Friday, 28 December 2007
The year ended with a bang for DGTL. Just look at the significant increase in volume! To think that I was prepping myself to buy DGTL on Jan. 2, 2008; where I was expecting the breakout to happen. I was tipped off by Broker M that it closed at 1.84 and it was in the run off period. Well, hell, I'm not gonna sulk and say I missed the boat, I'm gonna ride the wave! So I got some at the close. Who knows? Maybe there might be some oops trade on Jan. 2 for this.
But the real play here for me is NOT the flag as the return is quite small, but I'm riding on the breakout of the double bottom.
Again, be reminded that the area of 2.02 could meet some resistance before it proceeds to 2.20. Let's keep the faith and be vigilant of our stops!
Thursday, 27 December 2007
Two things have presented itself:
- The breakout yesterday is legitimate as there was volume and it cleared the 1.66 level.
- The action today is a consolidation of yesterday's move. In short, a flag has presented itself and may be worth playing for the very short term.
If by chance, the level of 1.78 would be surpassed tomorrow and there is significant volume again, 1.80 would be deemed a buy, but only for tomorrow. Why? Because if we were to follow the progression and the typical construction of flags, the breakout is expected to be on the first trading day for 2008; Jan. 2. By that time, the resistance would be at 1.80, so we adjust the resistance and targets higher by one fluctuation.
For tomorrow, the target would be 1.90 if it breaks out tomorrow. But since we do expect the breakout to happen one trading day later, then a break of 1.80 is a buy with the near term target at 1.92.
Personally, I still like to get this at 1.68 but I believe that at this point, what with a flag being formed, I find that scenario highly unlikely. Of course, it now all depends on how the major global markets would perform prior to our market's action.
Tuesday, 25 December 2007
1.66 seems to be some area of resistance. I would feel more confident getting into DGTL once this barrier is broken and with lots of volume to boot!
Based on the pattern, I'm looking at 2.20 as my target but we have to be wary of the 2.02 level. There was a previous resistance at that level.
There seem to be two things going for it that indicates some bullishness on DGTL despite its books being in the red. First is the MACD where after months of it hovering in bearish territory, it now is in bullish territory and still going strong. The other would be the moving averages; specifically the 65 & 130-day MA. The 65MA is just about to cross above the 130MA, another bullish signal. As for the 260MA, it's at 1.60, which should now serve as support.
I don't really expect DGTL to kick in during the last week of 2007 as many are on vacation, or at least their brains are. But you never can tell, so unless we want another opportunity to pass us by, let's check out what happens to DGTL in the coming days. It could be a great way to start 2008.
Saturday, 22 December 2007
- I wish for a PSE where the global investing/trading public would seriously consider putting their money in this market. In order to do this, market capitalization has to be increased at least five-fold. Hopefully, this would reduce the chances that the minority with strong hands would be the one in control of the market.
- I wish for brokers to be more conscientious of their actions towards their clients. I'm not saying all of them are crooks. But there are some. Not only should they be avoided, but they should mend their ways. They don't realize that their shenanigans puts back a few decades all the reforms that the PSE has done so far.
- I wish for a PSE that is successful in its information campaign in educating the public about what the stock market is all about and how to invest/trade properly. Our friends in Absolute Traders are educating many of those who join their seminars, the pros and cons of investing/trading, but they can only do so much. The PSE must lead this campaign.
- I wish for a PSE that would finally implement short selling, the way they do it in the US and not some version that makes you jump through hoops, short of telling you, you're better off not shorting the market.
- I wish for the public and brokers to embrace technical analysis as an alternative to the usual style of investing/trading. It's definitely an unorthodox way of doing things but who will complain if it's effective? Of course, there are others out there who find it foolish, idiotic, etc. Ah well, their loss.
- I wish for an investing/trading public that is more informed and seeks less rumors. It's an open secret that the PSE thrives on rumors. If it weren't for rumors, our market won't have any activity. It's about time for the market to be taken seriously.
