Me-Six: Technical Analysis of the Philippine Stock Market

StockWatch (Feb 06-10, 2012): PSEi

2012-02-05T21:50:00.000+08:00

PSEi (Chart: Daily Resistance: 4820 Support: 4700/4590)

The index created a new high last week, accompanied by high value turnover. However, I would like to advise caution in further buying from this point forward, for the reason that all indicators are pointing to a negative (bearish) divergence.

Looking at the RSI and MACD, these indicators have created a lower high, the complete opposite of what the index created last week. This means a negative divergence is happening and that the index may start to move south anytime in the very near future.

StockWatch (Jan 30-Feb 03, 2012) PSEi, CEB, ABS

2012-01-28T21:08:00.003+08:00

PSEi (Chart: Daily Resistance: 4760 Support: 4590)

As observed, the negative divergence seen in the charts 2 weeks ago has manifested as the bearish event that happened last week. The index took a dive but was able to recover on the last trading day.

The white candle that was formed last Friday seems to have some backing of the bullish traders because the value turnover for that day was almost as high as the value turnover on Thursday.

With regards to area patterns, we can see that the recent bearish activity broke the standing support line that was formed since the start of the year. That line can be interpreted as the lower line of an upwards channel which has a target level near 4550.

Now considering that the recent bearish activity broke the support line, it is possible that the continued “bullishness” last Friday is just a return move to the support-turned resistance line. One thing to observe for the coming week, is if the index can rise above that support-turned resistance line.

Also, be on the lookout for the impending small head and shoulder formation. It is possible that the return move might not be able to go above the resistance line and might turn into the right shoulder of the head and shoulder formation.

For next week, if you would try to take advantage of the “bullishness” that started last Friday, do dispose all of your positions IF the index is unable to move above the resistance line. If that occurs, that is a definite sign of weakness for the index.

CEB (Chart: Daily Resistance: 69.80 Support: 65.25)

As I have posted last December, for those who would like to go long on a stock, CEB is one stock that you could put in your long term hold list. As of last Friday, this stock was able to create a new higher low, which means, this stock is now slowly moving its way back to the trader’s list of buy items.

Looking at the white candles formed, we can clearly see that volume is significant, which means there is a growing demand for this stock. So if you would like to take advantage of this stock while in its early stages of growth, now is the time to do that, provided that you are willing to go long. Coming from a downward trend for more than 1 year, you definitely would not see this stock immediately skyrocket with its price. There will be a sideways movement before this stock starts to trend upwards, that is why this stock is only for those who can hold this for the long term. But definitely, your waiting will be rewarded later on.

ABS (Chart: Daily Resistance: 34.60 Support: 32.32/30.30)

Looks like there is renewed interest for ABS. Coming from a downward trend for more than a year; this stock has started the year right by creating a new higher low, which means it is now slowly recovering from the bearish trend.

Seeing the volume on white candles formed in the past 2 weeks, I can say that like CEB, this stock is now slowly making its way to trader’s buy list.

As of the moment, the bullishness of this stock is stopped by the resistance line at 34.60. RSI is very much overbought so expect that the resistance line would hold its ground and the stock would start going down this week, which would probably give you an opportunity to buy this stock between 31-32 price levels (or lower).

Observe by next week if the stock would be able to again create a new higher low, which is a further confirmation of the stock’s recovery.

If this stock remains bullish by next week and breaks the resistance line, the target level of the breakout of the channel area pattern would be near 39.

StockWatch (Jan 23-27, 2012) PSEi

2012-01-23T18:30:00.000+08:00

PSEi (Chart: Daily Resistance: 4747 Support: 4635/5460)

The index made history once again as it moved higher creating new high for the market. I was expecting the market to move downward last week, but bullishness sentiment was very evident that the index only had 2 days of downward movement and then continued creating new high.

One thing to look out for this current bull market is the possible formation of a negative divergence as can be seen in the RSI. We are now creating new high on the index, but the RSI is not in-synch and still hasn’t surpassed the previous high for the RSI. Also, I think we are now starting to form a rising wedge, a possible reversal signal, which is a bearish event.

