StockWatch (Jun 01-05, 2009): PSEi, MEG, EDC

PSEi (Chart: Daily Resistance: 2400/2620 Support: 2300)

The index has been continously climbing for the past weeks. It looks like the bulls are confirmed to be back as we can see that the index has been very much over bought for the past 3 weeks as indicated in the RSI. I have been very much observant about the RSI being overbought for the past 3 weeks, because in a non-bullish situation, usually when the index hits the RSI overbought level, the stocks immediately turn south. However for a bulish situation, the RSI overbought level will always be triggered and the graph usually stays above the normal overbought level of 70. Also RSI overbought level is usually re-desginated to a higher level than the usual 70 (because it will always be triggerred if it is around 70). Usually the bullish overbought level is at 80 and from the looks of the index, there seems to be more steam for the index to push through since the bullish overbought level of 80 is still not triggerred.

Also what can be seen from the index’s chart is the breaking above a significant resistance line at 2350 last Friday. This line was the support line of the index when the index created a large gap down last Octoer of 2008 which conversely becomes the current level of resistance prior to Friday. This line was broken with a significant volume and it is highly possible that Friday’s bullish ending will still continue come Monday.

General Analysis:
A lot of stocks are exhibiting characteristics of a rounding bottom pattern. You can make profit on this pattern in 2 ways: One, you can ride the stock up until it reaches near resistance, which is the previous high. A lot of stocks are still halfway from reaching major resistance levels. Second is that you wait for a break-out of the pattern. Or you can do a combination of both, you ride the stock up until a certain level near resistance and sell a few for the moment and then wait for breakout and buy again. Watchout for break-outs with low volume, these are possible bear traps.


MEG (Chart: Weekly Resistance: 1.02/1.20 Support: 0.47)

MEG seems to be going sideways for now, but looking at the weekly chart, it seems that a pennant formation is brewing for this stock (pole formed last May 08). Resistance is at 1.02. A break above this level with large volume would confirm the formation. Possible target price for the pennant formation is at around 1.5




EDC (Chart: Daily Resistance 4.50 Support: 3.30/3.60)

EDC seems to be forming a cup and handle formation. The break-out price is above 4.50. Possible target price of up to 6.5. As long as the price stays above 3.30 I think this stock is still good. Watch out also for the crossing of the 65 day MA (red line) above the 260 day MA (green line)

StockWatch (Apr 13-17, 2009): PSEi, EDC

PSEi (Chart: Daily Resistance: 2330 Support: 1970)

The index had a short stint of selling action on the last days of March which brought the index down to the low of 1965 which is the area of the 130 day MA (orange line). The last trading day for that week had the index running a white candle with relatively large volume. On the following week, the index continued where it left off from Apr 3 and continued with its upward movement. Interestingly the index was alive with volume on the 2 trading days before the holy week. Usually, when long weekends comes up, the index is expected to have lesser volume prior to the long weekend. But Apr 7&8 was the opposite. It had large volume and was moving bulishly. For next week, expect the index to continue with upward movement.

However, please take note that the RSI is now near the overbought level once again. Be on the look out for a possible bearish divergence. We have now posted a new higher high for the index and the RSI should also follow. If it is not able to create a higher high for the RSI, this means we have a bearish divergence on the RSI and selling might follow.

Just in my opinion, I think the correction last March 30-Apr 1 was very short and shallow. This gives higher probability that the expected continuation of the upward movement this week may not have enough steam to keep the index moving upward for a longer time. So I would recommend to keep an eye on your stops if incase the index starts to move south again. The next resistance is at around 2330, which is the 260 day MA(green line). The support is at around 1970, which is the 130 day MA(orange line). It is also important to watch out for the volume on the way up. If volume is diminishing on the index’s upward movement, then this is a sign that it is loosing steam.


EDC (Chart: Daily Resistance: 4.80-5.00 Support: 3.90)

After slowing down for a while, EDC continued its bullish movement the previous trading days and broke the 260 day MA(green line) acting as resistance. Trading ended last April 8 with a record high in volume.