Merry Christmas to everyone!
"...I'm wishing on a dream, to find out what it means..."
Saturday, 15 December 2007
Currently, LAMR is stuck in a consolidation that now looks like a symmetrical triangle that's pointing downwards. The support that we're looking at is 47.98 and the downside target given to us is a 19% potential return.
All that's left to do now is wait for my trigger price to be hit before I take action.
Sunday, 9 December 2007
This is the only stock I know of that came from the ashes (meaning below 1 peso) and reached an all time high of 107 pesos, without changing par value. As fast as it went to the high, is practically how fast it sank to below 1 peso. With that, it nearly brought the whole stock market to its knees and probably even was close to bringing it to the intensive care unit. The SEC was hell bent to get to the bottom of the manipulation that went on with this stock that they were prepared to shut down the market for at least one month. Well, enough of the background for BW, on with the chart!
What the chart has shown me (and I dunno why I decided to check this out), was that after a sudden downtrend in August, SUN has tried to go beyond 0.75 but has backed off. Recently, it seems to have regained some resilience. What I'd like to see is that this will now retest 0.75 and break it with substantial volume. Once that neckline is broken, we are targetting 1.02 as the minimum upside for SUN. For the moment, the price is caught in between the moving averages and the nearest moving average that is blocking its way is the 260MA at 0.68. After that, the 130MA is waiting at 0.72. It looks like this will take some time before it breaks out.
But we won't mind if it happens to go beyond those MAs and immediately breaks out. After all, it's a sin if we don't act on an opportunity that is presented to us.
Saturday, 8 December 2007
Saturday, 1 December 2007
As you see in the longer term chart, VRTX looks like it's in the final stages of completing a triple top. What's unusual with this triple top is that the neckline is slanted downwards. This now gives us a possibly delayed breakdown. But once it does breakdown, it's gonna be a long way down. First of all, prices are now below the moving averages. Bearish sign #1. Next, the 50MA is just about to cross the 200MA: Bearish sign #2. The MACD is below the zero line: bearish sign #3.
So given that things look bad, where are we supposed to place our bomb? Definitely when the neckline has been broken significantly.
Based on the latest data, the neckline I see for VRTX is $24.21 as of this writing. The downside target? Hold on to your seats, folks. Based on the highest of the three peaks, VRTX could go down to as low as $5.99. That's a 75% return!
The problem is we have no idea how soon this can happen. But if we follow the maximum rule, then we should hold this for around 2 years. Anyone with that kind of patience?
I don't think I can wait that long.
Friday, 23 November 2007
Good luck! May the listeners get an idea of what they're missing.
Wednesday, 21 November 2007
One of my favorite entertainment companies has long been listed in the US market and is undergoing some rough times, as far as trading is concerned. This is none other than World Wrestling Entertainment (NYSE:WWE).
As we can see in the chart, it has formed a double top after going up for most of 2005. After breaking down from the neckline, WWE has gone sideways to form a symmetrical triangle and it hasn't broken down from there yet.
I know what some of you may be saying. This guy deserves his nickname, why would he even want to trade something as fake as wrestling? Excuse me, first of all, this is sports entertainment. As such, there's a script to be followed. Plus the hazards are real. As real as the stock being hazardous in itself. Also, an opportunity is knocking. Shouldn't I be taking steps to try and answer opportunity's call?
So just how good is this opportunity? Currently, I'm looking at WWE's support at 14.56, giving me a trigger price of 14.27. That translates into almost a 20% return. Not bad for something considered dubious.
Now, if only the volume can be as attractive as the price movement. I fear that should I be daring enough to short WWE, I could be setting myself up for a world of hurt. Worse, WWE could lay a smackdown on my candy @$s if I'm not careful.