For the succeeding days, exercise caution on buying stocks. I would recommend keenly observing the market and selling a portion when signs of weakness are detected on the stocks you currently hold.

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

2012-01-14T21:11:00.000+08:00

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 2050http://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

2012-01-07T09:33:00.001+08:00

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

2012-01-01T10:40:00.000+08:00

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

2011-12-18T23:02:00.000+08:00

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

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

I would suggestto keenly observe the channel (parallel lines) between 4390 and 4200. A breachbelow 4200 line may indicate the start of the downward movement for the indexand the realization of the head and shoulder formation.

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

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

CEB’s chartlooks very depressing as it has been on a downward trend since its IPO last2010. However, even though this stockis depressing, there is a sliver of light for this stock as last week as volumehas spiked on the last three trading days.

The increase involume might be a sign of capitulation for this stock as those that have beenholding on long for this stock may have given up and has started to sell theirpositions at a loss. Bargain hunters on the other hand, as evidenced by thevolume, are very much welcoming the opportunity of buying this stock at a lowprice.

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

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

For those whowouldn’t mind going on long term hold for this stock, I believe that this stockis 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 onestock that you need to avoid for the mean time. As of last week’s trading action, MEG has completelyformed and broken a head-and-shoulders formation. The downward target price for this areaformation is near 1.47. It can also beseen that the break down from the neckline was accompanied by large volume, sothis 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 itsprevious price levels and may fall short of moving past the resistance at1.75. After which, it may continue its downward movement. If the retracing happens next week, thiswould be the best time to unload your positions for this stock.

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

2011-12-04T19:58:00.001+08:00

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

The support for4200 held its ground last week and has prevented the index from crossing belowthat support level. The lowest that theindex dived is at around 4211, just a few points away from the previous low at4207. Bullishness went back to the indexas it gapped up on trading last Thursday and continued on to Friday.

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

The bullishnesswill definitely continue next week with an upward to sideways movement, but itsstrength is something that one should closely monitor as it approaches theprevious highs at 4340 and 4390. It ispossible that the index is just moving in a wide sideways movement between 4200and 4390. Remember that there is stillthe possibility of the index forming a big head-and-shoulder formation (neckline at the low of Feb and Sep 2011) and the ranging movement may just be partof the bigger picture.

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

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

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

Last Friday’strading once again triggered a bullish sentiment for this stock as itregistered relatively high volume. So for next week, we may be in for thecontinuation of this bullishness if current support holds.

Immediate resistancefor this stock is near 3.60 which is the resistance line from the peak of Julyand peak of Nov. If the stock surpassesthat level, then next resistance will be near 3.75 which is the upper line ofthe 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 LCBhave been in a bullish mode for the past weeks and as of last Friday, it hasagain registered high volume on the white candle. There is no doubt about it that these stocks areon the run, but a possible resistance may put a stop to this bull run. And thispossible party pooper is the previous high from Aug at 1.82 for LC and 1.92 forLCB. Those resistance levels aredefinitely something that one would need to observe.

One thing is for sure, whether or not theresistance levels prove to be strong, you should be on the lookout for signs ofweakness like longer wicker for white candles and decreasing volume on theupward movement considering that both stocks are now way beyond over boughtlevel.

StockWatch (Nov 21 – 25, 2011): PSEi

2011-11-20T10:25:00.001+08:00

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

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

It is alsoevident on the chart that the index is no longer able to sustain upwardmovement as seen on the black candle stick formed on Wed, having a short realbody and a long wicker. This means therewere bullish sentiments during the day, but were overcome by bearish sentiments.

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

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

For next week,expect the index to move downward to sideways. Keep watch of the support at4200, if index moves below that level, it would be prudent to sell for themoment. Remember that there is still thepossibility for the big head-and-shoulder formation to materialize and theindex moving below that level would already be 1/3 of its way to accomplishingthat area pattern.

