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 (Sept 15-19, 2008): PSEi, CHIB, SMC

PSEi (Chart: Weekly )

PSEi (Chart: Daily Resistance: 2730/2755 Support: 2630/2575) 

The index isn’t looking good after a week’s sell down. The worst that we are expecting had already occurred with the index breaking the standing support line from July of this year. To further aggravate the situation, the support line was broken with large volume.  The break of the support line from July can also be regarded as a break down from the upward channel, with a possible downward target price at 2530. Next possible support is at 2630, which is the previous low. Support at 2630 is acting as the support line for a descending triangle. If this descending triangle is broken, the possible target price is at 2470. The next support after 2630 is at 2575 which is the 65day MA. As you can see, it’s a double whammy waiting to happen for the index. The weekly chart also confirms this impending further bearish action. As it is seen in the weekly chart, the price action for last week is short of a bearish engulfing pattern with a large black candle forming with a very large volume.  The other indicators are also not looking good, with stochastics still opening downward, as well as the MACD moving below the signal line. For the risk averse it would be best to avoid the market until a possible support is formed. The long term outlook is still not as grim as the short term, but it is dangerously moving towards a bearish outlook, with the MACD moving near the center line.

CHIB (Chart: Weekly)

CHIB (Chart: Daily Resistance: 560/565/575  Support: 545)

CHIB seems to have gone against the prevailing market trend with a surge in volume for the last 3 trading days last week. I’m not sure whether this surge in volume is just due to some cross trades and there is also no area pattern from which it might have broken out from.  The only possible pattern that I can see from the chart is a small double rounding bottom with the neck line at 575.  But even if there is no area pattern, this stock is worth following as other good things are showing up in the indicators for this stock. The MACD alone is above the signal line both for the weekly and daily charts, which suggests a bullish outlook. The only problem the both MACDs is that it is still below the center line. But for the daily chart, it is near the center line and is in position to cross above it.  Watch out for resistance at 565 which is near the 65 day MA and resistance line formed from Oct 2007.  If this resistance line is broken, this means this stock is now out of the bearish dive. Next resistance is at 575, which is the previous high and the neckline of a possible double rounding bottom.  If this neck line is broken, the possible TP is at 605.  Price below 560 is a good entry point for this stock assuming a possible target price of 605. Watch out also for the other MA’s acting as resistance along its way up. 

SMC (Chart: Daily Resistance: 52/53.50  Support: 50/48) 

SMC successfully broke the resistance of the inverse head and shoulder confirming a reversal form the previous downward trend. Target price for the pattern is at 57. The breakout also moved past the 260 day MA. Looking closely at the trading for the last 3 days, there seems to be another area patter, a flag pattern, forming, with the target price nearly the same as the inverse head and shoulder target price.  A word of caution though, the price of the stock is nearly halfway its target price, so if you are investing for the short term, there might not be enough  good profit to receive from this stock. For the coming week, there is a possibility that a sell down may further happen. For those planning to enter, a good entry point would be from 48-50 as long as it does not go below 48. 

StockWatch (Sept 08-12, 2008): PSEi, SMC, GLO

PSEi (Chart: Daily Resistance: 2755 Support: 2630/2670)

The index had a very unstable rally last week. It was less than what I expected, given the large volume on the Friday prior to last week. It also fell short of breaking the resistance line for both the inverse head and shoulder formation and the upward channel from 2003 (red-dash lines). There is strong resistance in the levels of 2755 up to 2800 and it’s not looking good for the index as its RSI is now near overbought, stochatics is not that good either and MACD is currently undecided where it would proceed. So expect more volatility for the coming week. Watch out for resistance at 2755, if it is broken next week, with large volume, then this is a bullish sign, as it is the resistance of the inverse head and shoulder that was spotted. But if the index moves further below 2670, then it is possible that the inverse head and shoulder formation we are tracking may get invalidated and the standing support from July is violated. For the latter’s case, it will be better to stay on the sidelines if the break of support does happen. In the long term point of view, this volatility and uncertainty in the market is just temporary and the market is still generally good for long term investment outlook as long as the MACD is above the center line.

SMC (Chart: Daily Resistance: 47.50 Support: 43.50)

SMC is one of the stocks forming an inverse head and shoulder with resistance at 47.50. Currently MACD is poised to cross over the signal line and stochastics is displaying good signs. The only problem is the RSI with is now near overbought. Buy if resistance at 47.50 is broken with volume preferable above 200,000. Possible target price of around 57.

GLO (Chart : Daily Resistance: 1100, 1135, 1235 Support: 1060)

No area pattern for GLO, but if you are following an Elliot wave pattern, we might be on Wave 2, which means Wave 3, the longest wave, may be nearby. It is a buy if support at 1060 holds. It is possible for wave 3 to go beyond 1300 level.

