Me-Six: Technical Analysis of the Philippine Stock Market

StockWatch (Nov 9-13, 2009): PSEi, BPC, FGEN

2009-11-08T18:37:00.001+08:00

PSEi (Chart: Daily Resistance: 2970/3000 Support: 2905/2850)

The index is still on a sideways movement for the past two weeks and the break of the 3000 that I was expecting did not happen. As of current the index is moving within a small range of 2905 and 2970. The MACD seems to suggest an impending crossover from the signal line and this we’d have to wait and see if it will bring more buying in the market to nudge the index from always moving sideways.

BPC (Chart: Daily Resistance: 4.20/ 4.90 Support: 3.70)

BPC had a breakout from a symmetrical triangle. Target price for this stock is around 4.90/5.00. There was large volume on the breakout, but it was followed by a sell down the following day also with significant volume. There was a lack of follow through buying which is quite bothering. MACD is bullishly opening upwards, but the RSI suggests overbought condition. It is possible that this stock may move down to sideways next week. As long as the stock does not go below support at 3.70, this stock is still good to play.

FGEN (Chart :Daily Resistance: 19 Support: 16.75)

FGEN also brokeout from a symmetrical triangle with a very large volume. Target price for the stock is around 23. Watchout for upcoming resistance at 19.00 which is a previous high.

StockWatch (Oct 26-30, 2009): PSEi, BPI, SM

2009-10-24T05:41:00.002+08:00

PSEi (Chart: Daily Resistance: Resistance: 3000/3092-3149 Support: 2915/2884)

The index bounced back from 2 consecutive days of selling. RSI did bounce from the 50 level, which means.the market is still generally bullish. Expect the continuation of the upward move next week, but do watch out for upcoming logical resistance at 3000, which I think by next week would be broken, and the standing resistance line from March at the range of 3092 to 3149. The standing resistance from March 2009 is still blocking the index’s upward progress, but I believe that this will be eventually broken by Nov and will become support by then.

BPI (Chart: Daily Resistance: 48.50 Support: 45.50)

BPI actually had a breakout at 47.50 from an ascending triangle forming from May 2009. The breakout was supported by large volume, the only problem was that it could not get past the standing resistance at 48.50. The day after the breakout, the stock went higher, but closed on the same level as the opening for that day, which indicates that there is still a lot of bearish sentiment for this stock. Then eventually the stock made a return move and price fell below the breakout line. This further confirms the weakness of the stock. Trading last Friday moved the stock above the resistance line again, but this time there was smaller volume, which indicates the upward movement is not that strong.

BPI actually has a large upward potential, you can either consider a large inverse head-and-shoulder formation or an ascending triangle formation, either way it give a great upward potential. The only problem is with the recent activity that I have explained above, it seems that it is not yet time for this stock to soar. But do watch out for this stock, especially if it breaks above the resistance line of 48.50. I believe that this could happen probably within Nov to Dec time frame.

SM (Chart: Daily Resistance:325 Support:290)

SM seems to have formed an island reversal. The stock had a sell down on Tuesday with large volume, followed by a large downward spread the next day with relatively lower volume. By Thursday, the stock gapped down and went into an indecision mode, with the stock opening and closing on the same level. This was accompanied with a very large volume. Considering the previous 2 selling days of trading, the indecision was rather a welcome sight to have. Although this may indicate indecision, this also indicates support. On the following day, Friday, the stock again gapped up with relatively large volume, which further confirms the support the previous day.

Looking at the RSI, the stock is currently oversold, and there is still a large area for upward movement. However, the MACD, suggests that this stock is bearish as it is opening downwards and below the centerline as well. So trading strategy for this stock is just to take advantage of the low RSI level and get out at the first sign of weakness. Watch out when RSI reaches near 50 level, usually when the RSI is coming from the low of RSI 30, RSI 50 is regarded as an area of resistance or rather an indicator that stock is overbought.