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

2011-11-12T20:28:00.001+08:00

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

2011-11-05T18:54:00.001+08:00

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

2011-10-22T13:09:00.002+08:00

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.

StockWatch (Oct 17-21, 2011): PSEi, MPI

2011-10-15T12:59:00.000+08:00

PSEi (Chart: Daily Resistance: 4170 Support: 4003/3798/3715)

The index rallied last week, stopping just short of crossing above the 200 day moving average. I didn’t expect the index to rally beyond the 4050 projected peak of the 4th wave (green bar on the chart). I was more of expecting a sideways movement when it reaches that level. Instead the index pushed beyond 4050 and even beyond the previous low of 4129 (labeled F1).

The 4129 level is supposedly the 1st wave count, and based on rules for counting, wave 4 should not overlap wave 1. The recent market activity had invalidated our standing 5-wave count (labels F1-F4). So what does this translate to?

Scenario 1:Some Elliot wave practitioners point out that if the 4th and 1st wave overlap happens, then we would have to re-label our wave count, changing our previous wave 3 as wave A of the A-B-C pattern. This now makes our previous 4th wave, as wave B. This gives us a projection of near 3650 (61.8% of the length of wave A) as the nearest end point of our wave C. The next possible end point of wave C would be near 3350 (100% of the length of wave A).

Scenario 2:Some Elliott wave practitioner acknowledges the occurrence of a wave 4 and wave 1 overlap. They believe on a more lenient interpretation such that wave 4 is allowed to overlap no more than 10-15% of wave 1. With this consideration, wave 5 projections can go near 3600 (127% of wave 4) or 3450 (162% of wave 4).

Either way, both scenarios point to a possible downward trend and both point to nearly the same level.

Scenario 3:Now considering we start labeling F3 as wave 0, then we have wave 1 (labeled (1)) at 4003, then wave 2 (labeled (2)) at 3798. The projected wave 3 would be near 4260 and the projected wave 4 would be just above wave 1 near 4028. This wave counting also points to a downward movement as we near the peak of wave 3. Albeit, this would be a more positive outlook (on the short term) than scenario 1 and 2 for the reason that the projected downward movement is shorter and it also has the possibility of forming wave 5.

The stochastics alone also points to a possible downward movement for next week as well as the RSI reaching 50 level. Add to that the current 200 day moving average acting as resistance. So with all those consideration, we could expect the market to move lower by next week.

As one might be tempted to get in the market because of the rally last week, I would suggest to hold on to your cash for now until we have more indicators supporting last week’s rally. One of the things to observe for next week is the support near 4003. If the downward movement does not go below 4003, then this gives scenario 4 more credence for short term bullishness as wave 5 starts to form.

MPI (Chart: Daily Resistance: 3.14 Support: 2.78/2.56)

MPI caught my attention because of the large increase in volume for the past 2 weeks. There has been a lot of interest on this stock as shown by the unusually large volume on the upward movement.

However, as of current, this stock is now on its way down. Do observe this stock on its way down. As long as the volume on the downward movement does not increase, this stock may be a viable item to buy later.

There are several scenarios that could play into this stock. One scenario would be if the stock is able to hold its price above 2.78 (which is the 62% retracement), then there is a possibility that the 3rd wave could materialize which could bring this stock back up to near 3.72.

Otherwise, if the 62% retracement at 2.78 does not hold and the stock continues to move downward, the next support will be at 2.56, which is the previous low. If the support at that level holds, then we might be seeing a reversal pattern here, which is a double bottom.

As of current, I am a bit skeptical on the possibility of the 3rd wave to materialize as there is no reversal pattern that I could see that would support the 3rd wave to reach 3.72, way past above all the moving averages. What I think would more likely to happen is for this stock to move sideways, because it has been on a downward trend for almost a year now and possibly the sideways movement would start forming a reversal pattern.

Would this be a stock to buy? Possibly if the support at 2.78 holds and price starts to move upward again with large volume, otherwise I would wait for a reversal pattern to materialize.