StockWatch (Dec 17-21, 2007): PSEi, SMC, MWC, SMPH

PSEi (Chart: Daily Resistance: 3630 Support: 3500/3450)

After a great upward move breaking the resistance line, the index was unable to hold its position above the resistance line and fell below the line. The gains that was made the previous week was wiped out last week. The bearish move by the index was a surprise for me as I was very much expecting that the index would probably move sideways and consolidate further before moving upward considering the bullish signs that is has manifested. Looks like the general expectation that the index will reach 4000 level before the year end will not happen. We only have this week to consider as a normal trading week as the trading action on the last week of the year will probably be lethargic as some may be on holiday mode already. So it will be impossible for the index to rally 500 points in just 1 week. The index may still reach the 3520 level next week before moving either sideways or upward in between 3600-3700

SMC(Chart: Daily Resistance: 60.50/62 Support: 58/55)

SMC and SMCB had a very bullish move last week breaking several resistance lines with large volume. The stock went as high as 60.50 and may still continue to move probably reaching up to 62. However, looking at the 3 consecutive trading days where it made a wild run upwards, it has formed a “Three advancing white soldier” candle stick pattern, with the third candle stick showing signs of weakness as the body of the candle stick is smaller relative to the first and second candle sticks. I believe that the recent upward move is already a sufficient gain for those who have this stock, so it would be best to start cashing in on those gains. The stock is still bullish, so we can just buy back at later time, probably with in the level of 50-55. Don’t forget the ex-div date on Dec 18, if you get too complacent with the recent bullishness of the stock, you just might find yourself loosing some gains come ex-div date.

MWC( Chart: Daily Resistance: 18.50 Support: 17)

MWC is showing signs of divergence of MACD movement against price. Price has formed a higher high, while MACD seems to be having a hard time to establish a higher high. Price as seen on past movement, after a run up, the price action goes on sideways, so expect that price may move sideways with support at 17. Watch out if price moves below 17 with volume. If it does, we may see price to move towards 13.

SMPH (Chart: Daily Resistance: 10.75 Support: 10/9.30)

SMPH broke down from a support line of around 10.50 and with large volume. As of current the area pattern seems to be a head and shoulder or a symmetrical triangle. Either way, its downward target price is around 6.00. However, RSI is currently oversold, so there is a chance that a bounce may happen and hopefully that bounce would have volume that may counter the effects of the breakdown. If that bounce is able to counter the breakdown, then that is a very bullish action and may be considered as a failed head and shoulder. Assuming this becomes a failed head and shoulder, a good volume to support the action would be around 30M shares. Otherwise it’s just a futile attempt by the bulls to re-instate the price above the resistance line.

In Retrospect: SMC, JFC

SMC

SMC had tough time last week. The bears were successful last week of preventing the price from moving further as trading was always closing lower than the opening price. During the bearish trading last week, it was somehow able to form a support at 50. However, a resistance was also formed at 51.50. So we could say that it is currently consolidating and moving side ways. Checking on the indicators, the MACD has crossed above the signal line, which is bullish. The RSI on the other hand still looks good as it is still below the centerline of 50, which means the recent bearish week is not yet the end for this stock and that it is just taking a breather from the recent upward move.

JFC

JFC had a very bullish start last week with the stock opening higher than its previous week’s close, reaching 52 before closing at 51.50. The rest of the week was characterized by bearish action topping with a sign of indecision on the last day as price opened and closed on the same level. The stock may further consolidate next week, as it is currently in between the 65 and 130 day MA. Sideways consolidation is actually good for the stock at this point as a breather from the recent upward move. Still watch out for the possible inverse head and shoulder formation with resistance at 54.

StockWatch (Dec 03-07, 2007): PSEi, SMC, JFC

PSEi (Chart :Daily Resistance: 3620/3670/3730 Support: 3500)

The index had a very bullish action last week and recovered 30% of the recent downward move. There was an unusually large volume traded last Tuesday and we can probably consider this as a support. One good thing that can be observed in the chart is that the gap up that happened on the first trading day last week created an island reversal, now how high can the index go is still anybody’s guess. Last week also, the incident at the Manila Peninsula did not have much of a negative effect on the index, but it somehow has shown a little bit of indecision on where it will move next as it closed just below the opening level creating a doji. The doji that formed I think definitely reflected the current situation for the index. We have the recently formed island reversal and a 20% recovery from the downward move which are bullish actions, however, due to last Thursday’s incident at Makati, there definitely occurred some hesitations and bearish reactions that prevented the index from closing higher, thus forming a doji. This coming Monday’s trading would be a critical indication of how the market will turnout for the rest of the week. There might be some selling happening when the index opens and that might be associated with the uncertainty and cautious trading. But observe the index closely, if the sentiment is still bullish, the index can immediately pull up from the selling pressure, or probably immediately open higher. Now looking at the DJIA last week, it formed a stalled candle stick pattern (3 successive white candle with the first 2 candle sticks being long and the 3rd a small bodied candle stick) and last Friday's trading had a higher close, but it formed a black candle with large volume, so there might be some bearish sentiment that could affect our local market for the coming week. Watch out for support at 3500, breaking this level might be an indication of a return to downward move. An MACD cross above the signal line is also poised to happen, if it does, then it is a bullish confirmation of the recent upward move that we are experiencing.