Eventhough the stock had large volume on April 8, I am having doubts if it could still sustain further upward movement this week. Looking closely at April 8, the volume was at a record high, but it did not translate into a long white candle. With such a large volume, I expected that this stock should have already zoomed past the target price, but it did not. At the very least it should have gone past the previous day’s high of 4.45, but it was also not able to move past that level. I am more inclined to believe that there might not be any further upward movement. Also when I tried to redraw the depth of the rounding bottom and taking the conservative (shorter) length, target price is at around 4.50. To be on the safe side, I would rather sell at the current price of 4.45, rather than wait for any further upward movement.

Also, watch out for island reversal formation. The stock has already formed several gaps with its rally, so there is higher possibility of an island reversal formation.

StockWatch (Mar 30-Apr 3, 2009): PSEi, EDC, SMC

PSEi-Monthly Chart

PSEi Weekly Chart

PSEi (Chart: Daily Resistance: 2048 Support: 1992)

The index showed strength on the opening of the market last Monday with a gap up accompanied with a large volume. It zoomed past the 65 day MA(red line) and closed just above the 130 day MA (yellow line). The index was also able to move above the logical resistance at 2000, which for the past 3 months has been impenetrable.

The MACD is currently giving us a bullish signal, however, the RSI is displaying overbought signal, so for the coming week, expect to see some selling activities or some sideways movement for the index.

Looking at the weekly and monthly chart, we can see that the bullishness for the past weeks is also reflected in the weekly and monthly chart with the long white candles being registered with good volume. Both charts are also giving us a hint that there may be more to this recent market activity. The charts are displaying comfortable levels of RSI which means there is more room for further growth. MACD for the weekly chart is bullish on the short term, while the MACD in the monthly chart seems to be starting an arch upwards.

The recent market activity is definitely something to hope for, but we still have to be cautious of our trades. There are still lots of resistance on the way up, observe your cutloss levels if incase things turn south. As I have mentioned above, for next week, expect some correction or sideways movement in the market. If you intend to get in the market, observe stocks that would display good support levels.

EDC Monthly Chart

EDC Weekly ChartEDC(Chart: Daily Resistance: 3.90 Support: 3.30)

EDC had a breakout on Wednesday last week. I recently thought that this stock would not do a breakout because of the recent large volume selling on Thursday (Mar 19) and low volume on the white candle on Friday (Mar 20). But on Monday last week, the volume on the buying action matched that of the volume on the Mar 19 selling action which eventually lead to a breakout on Wed. The strength is also evident in the weekly and monthly charts.

I am expecting that the market would slow down next week and coupled with the overbought state of the RSI, be on the look out for a return move towards the support at 3.30. Target price for this stock is near 4.80. The return move towards 3.30 is healthy if there is not much volume on the selling action and support is ketp intact.

SMC( Chart : Daily Resistance: 52/58 Support: 41)

SMC is eerily forming a head and shoulder pattern, however, this type of pattern (not the inverse head and shoulder) would usually occur only on market tops, so I believe that this is not a valid pattern. But, looking closely, there is another patter though that is much more valid in the current market, which is a big double bottom (looks like a big butt). The neckline for the double bottom formation is at 58. MACD is above the center line, so this means we can go long on this stock. If you intend to grab a piece of action in this stock, you would have that chace for the coming week as the stock is expected to correct first before having any further upward movement.

General Note: A lot of stocks are already overbought because of the recent rally. Do watchout for stocks that would display strong support levels for the coming week. Next week might be a good time to get in the market as long as selling does not have volume and support levels remain intact.

StockWatch (Mar 16-20, 2009): PSEi, TUNA, EDC, FGEN

PSEi (Chart: Daily Resistance: 1940 Support: 1800)

Just as I was jubilant that market had already reacted positively 2 weeks ago, the market action last week doused my joy and we’re now back below the 65 day MA. We’re still in the long standing sideways movement of the market and for the following week expect that this sideways to downward movement will continue.

