go well for 2012 and I also believe that 2012 will start with a white candle considering the large spread created on the last trading day of 2011. But up until when will this last, is something that we need to be keenly observing.
As of current, we are still not out of the woods yet for the worst case scenario of a big head and shoulder formation that we have been tracking since last year. What the index is having right now, that is a sideways ranging movement between 4390 and 4200, is still congruent to the characteristics of the head and shoulder area formation.
In addition to the sideways channel from which the index is moving within the range of 4390 to 4200, there is also the possibility of a double top formation. Both the channel and double top formation have the same downward projection of 4000.
If the double top or channel breaks down, this is one of the clear indicators that the big head and shoulders formation is still in play. A break above the channel is a positive thing which can lessen the possibility of the big head and shoulder formation from being fulfilled, but I wouldn’t get my hopes high, not until the index breaks above the previous high of 4560.
For this coming week, expect the index to still move upward to sideways. RSI indicates that there is still room for an upward movement, albeit probably short and possibly trying to break above the resistance at 4390.
GLO (Chart: Daily Resistance: 1140 Support: 950/930)
GLO seems to be on its way to recovery, but there is one last test to that statement and that is the resistance at 1140. For the last few trading days of 2011, GLO has been steadily rising accompanied by considerable amount of volume. This means the recent bullishness for this stock has a strong foundation. It even ended the year with a large spread between opening and closing price accompanied with large volume.
So for the coming week, all eyes are on the 1140 level to see if this will be broken by the recent bullishness of this stock. Breaking above that means GLO has recovered 100% from its downward trend from 2009 and 50% from its downward trend since 2007.
If I had this stock, I would sell a portion for the mean time. Although I believe that this stock will be able to break above the resistance of 1140, but I think it wouldn’t be able to do it within the week basing from the RSI that is now way well overbought. There is a chance for a small break above the line, but I believe it would not be able to support that any further as there would definitely be some who would cash on the profits earned from the start of it rise since Dec 13 (that is already about 20% net profit).
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