Just the same, an opportunity is an opportunity. And as traders, it's a mortal sin for us to just watch and do nothing. So what's a guy to do with WWE? Definitely a short sell is in the works but we just need to be patient.
God will help in our decision for this and it's time to take on Vince McMahon's challenge.
And that's the bottomline, 'cause Tarantrader said so!
Friday, 16 November 2007
I know what some of you are going to say, "What kind of gibberish are you talking about? They just reported a 36% increase in their earnings!" Right, so why was it trading around $22 (roughly 8% lower than the closing price of $24.10) in the after-hours market?
Regardless of whatever fundamental news or data that came out, it is very obvious that SBUX had a double top during 2006 to reverse its previous uptrend from years back. In fact, based on the MACD, its momentum is going to bring it to lower levels. That now explains the bearish sentiment prevalent in the stock.
It will probably take some more time before my downside target of $17.77 will be reached but it is already halfway there. The problem now will be if people suddenly become bullish with this as they find it cheap or they will do some short covering.
Thursday, 15 November 2007
It's very clear that BIDZ started with a symmetrical triangle from June to September of this year. Again it consolidates into a triangle; an ascending one this time. The resistance gave me a trigger of $15.35 as the proper price to buy it. I was targetting $17.94 for the triangle.
The premarket figures were higher than my buying price but only by 15 cents. I just posted my buying just the same, in case I was lucky to get some. What I thought was a glitch happened to be a legit selldown to $14.75, thereby giving me shares at a cheaper price than I thought. Within the first 30 minutes of trading, I saw BIDZ was very strong as it surpassed $16.30 in so short a time. I just thought, what the heck, I'll post my selling. I don't think it'll hit my target anyway.
I left the PC station for a while. After 10 minutes or so, I saw that BIDZ created a high of $18.35 at that time. I never thought that a 17% gain could be achieved in so short a time.
I'd say that this was one of my best trades for the year. It will rank high up there with my shorting of KIM earlier this year.
Can I get a replay on this again? I'd like to add another 17% in an hour...
Wednesday, 7 November 2007
The ideal kind of broker is one who is diligent, who goes out of his way to contact you about any update that you need to know. They give you what is due you without asking for anything more than what is rightfully due them. They do not have any right in siphoning off your money, much less use your account without your consent. In fact, they have no right to use your account, period.
I've had the experience to see this happen before and it's still happening to this day. I found out from a new acquaintance that her new broker is pulling the wool over her eyes. When he was already caught red handed, he was giving a lot of reasons yet no remorse was detected from him. So what is a client to do? The first step, complain with his boss. Unfortunately, the boss may not be interested in helping out. What's the next step? Talk to the organization with jurisdiction over the brokerage; that's the stock exchange itself (i.e., PSE). What if this isn't enough? The worst case scenario would be to bring the complaint to SEC. Of course, we're presuming that the client is being advised legally by her private counsel.
As of this writing, we heard that the said agent has been missing since 2 days ago. Worse, my acquaintance still has not received her money and the brokerage doesn't seem to be lifting a finger to help solve the problem.
How does this problem come about? This happens when the said agent, has already tasted the good life and needs to sustain it but has no regular means of doing so. So they decide to touch what is deemed untouchable: their client's money. The really creative agents have a lot of ways and means to be able to touch their client's money without even the client knowing about it. There's a promising career change in either magic or bomb disposal.
Before this turns into some long-winded sermon, I better get to my point. To the clients, this I say to you.
- Get a broker you trust. Whether they're your close friend, or relative, it doesn't matter but it should help. Remember, the keyword here is TRUST.
- It would help if the brokerage they're connected with is reputable. Why would you even want to play russian roulette in choosing the brokerage?
- The broker must keep you updated on all your holdings. They should be able to contact you through the celphone, landline, or even online (i.e., YM, Skype, etc.). They have to remember that aside from the price, YOU ARE KING (or queen)! Without you, there's no business to be made.
