StockWatch (Dec 05-09, 2011): PSEi, MPI, LC, LCB

PSEi (Chart: Daily      Resistance: 4340/4390            Support: 4200)

The support for 4200 held its ground last week and has prevented the index from crossing below that support level.  The lowest that the index dived is at around 4211, just a few points away from the previous low at 4207.  Bullishness went back to the index as it gapped up on trading last Thursday and continued on to Friday.

Looking at the value turnover on the lowest index level for last week, there was considerable increase in value turnover for the black candle formed last Tuesday.  This however was countered by an almost same value turnover on Thursday, the day when the index gapped up.  We can see here that bullish sentiment was able to reverse the effects of the trading last Tuesday and somehow was able to maintain its level.

The bullishness will definitely continue next week with an upward to sideways movement, but its strength is something that one should closely monitor as it approaches the previous highs at 4340 and 4390.  It is possible that the index is just moving in a wide sideways movement between 4200 and 4390.  Remember that there is still the possibility of the index forming a big head-and-shoulder formation (neck line at the low of Feb and Sep 2011) and the ranging movement may just be part of the bigger picture.

Another thing to look out for the coming days is the formation of a small head-and-shoulder area pattern.  Possible necklines have been established on Nov 3 and Nov 29.  The only thing missing from the area pattern is the right shoulder.  If resistance level at 4340 proves to be strong, then this might aid in fulfilling the area pattern.  The possible target level for this area pattern is near 4000 level.

MPI (Chart: Daily       Resistance: 3.60/3.75  Support: 3.41)

MPI has been moving upwards since October and what is remarkable about this stock is that volume on most of the days when white candle is created is exceptionally high.  Also comparing the volume prior to October, we can see that there is a lot of action in this stock from October onwards which means there is an established bullish sentiment for this stock.  The only area pattern that could be deduced from the chart is the upward channel, which confirms the bullishness of this stock. 

Last Friday’s trading once again triggered a bullish sentiment for this stock as it registered relatively high volume. So for next week, we may be in for the continuation of this bullishness if current support holds. 

Immediate resistance for this stock is near 3.60 which is the resistance line from the peak of July and peak of Nov.  If the stock surpasses that level, then next resistance will be near 3.75 which is the upper line of the channel or the resistance line of the current upward movement.

LC (Chart: Daily         Resistance: 1.82          Support: 1.35)

LCB (Chart: Daily      Resistance: 1.90          Support: 1.45)

Both LC and LCB have been in a bullish mode for the past weeks and as of last Friday, it has again registered high volume on the white candle.  There is no doubt about it that these stocks are on the run, but a possible resistance may put a stop to this bull run. And this possible party pooper is the previous high from Aug at 1.82 for LC and 1.92 for LCB.  Those resistance levels are definitely something that one would need to observe. 

One thing is for sure, whether or not the resistance levels prove to be strong, you should be on the lookout for signs of weakness like longer wicker for white candles and decreasing volume on the upward movement considering that both stocks are now way beyond over bought level. 

StockWatch (Nov 21 – 25, 2011): PSEi

PSEi (Chart: Daily   Resistance: 4390/4410/4560   Support: 4280/4200/4180)

The index had a short lived rally on the first 2 days of trading last week, but reversed on Wed and has been moving downwards since.   With the upward movement made by the index on the first 2 days of trading, this confirms a bearish divergence for the index, with the index moving higher and both RSI and Stochastics moving lower.

It is also evident on the chart that the index is no longer able to sustain upward movement as seen on the black candle stick formed on Wed, having a short real body and a long wicker.  This means there were bullish sentiments during the day, but were overcome by bearish sentiments.

Up until when this bearish sentiments would continue is still something to be observed.  As of current, a rising wedge can be seen on the chart and the recent bearish move could be interpreted as a break down from the area pattern.  The possible target level for this area pattern is near 4200.  This is the same level as the previous low last Nov 3.  

It is still a wait and see whether this recent bearish movements in the index would become a full blown bearish sentiment or if support at 4280/4200/4180 would prevent this bearish sentiment to continue.  As of current, the MACD seems to be siding on bearish sentiment, with the signal line just about to cross below the moving average line.