StockWatch (Oct 19-23, 2009): PSEi

2009-10-18T19:50:00.002+08:00

PSEi (Chart: Daily Resistance: 3000/3100 Support: 2915/2884)

The index is still moving sideways and indicates a lot of indecision. Resistance at 3000 still holds and the resistance line from March 2009 still hasn’t been broken yet. For this week, still expect a sideways to downward movement for the index.

Looking at the RSI, if the current side to downward movement of the index continues, the centerline at 50 RSI may provide support and bounce the index back up. This may happen towards the end of this week or by next week. If it does bounce back from the RSI of 50, this is probably an indication that the market generally is still bullish because the index hasn’t moved far below the RSI 50 since Aug. This means there is a significant amount of bullish traders out there that is buoying the index above RSI 50.

November is fast approaching and generally buying becomes active from that month onwards, so there may be some hope that we may be able to move above the resistance line from March 2009.

General Note:

There are a couple of third liners whose prices shot up last Friday accompanied with volume. These are MHC, MRC, ION, TBGI, UW, BHI. The upward movement may continue next week, but be cautious because some of these are already overbought and these stocks are usually unpredictable, its up one day with large volume and then down the next day, so watch out for previous highs and RSI of 70. MHC, TBGI, UW and BHI have RSI’s in between level 50 and 70, so there may still be room for some more upward movement.

StockWatch (Oct 12-16, 2009): PSEi

2009-10-11T20:54:00.002+08:00

PSEi (Chart: Daily Resistance: 3000 Support: 2884)

The index moved higher last week, creating 2 gaps accompanied by large value turnover on the first gap, but lacked follow-through in its bid to go past the resistance line (previously support line) from March 2009.

Although the move was accompanied by large value turn over, I am not that convinced of the upward move. In my opinion, this may be just a bounce from the RSI centerline of 50. Succeeding days after the gap up did not have large spread and value turnover as the first 2 gaps, which in my opinion is an indication that many are still in doubt also of the recent bullish move. If there had been no doubt or hesitation in the market, the standing resistance line from March 2009 could have been easily breached with the large turn-over.

For now, the MACD is saying it is bullish, but I would still advise caution in buying. In my opinion, I’d still stay on the sidelines for now and still wait for the standing resistance line from March 2009 to be broken before getting in the market.

StockWatch (Oct 05-09, 2009) :PSEi

2009-10-05T04:00:00.002+08:00

PSEi (Chart: Daily Resistance: 2905/2960 Support: 2767/2721)

The recent flooding did affect the start of the trading week, but not as much as I expected as there was low value turnover on the downward movement of the index.

The index is still moving sideways within the range of 2767 and 2905. It has been moving sideways for 2 months now and there is still no good indication of any strength in the market. This quite builds up some level of anxiety as it is still unclear where the market will go. In my opinion, I’d rather watch from the sidelines how the market would progress. I’d get inside the market only if the index is able to move above the resistance line from March

StockWatch (Sep 28-Oct 02, 2009): PSEi

2009-09-28T03:57:00.001+08:00

PSEi (Chart: Daily Resistance: 2910 Support: 2767/2691)

The index is still not in a good condition. There was no follow through on the upward move last Wed, and it seems that the resistance line is holding. Not until after the index is able to move above the resistance line that we could say that that index is in a good position.

For the coming week, watch out for the support line at 2767. I’m not sure how the recent flooding would affect the market, but I could definitely guess that it would not be a good start for the market. Also watch out if the index moves below the 65 day MA at around 2691.

StockWatch (Sep 21-25, 2009): PSEi

2009-09-20T19:34:00.005+08:00

PSEi Weekly Chart

PSEi (Chart : Daily Resistance: 2870/2910 Support: 2767 )

Looks like we now have a breakdown from the support line from March 2009 and further bad news is that it is accompanied with a relatively large volume. From the weekly chart above the breakdown with large volume is very evident.

Going back to the daily chart, there has been a rebound from the support last Friday and it is possible that next week we will see the index move up. However, it is not recommended to buy any stocks for awhile, use next week’s return move towards resistance levels as a chance to get out of the market for a while.