Most are waiting for the market capitulation, and in my opinion, the chart is giving us mixed signs on this. As can be seen in the chart, the market has been on a sideways movement since October of last year, and eversince the low of October 2008, the market has not gone back to that low, which suggests that there is very strong support. With that strong support, there is lesser probability of a market capitulation. However, we’ve been on a sideways movement for nearly 5 months and we are not sure up until when the support will last to prevent market capitulation. This long standing sideways movement is probably contributing to a possible market capitulation with players slowly loosing interest with the sideways movement of the market. We are also seeing shorter rallies as observed from the chart, which might also be contributing to a possible market capitualtion. So as you can see, the current market activity is not pointing to a market capitulation, but the current activity is probably contributing to that possibility. But ofcourse who knows? We’ll probably only know we’re in market capitulation if we realize that we ourselves are also part of selling panic.

TUNA (Chart: Daily Resistance: 1.30 Support: 1.26)

TUNA moved more than what I was expecting. I was just expecting for TUNA to just move and stop just above the resistance line, but it went further to a high of 1.40. The amazing thing was that the move towards 1.40 was accompanied with volume. This is definitely a breakout of falling wedge, but I can’t really say if this is the reversal of the long standing downward trend of the stock or a continuation of the recent shorter upward trend from Jul of 2008. Target price for the falling wedge pattern is at 1.70. As of current,there is a possibility that this stock is also forming a pennant formation with a target price of 1.55. If you plan on getting this stock, buy near support at 1.26. Observe the volume on breakout, there has to be a large volume on the pennant pattern breakout. If you buy at 1.30, cutloss when the stock moves below 1.30. Sell for profit near 1.50. Watch out for the moving averages at around 1.45. If the stock shows signs of weakness at that level, like large volumes on sell down, better sell for a small profit for the mean time.

Note: I have made a mistake last week of positng the TUNA chart for the PSEi analysis and the PSEi chart for the TUNA analysis.

EDC (Chart: Daily Resistance: 3.25 Support: 2.50)

EDC is showing a big smile: characteristics of a rounding bottom pattern. However, I’m not seeing a breakout of this pattern anytime soon because the stock is very much overbought. However, this pattern may still transform into a cup and handle pattern in the future, so watchout for this stock.

FGEN (Chart: Daily Resistance: 21.50 Support: 19.50)

FGEN also showing patterns of a rounding bottom and may have already broken-out of this formation. There is good build-up of volume as the stock pushed beyond the resistance line. Looking also at the weekly and monthly charts, both are also displaying a very good picture of the strength for this stock. FGEN is one of the very few stocks that made it near the 260 day MA(green line). Looking at the MACD, this is a candidate stock to hold for the long haul as long as the MACD stays above the center line. However, the stock is already overbought, so expect some further selling to happen. Target price for the rounding bottom pattern is at 28. If you buy at 20, cutloss is at 19.00 if the stock turns sour.

StockWatch (Sept 29-Oct 03, 2008): PSEi, JFC, FGEN, EDC, SPH

PSEi (Chart: Daily Resistance: 2630/2685/2700/2780 Support: 2468/2342)

The island reversal that showed up in the PSEi chart delivered on its promise with the index moving higher. The index had a little bit of a wobbly start for last week and ended with a bang. The last 3 trading days we saw successive days with the index closing higher. It is worth noting that the index’s advance broke the 65 day MA resistance with high volume, which is a very good break. The next question is whether the index can sustain this bullishness this coming week. The 3 day advance that happened last week maybe showing us signs that we should be protecting our gains. The 3 white candles are similar to the three advancing soldiers’ formation in the Candlestick charting technique. The formation is most of the time pointing to a warning sign that recent upward movement may start to encounter problems on its further bid for its way up. A visible sign for this is that the third day of advance has a shorter white body and longer wicker than the first 2. It opened higher, tried to move higher in the middle of the trading, but just wasn’t strong enough to hold its position, it receded, was not able to recover and closed just higher than the opening price leaving a longer wicker. Again this is just a warning sign, so suggested action maybe to move your stops higher just incase the market went sour you can immediately trigger a sell or for the risk averse, selling some of your positions might be a better idea. Watch out for the upcoming resistances: 2630, which is the previous support line of the descending triangle; 2685, which is the 130 day MA; and 2700, the resistance line extending from May 2008. The RSI may also be posing a resistance for the index as it is near the 50 level.
Again as pointed before, this is still not the time to go long on your positions, the MACD is still below the zero line but is currently showing good signs of a possible cross above the signal line.