- Don't take everything that the broker tells you hook, line & sinker. Many brokers tell you what you want to hear. Ask yourself this, does your broker tell you what you need to know?
- Follow what your client tells you to the letter. The customer is king, up to a point. They're your meal ticket. Without them, you have no lifeblood.
- Never destroy the trust given to you. Trust is one of the hardest things to give to someone. Don't take it for granted.
- Live a simple lifestyle. You may hear some other brokers always partying in bars, and all that fun stuff. Why do you want to join their rat race? Once you start living a lifestyle that you can't afford but you already decide you can't have without, your days are numbered. Start counting the days that go by. At least you'll know how long it took for you to achieve your downfall.
- Don't create a mutual fund of your own using your clients' money. YOU DON'T HAVE THE LICENSE TO DO THIS! (see #2)
- You may get the respect and recognition many people give to brokers when they're in parties. They're like doctors, people always want to get a tip from an "expert". DON'T LET ALL OF THIS GET TO YOUR HEAD! You have a responsibility to be diligent to your clients' accounts.
- Just because you're on a winning streak doesn't mean you're Superman. The last thing you want is to let success get to you that you become vulnerable on other things that are more important like observing where to cut your losses. Once you believe that you're invincible, you're f**ked.
We don't need agents that double cross us. It's already hard enough for the PSE to build the renewed interest in the market. Agents like the ones I mentioned destroy the credibility of the industry and scare off potential players.
Here's hoping that these people get caught and persecuted.
Sunday, 4 November 2007
As we see in the chart, BKD has moved sideways for the last 2 months. When this breaks out, the proper buy would be at 2.04, with a target of 2.40. Cut loss for now is at 1.86.
What makes me think that the chances for this to move up is good? The MACD alone was enough to tell me that there's probably some more momentum for this to rise. The question is when.
Thursday, 1 November 2007
Dell Computers (Nasdaq:DELL) was initially pointed out by Tidus as having a symmetrical triangle. The triangle is there but the volume looked wrong. But something told me there was more to it than just the triangle. So I decided to zoom out to see what else was happening here.
Since July 2006, DELL has been inside an upward channel. The resistance has been breached twice but the price returned back into the channel both times. The action last night was different. The triangle that was pointed out seems to be a setup for a break of the channel. Last night's trading gave us a significant increase in volume.
Could this be the start of a new trend? It's very possible. But let's also take a look at a similar chart that has already gone through this phase before.
CDC Corp. (Nasdaq:CHINA) has gone through the same thing before. As seen on its chart, it has already completed the cup and is now waiting for a set up for its handle.
So what do we play? It all depends on what you like...
If we play DELL, we're just playing either the triangle setup or the channel itself. If it was the triangle that you were looking at, the proper buy for it was around 29.87, with the target at 33.82. Cut loss would be at 27.73 but this improves with every day that passes. If you want to play the channel, the proper buy would probably be at 30.81 and the target would be at 36.28. Cut loss should be done once it enters back into the channel.
As for CHINA, definitely the play is the cup with handle. If we were to base our breakout from the handle, as of this writing, the resistance is at 9.19, giving us a proper buy at 9.38, with a target of 18.19. Yes you read it right, that's a 98% potential return. But of course, this may take some time...like 2 years.
So many choices, too little time to decide...it's your call.
Sunday, 28 October 2007
This is just something that's always been running through my head for some time now. Don't you get amazed with how man is able to come up with so many adages that it's come around full circle that he already contradicts himself?
Case in point, you've always heard the saying, "practice makes perfect". You've also heard the saying, "nobody's perfect". So what's the point of me practicing when there's absolutely no chance that I'll ever be perfect?
I'm sure that during the Christmas season, we've always heard people saying, "'Tis better to give than to receive". I'm sure professional boxers and wrestlers would agree with that saying. There's also the other saying, "Give till it hurts". That one must probably come from the taxman. Put the two together, and it'll really make you think twice.