For next week, expect the index to move downward to sideways. Keep watch of the support at 4200, if index moves below that level, it would be prudent to sell for the moment.  Remember that there is still the possibility for the big head-and-shoulder formation to materialize and the index moving below that level would already be 1/3 of its way to accomplishing that area pattern. 

StockWatch (Nov 14 – 18, 2011): PSEi, GLO

PSEi (Chart: Daily Resistance: 4346 Support: 4260/4207)

The index moved sideways last week with the moving averages providing support for the index. It looks like we will be on a sideways movement again next week as several support areas are just near the current index level. Two moving averages are currently providing support, the 10 and 100 day moving average. Just a little bit below that, we can see the support line from Sep of this year at 4260. Then afterwards, there is another possible support line, which is the previous low at 4207 and just a little bit down below that level are the 50 and 200 day moving average. With a lot of support along the way down, it is highly possible we may see the index moving sideways between 4207 and 4346.

One of the things to look out for the coming weeks is the possibility of a bearish divergence happening. Currently the stochastics and the RSI are moving downwards, if the index makes a short rally upward and the indicators still continues to move downwards, we may be seeing a bearish divergence happening. But again, this is just a possibility that we need to closely monitor.

GLO (Chart: Daily Resistance: 965 Support: 890)

GLO seems to have formed a small inverse head-and-shoulder (see the small markings on the right side) area pattern. This is a bullish pattern and when this breaks out, we can project the price to reach near 1100. As of current, this stock may have already broken out of this pattern, with trading action last Friday creating a considerable spread with large volume.

When the target price is reached, we may be one step closer to a much larger opportunity for this stock. Zooming out of the chart, we can see that this stock has a double bottom formation, just waiting to breakout. The break out from the inverse head-and-shoulder would put the double bottom formation nearer the resistance or breakout line. But unfortunately, this is still to be seen and it may take maybe more than a month before this materializes.

StockWatch (Nov 8-11, 2011): PSEi

PSEi (Chart: Daily Resistance: 4345 Support: 4180/4055)

I honestly have been having a hard time determining where the index would likely go for the past weeks. All those times, I was expecting the index to move lower since the index has unceasingly rallied so high for the first 2 weeks of October, and it again unexpectedly continued rallying up until the end of October. However, last week, it looks like reality is catching up with the index, with all the resistances along the way (e.g. the moving averages, the previous highs and the resistance line of the current upward trend), the index seems to be unable to maintain anymore rallies, as evidenced by the big 2 day drop for last week.

For the coming week, expect the index to move sideways to downward. There may be support for the index at the current level as the moving averages are all converging between 4270 and 4160. If not, next support is near 4180, the support line for the current trend and next is near 4055, the resistance-turned-support line connecting the peaks from Aug to Sep.

Note that the big head-and-shoulder formation (with left shoulder from Sept 2010-Mar 2011, head from Mar-Sep 2011) is still a possibility, so keep your eyes peeled especially as the index nears 3715, the previous low from Sept.

StockWatch (Oct 24 – 28, 2011): PSEi

PSEi-Weekly Chart

PSEi (Chart: Daily Resistance: 4218 Support: 4003)

The index moved upward on the start of the trading day last week. It was a welcomed surprise, but unfortunately, value turnover on that day was relatively lower. For the remainder of the week, the index moved sideways, treading the line of resistance connecting the peaks from Aug.

Of the 3 scenarios that I was looking out for last week, I think scenario 3 would best fit what happened last week, where the current bullishness in the market is labeled as wave 3 count. The projected end point of wave 3 was supposedly near 4260 and that was just barely reached last Monday when it peaked at 4218. So if we consider this recent bullishness as wave 3, then wave 4 would bring our index down to near 4003, but not going any further below.

Looking at the weekly chart, as wave 4 materializes, we are getting closer to seeing a possible head and shoulder formation. But this is probably 1-2 months down the road before it peaks. This is something to observe as the formation progresses.

For next week, it is still recommended to stay on the sidelines. If one would try to ride wave 5, then you could probably look for opportunities when the index nears the 4003 level.