StockWatch (Oct 10-14, 2011): PSEi

2011-10-07T22:58:00.001+08:00

PSEi (Chart:Daily Resistance: 4050/4100 Support:3860/3715/3630)

The index madea dip on the first half of the week and recovered on the second half. From the looks of it, the index is movingsideways with large swings. If the resistance at 4050 still holds by next week,this may lead to the sideways ranging movement of the index.

The index seemsto be bullish on the second half of last week, but it is still not recommendedto get in the market, as we are unsure of the index’s trend for the past 2weeks. If the index rallies, I wouldsuggest that you sell your positions rather than holding on to them. There are a lot of other resistances alongthe way and you would be holding on to those stocks for a long time and also,when the 5^th wave materializes, you would incur more loss.

Observe as wellthe RSI reaching 50 level, as of current it is still possible that the indexwould encounter resistance when that level is reached.

StockWatch (Oct 03-07, 2011): PSEi, SMPH, FGEN, AGI, DIZ

2011-10-02T17:57:00.000+08:00

PSEi (Chart: Daily Resistance: 4060/ 4130 Support: 3715/3630)

The downward target level of the head and shoulder formation and the projected length of the 3rd wave near 3700 were reached on the first trading day of last week, with the index going as low as 3715. And right after reaching the target level, the index did bounce back on the latter half of the week.

The 4th wave was projected to top on either of the following levels: 4050/3970/3870. But as of current index level, we have gone past the 2 projections; 28% and 34% of the length of wave 3, which leaves us with the remaining 4050 level (50% of wave 3 = 4059; thick green line on the chart) as the potential resistance to the current 4th wave.

However looking at the RSI, there is a possibility that the 4th wave would go beyond the projected resistance at 4050. Usually, when coming from an RSI of below 30, RSI 50 acts as resistance and from the current RSI the index still has some room to move before reaching RSI 50. The index can possibly move near the previous low, at around 4120 (4129 was the previous low on Aug 9).

For next week, expect the index to move upward on the first half of the week and on the second half, probably move sideways for some time before starting with the 5th wave.

For those who are still contemplating on selling their positions, one must act fast as the window of opportunity is becoming smaller as the index nears 4050 and 4120, before the 5th wave starts its downward movement.

If assuming the projected top of the 4th wave near 4050 holds, the projected 5th wave can go as low as any of the following projected target levels; 3620, 3350, 2920 (100, 162 and 262 percent of the length of wave 1 respectively; considering wave 3 a normal extended wave).

There are a couple of stocks that were unusually strong in a generally bearish condition, like SMPH, FGEN, AGI and DIZ. These stocks had the common characteristic of having larger volume on the upward movement, relatively larger than the volume on the downward movement during the creation of the 3rd wave on the index. Aside from the volume, I could not see any bullish area pattern that could be attributed to the strength of the upward movement.

The only thing I could deduce from those stocks is that traders seem to give high value to those stocks (this is very evident on SMPH and FGEN, but a little on DIZ and AGI) and are probably considered as bargain stocks at their current price level. I would not recommend buying them currently, but rather continue to observe those stocks as they may be the first few stocks to pull out from the current bearish cycle.

SMPH

FGEN

AGI

DIZ

StockWatch (Sep 26-30, 2011): PSEi

2011-09-24T16:58:00.000+08:00

PSEi (Chart: Daily Resistance: 4050/3970/3870 Support: 3700)

The index had the biggest drop in a day since Oct of 2008. This floored my jaw as my hopes were shattered for the index maintaining a sideways movement.

The previous support near 4130 and the 130 and 260 day moving averages were also wiped out last week.

On hind sight, the drop is expected as the index has formed a head and shoulder formation whose neck near 4129 was broken last week. The target level for the head and shoulder formation is near 3700.

Counting the Elliott wave, we are now on the 3rd bearish wave and based on projected length of wave 3 which is 162% of the length of wave 1; this wave may reach up to the same level as the target level for the broken head and shoulder formation which is also 3700.