StockWatch (Sep 14-18, 2009): PSEi, SPH

2009-09-14T03:53:00.002+08:00

PSEi Weekly Chart

PSEi (Chart: Daily Resistance: 2906 Support: 2840)

Index still hasn’t broken out of the ascending triangle. Although technically this is still a valid ascending triangle, I am not anymore expecting that this would breakout. Index would most likely move sideways still for next week. But looking at the weekly chart, it seems that index is overbought so it is likely that index will move lower in the near future. I would recommend caution in buying and keep watch of the support line. Index is still respecting the support line as of current, but anytime it moves lower with large volume, that would be a signal to sell.

SPH (Chart: Daily Resistance: 4.05 Support: 3.60)

SPH quietly brokeout from an upward channel which is completely unexpected as volume was not that significant in the past. Target price for this stock is near 4.50. Resistance at 4.05 which is the previous gap created last Oct 2008.

StockWatch (Sep 08-11, 2009): PSEi, MIC

2009-09-06T23:24:00.003+08:00

PSEi (Chart: Daily Resistance: 2895 Support: 2774)

The index continued to move downward and no break-out from the ascending triangle happened. Even though the index moved lower, it is somehow respecting the support line formed from March 2009 preventing it from moving downward any further.

The ascending triangle I think has this week as its last chance to break-out. If nothing still happens, then we would have to redraw again.

MIC (Chart: Daily Resistance: 4.70 Support: 3.90)

MIC had a breakout from an upward channel. Target price is at 5.30. This is definitely a buy, but be on the look out for a return move toward 3.90.

StockWatch (Sep 01-04, 2009): PSEi, SCC

2009-08-31T06:42:00.004+08:00

PSEi (Chart: Daily Resistance: 2895 Support: 2777)

The index did not progress downward any further last week. It instead climbed up despite the large turnover on the downward move 2 weeks before. Support was respected also last week when the upward move occurred on Monday. Currently the index still being blocked by the resistance line from the previous high of 2894 and there seems to be a lot of indecisiveness as trading last Friday was accompanied with large turnover.

From the looks of it, the index seems to be forming an ascending triangle. It is currently near the apex, so if by next week breakout does not happen, then we would have to redraw our resistance and support lines.

SCC (Chart: Daily Resistance: 43 Support: 40 )

While a lot of stocks have created long white candles in their charts, SCC seems to be either a laggard or just a very inactive stock compared to those stocks. However, looking at the chart, this stock seems to be forming a large ascending triangle with resistance at 43. So there is a possibility that this stock’s day hasn’t come yet, but this we will be able to find out within this week as the formation is already near the apex and is due for either a breakout or a fizz-out. If this does not breakout for this week, then the lines would have to be redrawn. Resistance is at 43, while target price is at 65 if resistance is broken.

StockWatch (Aug 24-28, 2009): PSEi

2009-08-22T03:49:00.001+08:00

PSEi (Chart: Daily Resistance: 2894 Support: 2693/2352)

The index continued to move downward to sideways. The last trading day was accompanied with large value turnover, but the action was downwards. So expect that by next week, selling may still continue. Looking as well with the RSI, which now is in the 50 level, upward movement may happen anytime soon. Probably towards the end of next week, we’ll see some upward movement.

StockWatch (Aug 17-21, 2009): PSEi, CMT, GMA7

2009-08-17T04:22:00.002+08:00

PSEi (Chart: Daily Resistance: 2894/3051 Support: 2780/2626)

The index is currently moving in a tight ranging movement from 2780 to 2894. Previous resistance at 2780 is providing support; this is also the previous high of Sept 2008. It is possible that the index may further move sideways for next week. As of current, index is still overbought; keep watch of the RSI nearing the 50 level as this may provide support and index may continue to move upwards from there.

CMT (Chart :Daily Resistance: 1.06/1.45 Support: 1.02/0.98/0.76)

With all other stocks that have been zooming past the RSI of 70, CMT is one of the laggards in the race. It seems that this stock has just recently had a breakout from a symmetrical triangle. Target price is near 1.45, which is also a resistance area.