Erratum: I earlier posted a wrong info on the DJIA having gained 300pts, it actually gained only around 60 pts last Friday, forming a black candle.

SMC Daily Chart

SMC Weekly Chart

SMC (Resistance: 51.50/54/56.50 Support: 46.50/42.50)

SMC now has an island reversal formed with an exceptionally large volume as shown in the daily chart. Looking at the weekly chart we can see that it fell short of being a bullish engulfing formation, however, the volume says a lot about the bullishness of this stock as it had an exceptionally large volume for last week. On the daily chart we can also see the bullishness as the stock was sold down with low volume, but was bought up the next day with more than double volume when it was sold down. Another bullish indicator is the MACD which is now poised to cross above the signal line. There is no price target for this since we do not have an area pattern formed. The only guide we have for selling are the different resistance levels and also our risk-to-reward ratio. The upcoming resistance for this stock are a.) 51.50, the highest the stock went last week, b.) 54 which is a long standing support that turned resistance when the stock broke down last November, and c.) 56.50, the 38.2% Fib retracement. Watchout for the 54-56.50 levels, those that were able to buy at 45 and below may start cashing in on the stock at those levels. Average volume for this stock is around 300T shares traded, a sell down near or above the average volume may indicate that some have started cashing in on the stock. If the stock was able to go past the 54-56.50 levels with low volume on sell downs, then there is a higher chance that the stock may reach the 65 level which is the 61.8% Fib retracement.

JFC (Chart: Daily Resistance: 51/55 Support: 48.50/45)

JFC showed a bullish movement last Thursday when it closed the gap formed last Nov 20 accompanied with a large volume of about 2.9M shares. The MACD has currently crossed above the signal line indicating a buy. The only hesitation that I have with the stock is that it formed a large upper shadow, which indicated that there was not enough bullish sentiment that could hold the stock at those price levels. However even though it was not able to hold price at those levels, it was able to close the gap formed last Nov 20 which can also be interpreted as a bullish move. We need to watch the succeeding trading days though. Watch out for signs of diminishing bullishness such as high volume on selling days and being unable to close above the 260 day MA. Also watch out for the inverse head and shoulder formation and possible resistance at 54-55 levels.

In Retrospect: ASIA, JFC, SMC

ASIA

ASIA went to as low as 11.50 one of its support level. The symmetrical triangle support line needs to be redrawn a little bit. In my opinion, a strong support level at 11.75 was established last week. Movement for this week could be sideways or up. Price action is very near the apex, so this is still a stock to watch. Buy only on break out.

JFC

Good thing with JFC is that the support line was very much respected on the trading days last week. It went up to as high as the resistance level of 56. MACD has crossed over the signal line which is very good. Another good indicator is a divergence of MACD and price last week. Any of these things could happen next week: a) Sell down to the 65 day MA support of around 54 possibly because of those who would want to cash in already. b.) RSI to move down near 50, or c.) A break out! A satisfactory breakout volume should be above 2M shares. Target price is 67.

SMC

Nothing significant happened, except that the stock moved sideways, forming an ascending triangle. However, the volume does not seem to confirm the formation. Though the rounding bottom is still intact. Still a stock to watch.

StockWatch (July 2-6) : ASIA, JFC, SMC

ASIA( Chart: Daily Resistance: 13.00/13.50 Support: 11.75/11.50)

ASIA is forming a symmetrical triangle with a target price of 23. Currently, price is near support line from Feb, which is a good buy level. Symmetrical triangle is near the apex, so breakout (or down) should happen anytime soon. Otherwise we have to redraw our support and resistance line. Aside from the symmetrical triangle, on a bigger picture, the charts is showing signs of a rounding bottom or cup and handle formation, however this formation is not yet ripe for the picking.

JFC (Chart: Daily Resistance: 56 Support: 52.50/ 49.50)

JFC is forming a symmetrical triangle with target price of 67. Price is currently near the support line from May, so this is currently a good buy level.

SMC (Chart: Daily Resistance: 76.50/80 Support: 72)

SMC is forming a small rounding bottom with resistance at 80. As of now anything could still happen, the rounding bottom formation might be replaced with a symmetrical triangle or ascending triangle depending on the outcome of the trading next week. Buy only on breakout.