One of the sayings I like comes from Bill Cosby, "A word to the wise ain't necessary -- it's the stupid ones that need the advice." How true...
Saturday, 27 October 2007
1. What did it break out of?
2. What is the proper buying price?
3. What is the target?
4. What is the cut loss?
Turns out that PERC broke out of one of my least favorite patterns: the rectangle. It's so unpopular with me because you have no idea when this thing will make a move. Add to that, the volume won't follow any textbook definition on how typical volumes should behave in this pattern. You also don't have an idea when it will break out.
After I checked the chart (which was way after I bought this at 12.50), I saw that the resistance of the channel was 11.75, therefore the proper buying price was 12.00. The target was pegged at 14.50. The cut loss would be at 11.50, if I were to follow the concept of role reversals.
Too bad, I didn't see this earlier or I would have been able to act on this immediately. Another stock that came out from deep slumber was TA.
Some said this was a cup w/ handle dating back to 2005. I would agree about the rounding bottom from 2005 up to June of this year. I'm just not so sure about the handle.
Regardless, TA made a major move yesterday to break the resistance of 1.82. This was accompanied by the heaviest volume since July 2005. The target for TA, should it continue moving up, is 2.75 otherwise, be ready to cut your losses at 1.80.
Everyone's looking to cash in on oil...
Monday, 22 October 2007
Kidding aside, today's trading day was one that called for a definite kind of action. Knowing beforehand that we were gonna be hit by a double whammy of sorts, the trader in me was shouting, "Just do it! Cut your losses, you @$s!" The question was at what price?
Of course, there is always the possibility that when we sell in the first 30 minutes of trading, we could be selling early. Then again, the other side of the coin may say that you're going to get hit with a bigger loss if you don't sell now.
This was a case of selling, whether right or wrong, and sticking to your decision. There are no regrets in selling today. It could be worse. Therefore, I was determined to be liquid despite what's happening. Whether I'm right or wrong about selling is now beside the point. If you don't want to be another statistic, the best thing to do now is to be liquid.
I will just return when things break out of another formation. Hopefully, with a vengeance!
Saturday, 20 October 2007
5. I used to be greedy. Now my greed is justified by the charts.
4. We are firm believers of the daw theory. Sabi DAW kasi ni pare aakyat ito.
3. Everyone calls us crazy. At least we're more accurate than them.
2. We don't hate fundamentalists. They have all the reasons to buy a stock. When it's time for them to buy, we're selling to them for a profit.
1. TA is essential to trading: Tsismis Analysis.
Wednesday, 17 October 2007
As we can see from the chart, AT is nearly finished with forming the inverse head & shoulders, which is bullish. However, there is no breakout from the neckline just yet. It hasn't even finished the right shoulder yet, so hold your horses.
What we're waiting for is a break of the neckline, currently at 16.50. So I will want to ride this at 16.75 with the target set at 23.00. Cut loss would be set one fluctuation below the neckline. Keep in mind that the neckline gradually decreases while AT doesn't break out yet.
Looks like this is what I will exchange my ELI for as it has returned to the support of .80. Damned stock...
Thursday, 11 October 2007
The resistance has become .80, so a proper buy was at .81, with a target of .90. It sure took its damned time before breaking out. I was already thinking maybe this flag has fizzled out since it took longer than usual to break out.
Yet, after waiting for longer than the normal amount of time, we tarantraders are gifted with a breakout yesterday. ELI ended at .83 with a volume of 55 million shares. Could this be the start of a new trend? It's very possible. That, notwithstanding the news of ELI issuing stock rights at par value.
What would that mean for ELI? The fundamentalists say that in order for any stock to issue rights at par value when the price of the issue is below par means that the stock has to be pushed to par value and beyond to make the rights attractive. Of course, that's the other view to this of which, it may have some logic to it, yet some speculation too.