GMA7 (Chart :Daily Resistance: 8.00 Support: 6.80/5.90)

GMA7 had a very large spread last Thursday, which was accompanied with large volume as well. It is possible that this stock may be forming a flag or pennant formation with the pole which formed last Thursday. Keep an eye on this stock. Possible target price of around 9.00.

StockWatch (Aug 10-14, 2009): PSEi

2009-08-09T21:59:00.002+08:00

PSEi (Chart: Daily Resistance: 2894 Support: 2686, 2626, 2352)

The index is now on its way down temporarily. Support levels are the following, 2686 (the 38.2% fib retracement), 2626 (previous high), and 2352 (previous low).

Since the index has been moving bullishly lately, expect a slowing of the downward movement, or support when the RSI gets near the 50 RSI level. For now, sell to preserve your profits.

StockWatch (Jul 27-30, 2009): PSEi, SFI, RFM, NI, SMDC

2009-07-26T22:42:00.007+08:00

PSEi (Chart: Daily Resistance: 2778 Support: 2626)

The index made a big move last week, it was able to move past 2 important levels of resistance in just a week. The first is the resistance line from Oct 2007, which marks the long term downward trend. Second is the previous high from Jun 2009 at 2626. And furthermore, this was supported by large value turnover, specially last Friday.

The index now has several bullish indicators: The gap up last Friday; The MACD above the center line and above the signal line, and we also have the index moving past the resistance from the downward channel. The moving average is the only indicator that has yet to signal bullishness with the proper sequencing of the 65 day MA(red line), (on top of) 130 day MA (orange line) and (on top of ) 260 day MA (green line). Currently, the 130 day MA has yet to cross above the 260 day MA, but this is in the works right now as we see those 2 lines move closer and closer. A cross-over may happen probably in 2 to 3 weeks time.

The index remains to be overbought, but do watch out as it moves closer and closer to the 80 level of the RSI. I believe that when it reaches that level, a return move towards the previous high at 2626 will happen. This can happen probably towards the latter part of the week or next week.

SFI (Chart: Daily Resistance: 0.245 Support: 0.205)

SFI caught my attention when I was quickly viewing some stocks and what actually caught my attention is the unusual increase in volume for the past 3 days. Looks like something is brewing for this stock, its either that or somebody just went crazy for hotdogs. The price action doesn’t give much clue to what is happening in this stock, but do keep an eye on this stock.

RFM (Chart: Daily Resistance: 0.58 Support: 0.45)

Looks like the main stock being played here is RFM rather than SFI. RFM has more price action compare to SFI and also in my opinion, it is more technically sound than SFI. We can see in the chart that RFM has formed and broken out of a pennant formation. The target price of the pennant has been reached at around 0.57. But, the stock may be in for another pennant or flag formation with resistance at 0.58 and target price at around 0.70. The only problem with the possible pennant or flag formation is that the action can happen quickly and you may not have time to react accordingly.

NI (Chart: Daily Resistance: 11.25/12 Support: 8.60)

NI had a very bullish move last week with the stock moving upwards to a high of 11.25. Based from the chart the recent bullish move was probably due to a breakout of a symmetrical triangle. Target price is at 11.25 has been achieved already, but there is still momentum for this stock and would probably continue up to next week. Another possible formation on the chart is a huge rounding bottom formation with the left part of the rounding bottom at Aug of 2008 at the high of 12.00. One may see also a possible rounding bottom with the left side at Sept 2008, but I think that the low volume does not confirm that it is the proper left side of the rounding bottom. The peak of Aug 2008 is a much better candidate for the left side of the rounding bottom.

For the coming week, watch out for a possible flag or pennant formation and also watchout for 12 which is the previous high of Aug 2008. A break from 12 with large volume would further confirm the rounding bottom formation.

SMDC (Chart: Daily Resistance: 3.75/3.85 Support: 3.45/3.60)

SMDC brokeout from a sideways channel with large volume (see inset picture) . Target price has been reached, however there is a possibility for a pennant or flag formation for this stock. Resistance is at 3.75-3.85, possible target price of around 4.40.

