StockWatch (August 27-31, 2007) PSEi, JFC

PSEi (Chart: Daily Resistance: 3250 Support: 3170)

The index is currently testing the 38.2% Fibonacci retracement level at 3230. It’s still a wait-and-see if the resistance will be broken. However I’m more inclined to call that the resistance may be a problem for the mean time. This is due to the volume which is just average in the index’s upward move. Looks like most are still out of the market until further confirmation that the stock market scare is over or have died down. A positive note on the index is that the MACD has now crossed above the signal line. Hopefully this might attract more volume in the market. As of current we’re still not yet out of the woods until we have gone past the Moving averages and have created a new high. Looking further at the index, if I were to follow the downward movement gaps, it seems to be confirming a reversal. We have the breakaway gap, the runaway gap, and the exhaustion gap (marked as 1-3 in the image). The trough formed in the index was a confirmation of the runaway gap, that indicates a halfway point for the movement and the exhaustion gap which indicates that the bottom is nearing. Analysing the gap on the current upward move, we have the breakaway gap and runaway gap (marked as 4-5). If the run away gap is to be considered as a halfway point this means the top of the current upward move will be near 3460 (marked as 6 in the image), at which level is also the 61.8% Fibonacci retracement level. Considering the gaps on the upward move, this could probably indicate that for the coming weeks or months, we will be trading between 2870 and 3460.

JFC (Chart: Daily Resistance: 53 Support: 49)

JFC seems to be forming a symmetrical triangle with TP near 75. At this point, it is still too early for a breakout to happen. Price action may probably trade the range of 44-53 for the mean time. Also if my analysis is correct, there seems to be an inverted head and shoulders formation. Left shoulder is already formed and head is on its way to be formed, however we still have to wait for the right shoulder. Judging from the time span the left shoulder has formed, which is around 3 months, the completion of the head formation may be on September and the right shoulder and breakout by November or December. Watchout for the resistance line, this will be tested by the right side of the neckline formation of the H&S. Getting in at this level would be risky for range trading. A good level for range trading is at 45 or below. Sell at 53, cut loss at 43.50.

In Retrospect: PAX, JFC, DGTL

PAX

PAX moved with the market last week, going to as high as 14. A short upward move and sideways movement characterized its price action. However, we could see that even if there had been an upward move for this stock, it has consistently closed lower than the opening price. This means the bulls are still overpowered by the bears trying to sell the stock. Also the volume is still lethargic, which means there aren’t enough buyers. If this goes up and is able to close the gaps without a significant increase in volume, then this means the upward move was just superficial. Watch out for price levels 14.25 the lower end of the gap, 15.25 higher end of the gap, 16.25 and 19.00 the 23.6% and 38.2% Fibonacci retracement price levels. One good thing to note for this stock is that the MACD is positioned to cross above the signal line. It’s a wait-and-see if this cross above the signal line would attract more volume. Still be on the look out for the formation of an island reversal pattern.


JFC

The trough that we are waiting is now formed and this means that our positive divergence is confirmed. This stock went to as high as 53 with sufficient volume. However, the 2 MA’s are currently blocking its way and has proven to be strong resistance. Price may move sideways to down for this week. It may go to as low as 49 which is its previous low or beyond.

DGTL
The positive divergence is also confirmed for DGTL as the trough has formed. However, the upward movement of the stock was not accompanied by volume, which means its sideways movement for this stock for now until it’s able to get more volume. Any further upward move without sufficient volume may not be good enough to break out from the downward channel that it is currently in.

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StockWatch (Aug 20-24, 2007): PSEi, PAX, JFC, DGTL

PSEi (Chart: Daily Resistance: 2940/3100/3220 Support: 2740/2440)

The index went thru the 260day MA, even breaking the long term support line connecting the peaks from 2002 and 2006. Next support level is at around 2740, the long term support line connecting the peaks of 2002 and 2005 and afterwards at 2440, the support line connecting the troughs of 2003 and 2006. With last Friday’s Fed’s intervention in the US market by cutting the discount rates, hopefully our local market would also react positively with that event. There is still no sign of reversal, so it might be possible that upward moves maybe short lived due to heavy selling from those who were stuck in the 4 weeks straight selling. Resistance at 2940/3100/3220 which are previous highs.

PAX( Chart: Daily Resistance: 14.25/15/16/17.50 Support: 10/10.75/12)

On a bearish market, RSI goes way below the oversold level of 30. This somehow got my curiosity to find the stock that has the lowest RSI to date which eventually led me to PAX. The RSI of this stock is currently at 6.69, the lowest of all stocks actively traded. On further observation of the price movement, this stock also has a couple of other stories to tell. The prominent things I’ve noticed on this stock are the gaps. If my analysis is correct, the price movement may have formed a break away gap, runaway gap and an exhaustion gap. The exhaustion gap coupled with the RSI is somehow telling us that selling momentum for this stock maybe near its end. What may happen in the week to come is the probable formation of an island reversal or probably a short upward move then a sideways movement. Expect heavy resistance at those levels where the gaps were made. This can be a candidate for range trading. If you could get this stock at 12, you can sell at 14 for a 15% net profit. Cutloss is at 11.50. Word of caution, even though there are signs telling us of possible end of the selling momentum, there is still a possibility that price may further move down. Next support levels are 10/10.75. The price 10.75 is the support line connecting the troughs of 2003 and 2005. While 10 is a logical support and previous low.

JFC ( Chart: Daily Resistance: 50/51/54 Support: 44/42.50/39)

JFC may be forming positive divergence. Both the RSI and MACD are registering higher lows, while the price is registering lower lows. The positive divergence is not yet confirmed as price still has to form the trough. At this point, the price may further register lower low and may drag both the RSI and MACD with it thereby invalidating the positive divergence. However, even if the positive divergence is confirmed it may take a while before the stock starts to move the opposite direction.

DGTL (Chart: Daily Resistance: 1.20/1.40 Support: 1.10/1.02/0.88)

DGTL is also showing signs of positive divergence. Both RSI and MACD are registering higher low while price is registering lower low. The divergence is still not confirmed as the trough still has to be formed and price may still move further down dragging the RSI and MACD and invalidating the positive divergence. Price at 1.10 is a support level, this is the support line connecting the troughs from 2002, 2003, 2004 and 2006. It’s a wait and see this week if that support line will hold.

In Retrospect: AC

AC

AC moved with the market and went further below 457. It broke both the support line from 2002 and the 260day MA. However, thought it has moved back in an upward channel formation, the MAs hasn’t crossed each other’s path which is a sign that this stock is still bullish. Also as long as it does not go below the support line of the upward channel at around 300, this can still be considered bullish. RSI is current at 19, which very much oversold, but with the current bear market, RSI may still go further low.