So what to do with ELI after holding it for some time? As I mentioned in my earlier post about being in trading limbo, we wait. The target is coming, or we get stopped out. It's that simple.
And we're off buying a new stock on breakout! Then what? That's the big question now. Patience happens to be a virtue every trader must have when entering any position.
Everyone wants to make money immediately. Who doesn't? However, the true test of character of a trader is not when they make or lose money but when they're in a position which has neither reached target nor met the stop. In short, you're in trading limbo.
There are a number of options that present itself to the trader: look for a faster moving stock and dump the current one, hold it until thy kingdom come (or it reaches target, whichever comes first), sell the sucker and never come back.
Let's talk about the last two first as these are easier to tackle. Hold it until thy kingdom come means you bought, you're waiting, yet the stock doesn't go up and it doesn't go down. Patience and character are being tested here. Are you disciplined enough to wait for your target to get hit and get out at that price? Are you disciplined enough to sell when it hits your stop? If yes to both questions, you may have to be a poor clone of a random walker who has bought and is now holding.
Sell the sucker and never come back. You either can't wait or you just don't want to wait. Therefore, selling a snail of a stock seems to be a logical reason. This way, you already eliminate the process of waiting. Time is gold, man!
Now the last: look for a faster moving stock and dump the current one. First of all, searching for that faster moving stock is like playing roulette. With so many options, which one will it be? Dumping the current stock may seem like a good idea in order to make your fund more active. Then again, I've already had the experience that the stock moves AFTER you just sold. You then become an indicator for other people. This one will give you anguish and it might haunt you for a while.
So what do you do when in limbo? Do what the others do. They wait...and wait...and wait... until you get sick and tired of waiting.
Personally, I would go for waiting for my target. Unless a faster moving stock suddenly presents itself.
Tuesday, 9 October 2007
Based on what we see on the chart, it is now caught inside what is known as a diamond. The start is quite volatile with volume increasing then it is consolidating in a symmetrical triangle with diminishing volume. Getting the base for this, we get a downside target of under 70 centavos. Of course the ride downwards won't be one straight line.
There will be supports at 1.16, 1.04, & .90, respectively. Once those areas have been broken, then we might see some sort of a bungee jump...without a cord.
Monday, 8 October 2007
It's a good thing my broker keeps me updated regardless of my account size. So kudos to you mickymac!
Unfortunately the same can't be said for the US market...
Thursday, 4 October 2007
Tuesday, 2 October 2007
Monday, 1 October 2007
Saturday, 29 September 2007
Looks like it will be a merry christmas after all!
Thursday, 27 September 2007
Wednesday, 26 September 2007
Friday, 21 September 2007
It is now priced around the 130MA, which is at 5.36. The 130MA has also served as support and hopefully MIC won't fall any further. So if what's forming now is really a flag, our resistance for the next trading day is 5.60 with the target poinitng to 6.80. However we should expect some resistance at 6.60 as the 65MA before it can continue. On the other hand, the MACD shows the 2 lines steady while slowly moving higher.
If one would notice, the GEMINI issues are moving again. NI is suspended pending further explanation of their deal. GEO is moving higher but isn't as strong as before. But MIC...this is a possible tsupitero's delight. Should prices follow expectations, then the price should break out very soon giving us at least a 17% rise in prices.
Sunday, 16 September 2007
As we can see in the chart, an ascending triangle has manifested itself onto the scene. Should this breakout of the pattern, a buy could be called above 12.50, where our resistance is. The target of the pattern is 16.25. I would initially put a cut loss at 11.00. Of course this becomes higher as the days go by and the triangle isn't broken.
We see on the MACD that it is still in a rally mode. Should this continue, we may see the fast line move above the zero line.
But a word of warning to the uninformed. Since this stock has low liquidity, you could be in for a Nihaosiao.