For the current index level at 3885, we still have way more space to drop to reach near 3700, so buckle up for further downward movement next week.

Observing the RSI, the index is now way oversold. The typical reaction to a very oversold equity is a bounce up once it goes below RSI 30. At current, RSI is now at 21, so we may also see a bounce up by next, but I don’t expect this bounce to be the 4th wave. This would probably be a short bounce with a little sideways movement.

Assuming the 3rd wave reaches the level near 3700, the 4th wave is projected to top anywhere between 3870, 3970 and 4050 (24%, 38%, 50% of the length of wave 3; Green bar on the graph).

In conclusion, we’re definitely on a bearish cycle now, so if you were stuck and wanted to get out, the 4th wave maybe the chance for you to move out of your positions. There is opportunity to profit riding the 4th wave, but for the risk averse, it would be best to continue sitting on the sidelines.

StockWatch (Sep 19-23, 2011): PSEi, NI

2011-09-18T21:20:00.002+08:00

PSEi (Chart: Daily Resistance: 4360/4400 Support: 4260/4230)

The index’s situation slightly deteriorated last week. For the past 3 weeks the index has never gone below the standing support line of the sideways channel near 4290, but last week, the index breached that level forming a new low.

It looks like the channel might be redrawn/shifted lower, with the support near 4260 (130 day moving average) and resistance near 4360 (65 day moving average).

Trading strategy would still be the same, which is to play the possible range on certain stocks (for example DIZ) and not to hold your positions for long term.

Although the actions last week maybe a little bit discouraging, the index is still on a safe middle ground. I am just hoping that the index would be able to sustain the current sideways movement and not create a new low that is lower than the previous low of 4130 (Aug 9 low). If it does go below that level, then we may be seeing the start or confirmation of the bearish cycle.

NI- Weekly Chart

NI (Chart: Daily Resistance: 4.0/ 4.5 Support: 3.40)

NI showed a spectacular show of force Friday last week with the volume exceeding recorded volume since the start of this bullish trend for NI.

Looking at the weekly chart, we can see that the volume on the downward movement of the stock for the first 2 weeks of September is dwarfed by the volume of trades last week. This only means that the bullish sentiment for this stock is still preserved and may continue for this week.

I could not see any possible pattern to be the basis of a target price for this bullish activity, but basing on the Elliot wave pattern alone on the weekly chart, we may be on the 3rd wave. Usually the 3rd wave is the longest of all waves and measuring the length of the first wave as the minimum target price relative to the start of the 3rd wave, the 3rd wave could potentially reach at least up to 5.50.

Amidst the ranging movement of the index, this stock seems to go against general sentiment and is a viable candidate for going long. The MACD on both the weekly and daily chart seem to confirm the bullishness of this stock.

Again as with any stock, be on the lookout for dips on this stock that is accompanied by large volume (those that exceed 20M trades). If any such occurrences appear, then start unloading your position.

StockWatch (Sep 12-16, 2011): PSEi, DIZ

2011-09-12T08:39:00.000+08:00

PSEi (Chart: Daily Resistance: 4400 Support: 4290/4250)

Just when I thought that the index is moving up beyond the current sideways channel, the index again fell within the small channel between 4400 and 4290. The recent activity only shows how volatile the market is.

As of current, the sideways channel between 4400 and 4290 still holds. There are a couple of stocks that you can play on this ranging market, but for the risk averse, it would be better to stay on the sidelines until the index is able to breach beyond the 4400 resistance line with high value turnover

DIZ (Chart: Daily Resistance: 14.40 Support: 9.80/8.40)

DIZ had a spectacular run up with large volume even going beyond the resistance line and reaching 14.40. With that kind of volume, this may definitely go way beyond the channel that it has created since July.

As of current, the stock is very much over bought. It would be prudent to lock in profits for now, probably sell ¾ of your position. This stock definitely has the potential to go beyond 14.40, but it would eventually fall back one of these days and I would rather recommend to sell now and buy later when the stock reaches near 11.50 (50% retracement).

