StockWatch (Jul 23-27, 2012): PSEi

PSEi (Chart: Daily      Resistance: 5252         Support: 5180/5070)

It seems that the recent 3 week bullish activity that propelled the index to new highs was unable to sustain its upward momentum and right now with the past 2 weeks of downward movement, the gains made on that 3 week bullishness is now 50% gone.

The index is now below the 10 day moving average, which previously stood as a support line and is now a resistance for the index.   As long as the index is below the 10 day moving average, I would like to suggest avoid buying and just maintain your position or lessen it.  

Do watch out for the 50 and 100 day moving average that is just a few points away from the current index level. If the index moves below that 2 moving average lines, be prepared for a long wait before the index is able to create a new high.

StockWatch (Jul 09-13, 2012): PSEi, PX

 PSEi (Chart: Daily      Resistance: 5400         Support: 5287)

Last week, the index proved me wrong on all possible area patterns that I saw and instead pushed further upward creating a new high.  I am a little bit skeptic on the bullishness that the index is displaying now.   After large drops on previous weeks of trading, I was surprised to see the index creating a new record high and even gapping up on the start of last week’s trading.  I was expecting the index to meet strong resistance on approaching the previous high, especially because of the drop that happened on the second week of May.  But I guess a lot of traders are bullish on the market right now, hence the previous high being easily overtaken.

For next week, do observe the market, we can see that the RSI is now near overbought level with three weeks of upward movement for the index, it is possible that it would succumb to the resistance brought about by the RSI  near level 70.

Support is near 5287 which is the 10 day moving average for the index. For the past 3 weeks, the 10 day moving average has been providing support, so if the index moves below that, do sell a portion for the mean time.

PX (Chart: Daily         Resistance: 24.90        Support: 23.20)

PX is exhibiting characteristics of a symmetrical triangle.  This is supported by the diminishing volume as the triangle nears completion.   Right now, this stock is almost near 1/3 away from the formation of the triangle’s apex, so watch out for either a break out or break down of this stock in the coming weeks.

Upward target price for this stock is near P30, while downward target price is near P18.

StockWatch (Jul 01-06, 2012): PSEi

PSEi (Chart: Daily      Resistance: 5330         Support: 5180/4860)

Just as we are getting the hang of the ranging movement of the index, the index made an unexpected move last week, where instead of following the ranging movement that it has been doing, it broke above the channel area pattern.

As of Thursday and Friday last week, the index has created a new resistance level, almost reaching the previous high created last May.

So what is the index now up to?  Couples of area patterns are fitting the current conditions of the index. The very evident is a possible big and wide ranging movement.   Second that I could see is a possible cup and handle formation, a bullish continuation pattern, considering the previous trend is upward. The third is a possible double top formation if the index is unable to go beyond the previous high.

All of the possible area patterns that can be matched for the index’s current situation have something in common, that is, its next movement would be a downward movement. So expect further downward movement next week.  Succeeding downward movement will eliminate one by one the 3 patterns that matched the current conditions. 

StockWatch (Jun 25-29, 2012): PSEi, MEG

 PSEi (Chart: Daily      Resistance: 5156         Support: 4964)

Events from last week’s trading was positive, with the index regaining its loses from the previous week. 

We can now see a possible slight upward shift in the sideways movement of the index as it was able to create a new high since the major downward trend that happened last May.  Albeit slightly upward, this is still a sideways movement for the index ranging between approximately 5156 and 4964.

There are no negative divergences that can be seen from the chart; both MACD and RSI are in-synch with the movement of the index.

The index has now established a pattern, that of a sideways movement, and it is currently following resistances and support areas.  So for the coming weeks, range trading strategy is recommended.

MEG (Chart: Daily     Resistance: 2.26          Support: 1.90)

MEG caught my attention because of a very noticeable volume and price pattern.  The ongoing trading action for MEG seems to be forming a cup and handle formation, with volume increasing as the right side of the cup is being formed.  

With the inability of the stock to support further upward movement last Friday, this may signal the start of the handle formation.

Generally a cup and handle formation is a bullish continuation pattern. Considering the recent upward trading activity in MEG since the start of the year, we may be seeing the return of MEG towards the previous high created last Nov 2010.   However, there are still a lot of resistance levels that it needs to overcome, but nonetheless, MEG is slowly knocking out one level at a time.

If the cup and handle formation does materialize, it has a potential upward target price of 2.55, slightly just above another resistance level at 2.48.

StockWatch (Jun 18-22, 2012) PSEi

 PSEi  Weekly Chart

PSEi (Chart: Daily      Resistance: 5109         Support: 4929/4909)

Apologies if I haven’t been posting any analysis on the blog for a month. I was on a month long job assignment outside of the country and I wasn’t able to monitor the local stock market.

I was surprised that a lot has happened for a month, particularly with the index falling 400 points on May and more recently the 200 point drop from last week’s trading.

A lot may be wondering where the index is headed, and from the looks of the daily chart, the index is still in a sideways movement between 5109 and 4909.   With the RSI chart, we can see that the index is definitely undecided where to go as seen by the zigzagging action, crossing above and below the 50 RSI level for 3 weeks now.

However, looking at the weekly chart, particularly the MACD opening wide downward, the index is more likely to move lower in the long term, so it is possible that what we are seeing now is just a pause before the continuation of the downward movement.

For next week, if the index continues to move lower than the support line at 4909, then this would be a breakdown of the current sideways channel. Target level for this would be near 4700.   I would suggest staying on the sidelines for the mean time until at least the MACD has crossed above the center line again.