Friday, 7 September 2007
Sunday, 2 September 2007
What is sure is that PCOR broke through the short term resistance at 5.50 and is currently doing 5.70. What seems to be a flag looks suspect though. There is no significant volume that accompanied the break out. Yet, the MACD has signalled a short-term play as it's rallying from recent lows.
Should the current formation prove to be correct, the resistance is 5.70 and the projected upside target would be at 6.00. Unfortunately, this is too small an upside for me to even get excited.
Hopefully we'll see more issues giving us better signs in the coming weeks.
Friday, 24 August 2007
Merrill Lynch (NYSE:MER) has been on a steady rise since end-2002. It went sideways in a symmetrical triangle that spanned Jan. 2004 to Sept. 2005. It broke out and reached the target of the triangle in a few months. After continuing its rise, we see it consolidated for around 5 months in 2006, before it still continued its rise. It again went sideways and formed a double top that has quite a good return. So do we turn bearish on MER and call a short? Yes and no.
Yes this is a bearish reversal pattern and once it breaks the neckline at 76.87, we see a probably downside target of 55.61. But wait a minute! Did we forget to look at something else? I think we did. What about the long term support that was made since the end of 2002? The support is still intact and is currently situated at roughly the same price as the downside target of the double top.
So what is happening to MER currently? It is still hovering somewhere near the neckline and has yet to fall to its recent lows. The other thing to consider for traders who are interested in this stock, this is NOT for the faint of heart. Even if MER is priced above $70, this is one very volatile issue.
Either the patient trader will wait this out until it drops to the downside target, or they will get whatever profits they can from here and choose a less cardiac issue.
The prudent trader would choose the latter...and that is not me. Why else do you think I am called the TaranTrader?
Sunday, 19 August 2007
As we can see from the chart, the DJIA has been very volatile for the past sessions. I have been debating with my friend, Welles Wilder about what the DJIA is doing. He says he hopes it becomes a falling wedge. I don't agree as the falling wedge is supposed to be pointing to the 4:00 position in the clock. Not only is the supposed wedge pointing sharply lower, if this was a wedge, DJIA already broke through the support.
The other argument I see against the DJIA being a falling wedge is that the MACD's two lines are still diverging away from each other while it accelerates downwards. This tells me that the DJIA's drop isn't over. On the last bar of the chart, we saw that we had a massive return above the support line as this was the day the Fed surprisingly announced a cut in the discount rate it gave to the institutions it lent money to. It may not be the key interest rate, but at least it was something many were cheering for, although I feel it's misplaced. I still remember the one comment that stood out among all the hysteria, this is more of a short covering than anything else. This only means that this is like a band-aid solution. So we should expect more drops. By the way, I feel the DJIA is more of a head and shoulders than a falling wedge. I could be wrong though as the volume somehow doesn't follow the textbook definition. On the other hand, it is very possible that the H&S can now be considered a failed one as it has gone above the neckline again. Yet I feel this is still not over as it hit the 100MA only to go lower again.
Which now brings us to the PSEi. Ever since the big drop last Feb. 28, we have been climbing up to our all time high of 3822. Once the support broke, we have been on a tailspin. We had a 3-day rally but what's interesting to note was that on the 3rd day of the rally, the index tested the 130-day MA and has backed off from there. When we apply the Fibonacci retracement, we have already given back more than 100% of the gains since Feb. 28.
The worst part here is that we are not necessarily following the movements of the DJIA anymore. Even if there are positive days for DJIA, we still keep on dropping. All signs point down, and there is no reversal in sight yet. No wonder many have been fretting. The freefall has broken many supports and we are looking for a base. For now, the nearest that I see is around 2567. Unfortunately, this is no assurance that there will be a bounce off that area should we reach that. Hopefully we don't go down that far.
So what does our title have anything to do with these two indices? Well, the bad is DJIA, the ugly is PSEi. The good? Show me something good then I'll include it here.