Do not forget to observe the volume, any increase in volume on the downward movement would be a sign to cancel the idea of a buy back near 11.50.

StockWatch (Sep 5-9, 2011): PSEi, DIZ

2011-09-04T14:23:00.002+08:00

PSEi (Chart: Daily Resistance: 4400 Support: 4350/4290)

The index is still treading the line plotted by the 65 day moving average and it seems that it has confirmed a sideways channel between 4400 and 4290.

If the index breaks out of that small sideways channel we could see the index moving back up to the previous high near 4550.

Considering the stochastics, RSI and MACD, all three are giving a higher credence to the possibility that we may be seeing some upward movement for next week.

However, I wouldn’t go long for now. I would rather go long only when the index is able to create a higher peak with no signs of bearish divergence. For now just trade the range.

DIZ (Chart: Daily Resistance: 11.76 Support: 8.10)

DIZ is an eye catcher for its long spread and large volume on the last trading day last week. There is an upward potential of up to P13 based on the resistance line connecting the previous peaks.

Buying at the current price 9.50 and selling near the previous high at 11 would already give you around 14% net profit.

This is definitely a buy but only for the short term.

StockWatch (Aug 29 – Sep 2): PSEi, ORE

2011-08-27T09:02:00.000+08:00

PSEi (Chart: Daily Resistance: 4400 Support: 4300/4220/4180)

The index is still on a sideways movement, treading the line plotted by the 65 day moving average. Whatever gains made on Tuesday was taken down on the succeeding days of the week. So it’s still a power play between the bulls and the bears, with the bears slightly winning because the upward movement of the index was not sustained (i.e unable to create higher peak).

The only solace that we could find in the current condition is the fact that the index still hasn’t nose dived again like it did in the second week of August. So we might be seeing a slow decline in the index for the succeeding weeks, but at least it is not a sudden decline.

Again expect the index to move sideways ranging between the 65 day moving average (4340) and the 130 day moving average (4220).

ORE (Chart: Daily Resistance: 5.74 Support: 5.00/4.80/4.00)
If you are still riding ORE, now is the time to get out of the stock temporarily. ORE has had a good run up for the past 2 months. Even with the recent general decline in the market ORE has continued to move higher. But unfortunately the ride will come to a stop and it looks like this is it.

As seen in the chart, it is very evident with the RSI, MACD, and stochastics that the stock is now exhibiting bearish divergence with the stock moving higher, creating a higher peak, while all 3 indicators are creating lower peaks.

The next support for this stock in near 4.80, if support holds, then you could buy back a smaller portion just to take advantage of the possible bounce, but do not hold it for long.

StockWatch (Aug 22-26, 2011): PSEi

2011-08-20T20:22:00.002+08:00

PSEi (Chart: Daily Resistance: 4440/4500 Support: 4340/4200)

The index made no progress for last week. It went flatly sideways with high instability. Progress made by the index on one day is taken back on the next day. The sideways movement of the index last week would definitely be an indication that the bounce from the market crash 2 weeks ago has reached the maximum height. There are no bullish indications on the chart that says otherwise.

For next week expect further sideways to downward movement. It is highly possible that the index would just range between the current high and the 130 day moving average.

StockWatch (Aug 15-19, 2011): PSEi

2011-08-13T16:41:00.000+08:00

PSEi (Chart: Daily Resistance: 4330/4440/4650 Support: 4170/4080)

The index continued its downward movement creating a very large downward gap on the second day of trading.

The support that I was expecting near 4330 which is the 65 day moving average was not able to contain the strength of the bears which resulted into further downward movement towards the 130 day moving average near 4170. Luckily, support at the level of the 130 day moving average was able to hold the bearish action from further strengthening.

The succeeding trading days saw the index bounce from the 130 day moving average and even closing the gap that was formed on Tuesday. Question is whether this incident would usher the continued upward movement for the index? Well, I believe otherwise. Even though the gap was closed, that incident is not a veritable comeback of the bulls. It was just a natural reaction to the RSI level reaching the low of 30 level. If that was a real comeback for the bulls, then the last trading day would not have formed a short real body with a very long upper shadow; preventing the index to move above the 65 day moving average. The last trading day showed that bears still have influence over the index.

