StockWatch (Jan 16-20, 2012): PSEi, MEG, RLC

PSEi (Chart: Daily Resistance: 4660 Support: 4560/4530)

We officially created a new high Wed last week, breaking the resistance of the previous high near 4560. Looks like this is the time to bring out the fireworks and celebrate a great start for this year.

Looking at the chart, the dreaded head and shoulder formation that we have been observing has now been invalidated by the creation of the new high for the index. The nearest area pattern that we could see is a large and wide sideways channel, which has the same range as the head and shoulder. With the breaking of the previous high, we could now see our index reaching as high as 5400 which is the target level of the big and wide sideways channel (that was formerly the head and shoulder formation).

However, as of current, we could see profit taking in the market for next week. That may be an opportune time to snatch some stocks and ride the early stages of the bullish sentiment that we now have in the market.

Who knows, this might be the early phase of our leap frog to become the 16th largest economies in the world by 2050 http://business.inquirer.net/39327/philippines-seen-among-top-20-economies-in-next-4-decades

MEG (Chart: Daily Resistance: 1.94 Support: 1.68)

MEG is one of the promising stocks that we have in the market. I say that it is promising because it currently looks like it is forming a symmetrical triangle. Aside from that, the stock has now formed a higher low last Dec 2011 which means it is now recovering from the downward trend that it suffered since Nov 2010.

Measuring the potential upside for this stock, if bullishness enters this stock, we could have a potential upside of up to 2.50 which is a 28% profit from the current price if the current symmetrical triangle breaks out.

As of current, the current price for this stock is now near the resistance line formed since the start of its downward trend since Nov 2010. I don’t see this stock breaking out next week, rather I could see this probably breaking out in 2-3 weeks further. For those who would want to ride this stock, start looking for opportunities next week as the stock moves downward. As long as the stock creates a new higher low, this stock is still in good condition.

RLC (Chart: Daily Resistance: 13.60 Support: 12.08)

RLC is one of the stocks that has been moving bullishly last week. This stock had successive long white candles accompanied by large volume.

It is very evident from the chart that this stock has broken out of a symmetrical triangle with a target price near 14.75. Buying at the current price level of 13.52, will just give you a profit of around 7%. I would recommend waiting for the downward/return move to reach near 12.50 before acquiring this stock so as to maximize profit. I believe that it is bound to go down by next week because the RSI is very much way beyond the overbought level.

StockWatch (Jan 9-13, 2012) : PSEi

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

It was a surprising move for the index to break above the resistance line created since November 2011. The bid head and shoulder formation is still a possibility, albeit decreased in chances of being fulfilled.

We are 40 points away from breaking the previous high created on August 2011. The recent bullishness displayed last week seems to be legitimate. It was accompanied by considerable value turnover, and I could see no bearish/negative divergence created during the making of new highs. Although a very visible weakness was created last Friday’s trading and this could start a downward movement for next week.

I am all hopes that the downward movement for next week would just be a short break before the index continues its upward movement, hopefully making new highs.

Support is near 4410 – 4390 which are respectively the 10 day moving average(red line) and the resistance line from where the index broke above.

As long as the index is able to maintain its current value above the 10 day moving average, bullish sentiment may still be present in the market that could propel the index higher. Otherwise we go back to a higher possibility of the previously observed big head and shoulder formation.

For next week, if you are already making profits, I would suggest to sell a portion for the moment. If the index is unable to hold above 10 day moving average and starts to go to the area where the other moving averages are converging (4300-4250 area) I would suggest to sell all your positions as it would definitely be a sign that bullish sentiment has waned.

Also be on the lookout for a small head and shoulder formation. The current high may be the head and left shoulder at November 2011. It is possible that this may be a prelude to the bigger head and shoulder formation.

StockWatch (Jan 2-6, 2012): PSEi, GLO

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).

StockWatch (Dec 19-23, 2011): PSEi, CEB, MEG

PSEi (Chart: Daily  Resistance: 4340/4390  Support: 4260/4200)

Looks like the index is making a very wide sideways movement as evidenced by the 6 trading weeks where the index is just moving within 4340 and 4200.  This is probably as expected because if the head and shoulder formation is to be taken into consideration, the right shoulder may be completed within the same amount of time. The left shoulder took about 5-6 months to form, so taking cues from there; the right shoulder might also span that long before it gets realized.  Currently, we are now into the 3rd month since the right shoulder bounced from the low last Sep 26, so we probably have another 2-3 months before the right shoulder gets realized. 

I would suggest to keenly observe the channel (parallel lines) between 4390 and 4200. A breach below 4200 line may indicate the start of the downward movement for the index and the realization of the head and shoulder formation.

For next week, the index would most probably continue to move sideways to upward, still within the range of the channel.

CEB (Chart: Daily  Resistance: 67  Support: 62 )

CEB’s chart looks very depressing as it has been on a downward trend since its IPO last 2010.   However, even though this stock is depressing, there is a sliver of light for this stock as last week as volume has spiked on the last three trading days. 

The increase in volume might be a sign of capitulation for this stock as those that have been holding on long for this stock may have given up and has started to sell their positions at a loss. Bargain hunters on the other hand, as evidenced by the volume, are very much welcoming the opportunity of buying this stock at a low price.

Looking at the Relative Strength Index (RSI, 3^rd chart from the bottom), the stock is now way oversold, even going below 20 level.  Usually an RSI of 30 means the stock is oversold, but in this stock’s case, this is way too oversold.  So for a stock that is way too oversold, the next possible move on this stock is a bounce from the low.    This stock would definitely provide you with some gains for the short term. 

You can buy at the current level of 63.15 and sell near 70 for a decent 9+% gain.

For those who wouldn’t mind going on long term hold for this stock, I believe that this stock is also good for the long term, as this stock has nowhere to go but up.

MEG(Chart: Daily      Resistance: 1.75   Support: 1.66/1.51/1.47)

MEG is one stock that you need to avoid for the mean time.   As of last week’s trading action, MEG has completely formed and broken a head-and-shoulders formation.  The downward target price for this area formation is near 1.47.  It can also be seen that the break down from the neckline was accompanied by large volume, so this means the break down is credible, not just an event created by a few sellers.

For next week, expect the stock price to move sideways to upward. This stock may retrace its previous price levels and may fall short of moving past the resistance at 1.75.  After which, it may  continue its downward movement.   If the retracing happens next week, this would be the best time to unload your positions for this stock.

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.