JFC (Chart: Daily Resistance: 57.50/59 Support: 44.50)

JFC, just like a dormant volcano, blew its top off sky high, consecutively moving higher for the 5 trading days last week. The bullish move broke the 260 day MA and also the resistance of the downward channel established since April 2007 all with large volume. Possible target price for this stock is at 57.50. I’m not sure what’s going on financially with this stock, but whatever it is, looks like investor confidence came in by the truckloads. Following the Elliot wave pattern, we may now be in the 3rd wave on a small scale with the first and second wave formed from July to Sept 2008. Looking on a larger scale, we may now also be on the 3rd wave with the first and second wave formed from 2004 to 2008. Looking at other indicators, we have the MACD still above the center line, so this means we can now go long on this stock, especially in the light of the recent breakout. Although for the RSI, the stock might be on the overbought level so this means a possible correction is near. This may give us a chance to jump in on the stock when it moves lower. Watchout for support at 44.50, as long as the stock does not go below this level on its correction phase, we are still safe. As the stock moves higher, the MA’s will further confirm this bullishness with crossovers.

FGEN (Chart: Daily Resistance: 25/27/31 Support: 15.25)

FGEN traded last week with large volume. There is no visible area pattern from which a breakout might have happened. The indication of a large volume makes this stock viable for a short term hold. A good signal to start buying would be if the MACD crossed above the signal line. Watchout for the following resistance: 25, which is the 65 day MA; 27 which is the resistance line formed from April 2008; 31 which is the previous high.

EDC (Chart: Daily Resistance: 4.20/4.50/4.70 Support: 2.95)

EDC had a very good bullish rally last week accompanied with large volume. A gap was formed also with good volume. Watch out for further gaps happening in this stock. This stock is good to hold for the short term only. We have the MACD crossing over the signal line, but still below the center line indicating a short term bullishness. The stock currently stopped short of breaking the resistance at 4.20 which is the resistance line formed from Jan 2008. Also watch out for other resistance levels at 4.50 which is the 65 day MA and 4.70 which is the resistance line formed from October 2007. If resistance line from Oct 2007 is broken, there is a possible of stock reaching target price of 6.50.

SPH (Chart: Daily Resistance: 5.40 Support: 4.40)

SPH closed successively higher for the past 2 weeks, breaking a possible sideways channel formation. Target price for this channel is at 5.40. Current level is at 5.20 and is not a good entry level, especially looking at the RSI which is very much overbought. The MACD on the other hand, is indicating a long term hold, so if you are to get in on this stock for the long term hold, wait for the correction before buying.

StockWatch (Aug 19-22, 2008): PSEi, MEG, EDC

PSEi (Chart: Daily Resistance: 2780 Support: 2620/2600)

The index managed to gap up on the first day of trading last week, but only to be stopped by the resistance at that level. There are 2 resistances hindering the index at that level: the support line turned resistance from 2003 and the 130 day MA. The gap up on Monday was equaled in volume when the sell down happened the next day. And the following days also had large volume on the sell down days, which is a not so good indication. Plotting the troughs and peaks, we can see that there seemed to have formed a rising wedge. The characteristics of a rising wedge seem to fit the current market situation where rising wedges can be seen on a downward trending condition, which is what we recently had. And to add, the index may have already broken a short term support line, when it moved sideways last week. If this is indeed a valid rising wedge formation, then downward target price is around 2600, which is a point support line connecting the troughs in July and also the 38.2% Fib retracement level. I hope that this is an invalid rising wedge, otherwise, this might be an indication of worst things to come (rising wedges are considered bearish indications). Aside from the rising wedge formation, there may also be a possible island reversal. But this is still not confirmed as the island hasn’t been formed yet. To complete the island reversal picture, a gap down is needed. So for next week, still watch out for a possible continuation of the sell down as volume was noticeably large on the down days last week and the RSI is still very much oversold. Watch out also for a possible inverse head and shoulder formation if the support at 2600 holds.

MEG (Chart: Daily Resistance: 1.72 Support: 1.30/1.20)

MEG is not in a good position currently with a large volume and large spread on the sell down last Friday. A rising wedge can also be seen in the chart which was broken last week. The target price of the rising wedge was also reached. This is a stock to avoid for now given the large spread and volume on the sell down. Next support is at 1.30 which is the previous resistance on the small ascending triangle, while 1.20 is a point in the support line connecting the troughs in July.