StockWatch (Jul 20-24, 2009): PSEi, LC/LCB, PX

2009-07-19T20:37:00.004+08:00

PSEi (Chart: Daily Resistance: 2560 – 2626 Support: 2500)

Looks like this is it, the long awaited break of the resistance line formed from Oct 2007 is just one step away and based on the large value turn over and the gap that formed last week, there is a higher chance that this time, the break above the resistance line will push through.

However, the market is near overbought level again, and the most likely scenario that I could see is that the index would break the resistance and do a return move to 2560 to test the resistance-turned-support level. Also up ahead is another resistance at 2626 which is the previous high. If the market also breaks above the previous high, this definitely means were back on the upward trend for the market.

LCB (Chart: Daily Resistance: 0.29/0.34 Support: 0.225/0.155)

LC and LCB seems to have broken from a sideways channel. One could also say that it has broken from a symmetrical triangle. But any which way you look at it, target price is both at around 0.32.

This stock had a shaky run with the stock being sold down on Wed last week with large volume, possibly by those who were observing the resistance at 0.235. But this was bought back up beyond the resistance, to the high of 0.25 and closing at 0.245 with ¾ of the volume during the sell down. I believe that the large volume on the following day after the sell down, neutralizes the effect of the sell down, which means a lot are still confident with this stock.
This stock is definitely a buy, but do watch out for the upcoming resistance at 0.29 and 0.34 which are previous highs. Also the stock is near overbought so do watch out for a return move towards the support line of 0.235

PX (Chart: Daily Resistance: 7.90 Support: 6)

PX is exhibiting 2 formations, cup and handle formation and also a possible double top formation.

The bullish side of the formation, the cup and handle, has a breakout price at 8.00 with a possible target price of 11.50. A good volume on breakout is around 20M shares traded.

The bearish side, the double top, is still too early to confirm, but if the resistance at 7.90 holds, then do watch out if the stock would break the neckline of the double top at 6.00.

For this stock, it would be best to buy only on break of resistance at 7.90 and watch for the volume, there has to be large volume on breakout preferrably around 20M shares traded

StockWatch (Jul 13-17, 2009): PSEi

2009-07-12T21:42:00.000+08:00

PSEi (Chart: Daily Resistance: 2508/2570-2560 Support: 2410/2350)

I wasn’t able to closely follow the local market for the past 2 weeks because my mother-in-law died and I had to set aside blogging about the market for a couple of days. Looks like I missed out some action in the market with the index consistenly moving up last week. The index is now approaching the previous high of 2508 and it is a wait and see if by next week the index is able to move past that previous high. After that resistance, next resistance is between the level of 2560-2570, this is the resistance line formed since Oct of 2007.

The market is consolidating currently and there is still more room in the RSI before it is considered as overbought so there is still a stronger possibility for the index to move further upward. However having those resistance levels near the current index level is a little bit disturbing. For the coming week exercise caution in buying. If trading for this week has low turn over or volume for the stocks, I believe that the index won’t be able to move above the long standing resistance line from Oct 2007 (2560-2570).

StockWatch (Jun 22-26, 2009): PSEi

2009-06-21T13:32:00.002+08:00

PSEi (Chart: Daily Resistance: 2620 Support: 2350/2290)

Looks like this is the long awaited correction to the upward movement of the index and it means were still within the long standing downward channel generated from Sept 2007.

Possible support are at levels 2350, which was the previous resistance that was broken and 2290, which is the 38.2% fibonnacci retracement level. There is a possibility for an upward movement next week considering that the RSI is now on the 50 level, usually RSI at 50 acts as support when the RSI is coming from the high of 80. Still for next week, it would be best to stay on the sidelines just to be sure and wait for any signs of reversals.

StockWatch (Jun 15-19, 2009):PSEi

2009-06-14T19:05:00.001+08:00

PSEi (Chart: Daily Resistance: 2630 Support: 2485/2350)

The index corrected for just 2 days and it went back to its upward movement which is very surprising. We are now very near resistance at 2630 which is the previous high and also the resistance line from Sept 2007. This coming week will be a make or break week to see if the resistances are overcome by the index. Still, it would be best to stay on the sidelines for the mean time until after the previous high is broken.

