StockWatch (Jul 14-18, 2008) : PSEi, ISM, LCB, PA, BSC

PSEi (Chart: Daily Resistance: 2500/2650 Support: 2330/2290)

The index had a good rally that lasted 3 days before succumbing to selling activities. There are a couple of things worth noting on the action last week, first is the closing of the gap down that happened last Jul 3 (Gap 2) on the first day of trading last week. It indicated strength in the upward move as it was able to go past the gap down area. Second is the nearly closing of yet another gap down on June 27 (Gap 1), on the third day of trading. It would have been good indication, if on the fourth day of trading, that the index totally closed the gap and created a new high. However, the index was sold down for that day, leaving the gap unclosed, which indicates weakness in the index. Last Friday saw the index move further down nearly closing the gap created in the rally (Gap 3). And looking from the RSI, it is near the 50 line which indicates resistance. An RSI of 50 is already considered as a resistance if the trend of the index is bearish. With that it is possible that on the first trading day next week, we may see the gap up be totally closed. What I can see as a good indication in the chart is that the RSI has now created a new higher high. In a severely bearish market, an RSI of 30 and 50 are considered areas of resistance. In previous instances, RSI was able to move beyond 30 RSI but is unable to create a new high. For last week’s case, RSI was able to move above 30 and create a new high. This is good indication, because it means RSI 30 has been eliminated as an area of resistance and can now possibly act as an area of support. So for the coming week, expect that the index would still continue to move further down, but expect that when the RSI reaches near 30, there might be support at that price level (possibly at 2330). Trading strategy is still to keep liquid. Any small amount of profit should be protected from a bearish market. Still no signs of reversal, but hopefully if the support at 2330/2290 holds, then we might see a reprieve from the bearish market and move to a consolidation phase.

ISM (Chart: Daily Resistance: 0.039-0.040 Support: 0.033/0.029)

ISM had a good run last week, from the low of 0.026, the stock sky rocketed to 0.039, a 50% increase in price. It is also worth noting that the price also broke above 3 moving averages, and the break was accompanied by large volume, a sign that the sky rocketing action has credibility and is not just some result of speculations. Aside from breaking the 3 moving averages, the stock also broke a resistance line from Jun 2007, which is part of what seems like a falling wedge formation, with a target price of nearly 0.06. However, the stock is very much overbought as the RSI is now above 80. Aside from being overbought, the stock is also facing resistance at around 0.040, which is a support line turned resistance from 2003. For now if you have this stock, sell for the mean time. If you plan to get into this stock, a good entry would be at 0.035 and 0.33. Watch out if the stock falls further below 0.33, there might be signs of weakness of such case happens.

LCB (Chart: Daily Resistance: 0.26/0.34 Support: 0.22)

LCB is showing some activity. Last Friday’s trading saw the stock moving higher with above average volume. It may or may not mean something, but it is worth watching as support at 0.22 held, which is a previous low. Current resistance is at 0.26, which is the start of the previous gap down.

PA (Chart: Daily Resistance: 0.13 Support: 0.07)

PA had a promising run up to Thursday, but things went the other way around come Friday. Large volume accompanied the break out from a falling wedge, but a larger volume accompanied the sell down last Friday. This definitely is a sign of weakness, so it is better to avoid this stock.

BSC (Chart: Daily Resistance: 0.23 Support: 0.16)

There seems to be some activity in BSC as the stock traded with large volume last Friday. Thing to watch out for this stock is its resistance line at 0.23, which if broken may give the possibility of it going to as high as 0.40.

In Retrospect: PLTL, PAX, PA

PLTL

PLTL was very much affected by the drop in the market. The stock went back in the triangle to as low as 6.90 before being able to regain its previous high of 7.30. At this point, price may either move sideways or up to 7.50-7.70. This is still a buy.

PAX

The price movement was not as fast as I thought it would be. Price was able to move to as low as 22.50 before closing to 23.75 for the week. The target is still 25 and there is still no signs of reversal.

PA

This stock sky rocketed its way from 0.05 to as high as 0.17 within a week. Expect selling to be heavy this week. Possibility of RSI to move down near 70 before moving up again.

StockWatch (July 09-13): PLTL, PAX, PA

PLTL (Chart: Daily Resistance: 7.30/7.50/7.70/7.90 Support: 7.10/6.90)

PLTL had a break out Wednesday last week. Target price is 8.60. High resistance might be encountered near 7.70-7.90 as that was the highest price when the Feb sell down happened. With the very good breakout volume, this is already a buy at 7.30.

PAX ( Chart: Daily Resistance: 24.75/25 Support: 23)

PAX is on the watch list just because the RSI has passed below 30. A bounce from the downward move is imminent due to RSI. There is still no clear reversal from its current downward move, so you must get in and get out immediately. Get in at 23 and sell at 25 for a fast 7% net profit. But you have to be fast for this play. Expect resistance at around 24.75.

PA ( Chart: Daily Resistance: 0.055/0.06 Support: 0.044/0.033)

PA had a remarkable move up with very high volume. This is currently a buy. There is a possibility that this stock may still form a pennant or flag, so buying the dips is also recommended as long as the MACD does not move below signal line. Resistance is expected at 0.06. Looking at the weekly chart (see chart below), this stock seems to be forming a rounding bottom or a cup and handle. Confirmation of this would be if there is high volume when 0.60 is reached.