EDC (Chart: Daily Resistance: 4.75 Support: 4.40)

EDC is showing some signs of positive divergence with the price going lower and RSI and MACD creating higher lows. Aside from the positive divergence, the stock seems to be forming a falling wedege, which is a bullish indicator. A peculiar thing about this falling wedge is that it can be found in a downward trending action. A falling wedge in a downward trending stock is a bullish indication and may probably indicate a possible reversal. What we are waiting for now is a break in the resistance line. Possible breakout point is at 4.70. If broken with volume target price is around 5.70. Now an important ingredient for the breakout is volume. Since this stock is trending downwards, in order to pull out of its dive, we need a very large volume to consider that we will be having a prosperous breakout. Current price level at 4.55 is already a good entry level, just watch out for support at 4.40 and sell if support is broken.

In Retrospect: GLO, EDC, MBT

GLO

GLO gapped up on the first trading day last week with above average volume. However on the following day, the stock was sold down with almost the same volume as when it gapped up. On the succeeding trading days, the stock was sold down. This just implies that the stock is not yet out of consolidation. The good side of this stock technically is that the MACD is still above the zero line and above the signal line and the 3 MA’s are in its bullish order, so this stock is still bullish for now even if it is still consolidating. Another good thing about the stock is that it is still able to close above the resistance-turned-support line. The crucial part for next week is observing if the stock will still be able to close above the resistance-turned-support line at 1530. The not so good side of this stock is that it has been in consolidation for around 4 months. Next support levels are at 1520, 1495, 1475. If you intend to trade the range for this stock, a good buy will be near support at 1495-1475 and sell at around 1600, this will give you a good 5-7% net profit.

EDC

The resistance line at 6.30 was able to hold the advance of this stock, so this means the stock is not yet out of the downward move. It is possible that this stock is now starting to consolidate between 5.50 and 6.30.

MBT

No break-out from the falling wedge for this stock. The price movement just went sideways. The volume on the sell down on Jan 31 was just equaled with the volume on the gap up on the first trading day, but the succeeding trading days that followed had lesser volume. The bullish divergence was formed, but there are not enough other good indicators to back this up. Still, watch out for the downward TP of the H&S at 31.

StockWatch (Feb 04-08, 2008): PSEi, GLO, EDC, MBT

PSEi (Chart: Daily Resistance: 3330 Support: 3120)

The index encountered resistance at around 3100-3300 level, trading was characterized mostly with short bodied candles with long wickers. Currently, the index was able to reach the resistance line and closed just below it. Expect trading next week to move sideways to downward. Support currently is around 3120.

GLO (Chart: Daily Resistance: 1610/1675 Support: 1495/1465)

GLO had a breakout from the symmetrical triangle, however, the volume was not that sufficient to consider a good breakout. Watch out for upward moves with low volume, this indicates weakness of the upward move.

EDC (Chart: Daily Resistance: 6.30/6.70 Support: 6.10/5.70)

EDC gapped up last Friday with large volume, however, there was no area pattern involved in the gap up. Currently, it was able to move past the 260day MA with volume and looking at the weekly chart, the stock has been moving upward for the past two weeks with sufficient volume which suggests there is strength in its upward move. As of current 6.30 is a crucial resistance to observe, this is the resistance line formed during the stock’s downward move and at the same time the 50% Fib retracement level. If it is able to move past this resistance line with volume, then this suggests that the stock is now out of the recent downward movement. Also watch out for resistance the Fib retracement level 6.70 (61.8%).

MBT (Chart: Daily Resistance: 43/47 Support: 39.50)

MBT broke down from an H&S pattern with a downward TP of around 31. Currently, the stock is showing signs of bullish divergence; however, this is not yet confirmed as the trough for the RSI and MACD is not yet fully formed. Also a falling wedge is forming with a possible TP of around 55. If traders are bullish with this stock, the downward TP of the H&S may not be reached and it is possible for falling wedge breakout. For now just wait for the breakout from the falling wedge or the confirmation of the bullish divergence. Falling wedge breakout is at 44.