StockWatch (Jun 08-12, 2009): PSEi. FLI

2009-06-07T17:27:00.003+08:00

PSEi (Chart: Daily Resistance: 2630/2770 Support: 2400)

The index is now near a couple of major resistance levels. We have 2630 and 2770 which are previous highs of the index. Of the 2 resistance levels, 2630 has more significance, because if the index is able to breach above that level, this means the index is now out of the downward trend that plagued the market since the drop which happened last Oct 2007. This indeed is something to watchout for in the days to come.

However, I think these resistance levels will give the index a hard time before it is able to move past those levels. As I have mentioned before, I believe we are in a bullish phase as evidenced by the RSI always staying above 70 while the index never goes down. And currently the RSI is now near 80 level which is considered the overbought level for a bullish scenario. The RSI being overbought coupled with the fact that the index has always moved higher every week gives more probability for a sell down or a sideways movement by this coming week or next week. I would suggest to take profits for now and wait until the index is able to move past those resistance levels.

General Analysis:

I have mentioned previously that a lot of stocks are exhibiting signs of a rounding bottom. Currently most of those stocks are already near the previous high, so watchout possible resistance on the level of the previous high. If the stock is unable to move past the previous high, then sell for the mean time.

FLI (Chart: Daily Resistance: 0.88 Support: 0.69)

FLI has recently been trading with increased volume and is about to test resistance at 0.88 which is the previous high. With the looks of the RSI being overbought, there may not be enough steam to push this stock beyond the resistance level and it may take some days before this stock is able to move past that level. Also a gap up has formed, but the stock hasn’t moved up any further, so be on the look out for a gap down which may indicate an island reversal.

This maybe a good stock to hold for the long term, but for those who are playing this stock for the short term, it would be best to sell for now.

StockWatch (Jun 01-05, 2009): PSEi, MEG, EDC

2009-06-01T08:19:00.004+08:00

PSEi (Chart: Daily Resistance: 2400/2620 Support: 2300)

The index has been continously climbing for the past weeks. It looks like the bulls are confirmed to be back as we can see that the index has been very much over bought for the past 3 weeks as indicated in the RSI. I have been very much observant about the RSI being overbought for the past 3 weeks, because in a non-bullish situation, usually when the index hits the RSI overbought level, the stocks immediately turn south. However for a bulish situation, the RSI overbought level will always be triggered and the graph usually stays above the normal overbought level of 70. Also RSI overbought level is usually re-desginated to a higher level than the usual 70 (because it will always be triggerred if it is around 70). Usually the bullish overbought level is at 80 and from the looks of the index, there seems to be more steam for the index to push through since the bullish overbought level of 80 is still not triggerred.

Also what can be seen from the index’s chart is the breaking above a significant resistance line at 2350 last Friday. This line was the support line of the index when the index created a large gap down last Octoer of 2008 which conversely becomes the current level of resistance prior to Friday. This line was broken with a significant volume and it is highly possible that Friday’s bullish ending will still continue come Monday.

General Analysis:
A lot of stocks are exhibiting characteristics of a rounding bottom pattern. You can make profit on this pattern in 2 ways: One, you can ride the stock up until it reaches near resistance, which is the previous high. A lot of stocks are still halfway from reaching major resistance levels. Second is that you wait for a break-out of the pattern. Or you can do a combination of both, you ride the stock up until a certain level near resistance and sell a few for the moment and then wait for breakout and buy again. Watchout for break-outs with low volume, these are possible bear traps.

MEG (Chart: Weekly Resistance: 1.02/1.20 Support: 0.47)

MEG seems to be going sideways for now, but looking at the weekly chart, it seems that a pennant formation is brewing for this stock (pole formed last May 08). Resistance is at 1.02. A break above this level with large volume would confirm the formation. Possible target price for the pennant formation is at around 1.5

EDC (Chart: Daily Resistance 4.50 Support: 3.30/3.60)

EDC seems to be forming a cup and handle formation. The break-out price is above 4.50. Possible target price of up to 6.5. As long as the price stays above 3.30 I think this stock is still good. Watch out also for the crossing of the 65 day MA (red line) above the 260 day MA (green line)

StockWatch (May 18-22, 2009): PSEi, DMC

2009-05-17T20:39:00.004+08:00

PSEI (Chart: Daily Resistance: 2350/2400 Support: 2256/2060)

The index moved sideways for a moment last week, but ended still strong by Friday, having successfully moved farther from the 260 day MA (green line).