For the succeeding days expect a ranging action in the market. We will be seeing a battle between bulls and bears as the index move between the 65 day (red line) and 130 day(yellow line) moving averages.

StockWatch (Aug 8-12, 2011): PSEi

2011-08-06T16:38:00.002+08:00

PSEi ( Chart: Daily Resistance: 4560 Support: 4400/4330)

The index had a short upward movement last week, but was probably capped by financial events occurring in foreign markets. After the short 1st day upward movement, the index went down and broke the standing rising wedge.

Downward target value for the rising wedge would be near 4260. However, the 65 day moving average is on the downward path of the index and this may provide support for the index. The strength of support at 4260 is still something to see, but I’m hoping that the index does not go below that level so that the upward movement of the index would remain intact.

Expect continued downward movement for next week. A bounce may occur probably towards the end of next week or once RSI level reaches near 40 level. Sell for now, or you could wait for the bounce to happen before completely unloading your stuck positions.

SotckWatch (Aug 1-5, 2011) PSEi, ISM

2011-07-30T17:34:00.000+08:00

PSEi (Chart: Daily Resistance: 4515/4580 Support: 4450)

The index moved sideways last week and regaining losses on the last trading day.

As of current there is no significant area formation except for a possible rising wedge and this formation seems to be supported by the RSI and the MACD as of the moment. The RSI is near overbought level while the MACD has crossed below the signal line.

One good thing to point out though is that value turnover on the days when black candles are formed are significantly lesser than value turnover for days when a white candle is formed. This may mean that the bears still do not have the full strength to pull the index downward. But on the other hand, value turnover on the white candle days are noticeably lower than those from the previous 2 weeks which may indicate weakness in the upward movement.

For next week expect a short upward movement or sideways movement for the index. A resistance line is now established at 4580 ( connecting the previous peaks). There is lesser possibility for the index to breach that resistance line if the value turnover continues to be lower than what we had last week.

ISM (Chart: Daily Resistance: 5.19 Support: 4.50/4.00)

ISM went very bullish and created large spreads and gaps on the last 2 trading days for last week. On both days, the white candles were accompanied by very large volume.

This stock is definitely bullish, however, on the last trading day, the stock was not able to create a full body for the white candle, which means weakness on its upward movement.

For those going long on this stock, this definitely has the potential to go up to 8.00 level. But for those whose objective is short term, it would be best to sell for now and buy back probably near 4.00.

StockWatch (Jul 25-29, 2011): PSEi, GLO

2011-07-22T20:11:00.002+08:00

PSEi(Chart: Daily Resistance: 4550/4580 Support: 4470/4330)

The run up for the index for the past trading days was capped off with a sell down on the last 2 trading days for this week.

The run up during the past 2 weeks gives us a good indication that the index is well on its way to create more new peaks. As long as the index is creating new higher lows as well, we can go long on our positions.

For the coming week, we may see downward to sideways movement for the index.

Watch out for support at 4330, as long as the index stays above that support level, we still have a good chance of continued upward movement.

GLO (Chart: Daily Resistance: 964/1035 Support: 907)
Looks like GLO has a new lease on life. Since being in a downward trend since 2007, GLO is now showing signs of resuscitated life. The run up that happened this week seems to be further confirmation of the bullishness on the last days of Mar 2011.

The breakout last Wed from the sideways channel has a target price of around 1000. However, the stock is now overbought so expect some dips to happen this coming week.

There are a couple of good signs that affirms that this stock may be on its way to recovery. One of the sign is the 65 day Moving Average, now seen on top of the other two moving averages. The 130 day Moving Average, though not yet in its bullish position, is getting there and is about to cross above the 260 day moving average. Aside from the moving averages, the MACD is now opening upwards. So the possible dip that could happen this week may be a perfect time to get in the stock for those who are willing to take long positions on GLO.