There are two upcoming resistance at 2350 (orange horizontal line), which is the gap from Oct 2008 and 2400 which a point in the line connecting the peaks of May and Aug 2008.

There may still be some small upward movements next week, but trade cautiously. RSI is still very much overbought and a correction is due any time. Probably it would be best to sell a portion for the mean time to lock-in some of the profits.

DMC (Chart: Daily Resistance: 7.30 Support: 5.1)

DMC had a break out with volume from a rounding bottom pattern. Volume on breakout was large. Modest target price is at 8.5 . Upcoming resistance at 7.30 which is a previous high. If you buy at the current level of 6.9, cutloss is at around 6.5.

StockWatch (May 11-15, 2009): PSEi

2009-05-09T19:47:00.001+08:00

PSEi (Chart: Daily Resistance: 2270 Support: 2060)

The index’s movement last week was very impressive. I was expecting that the trading last week would follow the same trend where a sell down would happen at the start of the week and recoup on the last trading days of the week. This time the index moved higher for the whole week and just fell short of moving past the 260 day MA (green line).

Next week’s action is anybody’s guess. The RSI is again overbought and currently the 260 day MA is acting as resistance for the index. I’m not sure if the bullishness can extend further next week, but I’d be cautious in trading just incase the recent bullishness does not follow through.

Also 2 gaps has already formed since the start of the rally, so I’d be on the look out for a possible island reversal.

I’m still skeptical on the recent bullishness, probably because I was fixated on the negative divergence between the RSI and the Index. But the chart is showing a different story now, so let’s see where this would take us for the following weeks.

StockWatch (May 04-08, 2009): PSEi

2009-05-02T19:04:00.001+08:00

PSEi (Chart: Daily Resistance: 2120/2170 Support: 2057)

The index had a sell down for 2 days but was again able to recoup the loses on Thursday. Although it is not evident in the chart, the volume on Thursday’s recoup was less than the volume on the April 24 rally. The volume last Thursday was just bloated by block sales. Volume is still diminishing on every time the market is able to bouce back which I believe is not a very good sign.

Also, something not that evident in the chart is the MACD crossing below the signal line. For MACD followers, this means a signal to sell for the mean time, which I believe is what should be done.

The index also broke the standing support line (orange line) from March 2009. The recoup last Thursday just fell short of moving past that line so this is something to watchout for the coming week.

Overall, I still advise caution in trading or for the risk averse stay on the sidelines for now. Watch out for upward movements with low or diminishing volume

StockWatch (Apr 27-30, 2009): PSEi

2009-04-25T21:57:00.002+08:00

PSEi (Chart: Daily Resistance: 2105/2150 Support: 2050/1920)

The index in my opinion is still not in a good shape, even with the recent drop that happened Monday last week. The RSI is still near overbought and the divergence is still intact as of Friday last week. For the past weeks, volume seems to be diminishing in the index. The recoup that happens after the short drop is usually acompanied with volume, which is good, however, volume seems to be diminishing each time the recoup happens.

Another observation for the index is that there seems to be a rising wedge that is forming. However, it’s a little bit awkward to see a rising wedge at this point since the somewhat prevailing trend is sideways and rising wedges are usually seen on a downward trending market. So the rising wedge is still questionable at this point. But I would still advise caution in trading the market or better yet just observe the market for the mean time if the volume still continues to diminish by next week.

Website: Do Online Trading by jhesqi

2009-04-25T21:40:00.004+08:00

Here is another trading related blogsite 'Do Online Trading' by jhesqi called (http://dotnewbie.com/). He's got some nice stock market info specially for those who would like to start on trading the local market.