Saturday, 11 August 2007
The maker of the Blackberry has been on an uptrend since Aug. 2006. It gaps up in end-June to the $200 level and has been there ever since. Looks like the happy days of RIMM are numbered.
It seems that the consolidation that RIMM is going through is the head & shoulders top formation. Although it's a bit short in time frame, it still looks valid. We have diminishing volume that accompanies the formation. The neckline is situated at $210.89, which was broken on Aug. 10, 2007. The downside minimum target for this is $183.06. But we also have to note that the 50-day moving average could serve as a support at $198.85.
The MACD has been showing us bearishness since end-July and it is still accelerating downwards. Since the neckline has already been broken, it is safe to presume that it is on its way to our minimum downside target.
With the way the US market has been reeling from the credit sector problems, those who decide to trade this could find another winner waiting in the wings.
Sunday, 5 August 2007
As we can see from the chart, for the past 10 months, JOYG has been on a steady climb. Currently, we saw it gap down and form what seems to be an inverted pennant. The pennant is currently breaching the said support of the 10 month uptrend. It hasn't clearly broken down from both the support and the pennant but the inevitable is coming. What gives it away is the momentum of the MACD. Not only is it in a sharp drop, but the 2 lines have diverged away from each other. So the momentum for it to drop is there, we're just waiting for the shoe to drop.
Right now, the support of the pennant is pegged at $47.10, with a downside target of $40.18. That's roughly a 14% return. That's quite good considering this is expected to happen in a very short while.
Not only are my fingers itching to short this, but it's like a hunter waiting in the wings while his prey sits right in front of him. Hopefully, the hunter's name isn't Elmer Fudd.
Currently, the DJIA is 13,181.90, well off the all time high of 14,121. In fact, the DJIA is now playing along the support of 13,213.90 and it’s struggling to stay alive. The short-term support of 13,577 has already been broken around two weeks back, when the concern about the subprime meltdown and the housing sector has now become more general as they’re now looking into the credit sector. That was the time the DJIA lost around 500 points in just two days. The longer term support for the index still holds at 12,689. But if I were to use the recent peak and draw a vertical line to my support and project this upon the breakdown of the support, I am seeing a downside target of 12.289.50 for DJIA.
What compels me to be so bearish? I’ll show you another angle to this.
Notice how the index behaved from Oct. 2006 to Feb. 2007. DJIA just kept making higher highs while the MACD was steadily declining. This was a bearish divergence telling us a change in the trend is coming. The bottom gave way on Feb. 28 when we all experienced the China syndrome. The index was able to shake that off after a month or so and was back on its way to making higher highs. Now look at the index from June to July 2007. Not only was the index more volatile, but the bearish divergence created looks more dangerous. The MACD doesn’t even show any signs that the bearish sentiment is over as there is no reversal yet.
Is all hope lost? Not really. But we shouldn’t expect things to become rosy in an instant either.
Applying the Fibonacci retracement, we see that DJIA is still staying above the 50% retracement level. So this is still a healthy correction…for now. Once when the breakdown happens, all hell will break loose. It could be a repeat of July 26 & 27 when the index lost 500 points, only it’s on a bigger scale. The bigger question now is how does that affect the local market, or any other market in general? There’s a saying that goes, when the US sneezes, everyone else catches a cold. That is what is happening right now as DJIA has been finishing every trading session lately in triple digits, whether up or down. So the effect is quite significant on every other market, as many tend to follow the US market’s direction. The same is true here only there have been occasions when we did the exact opposite by dropping further when the DJIA went up the previous night.
For those who are going long in the US, good luck to you. Unless the issue shows tremendous strength, I wouldn’t stay long for the moment. It’s shorting time!
Saturday, 28 July 2007
We see that it's consolidating inside a symmetrical triangle. Should this try and breakout this week, the resistance is set at 6.00 pesos. A trigger buy would be a 6.10, with an upside target of 7.20.
However, we need to observe how the market performs as a whole. It may have a hard time breaking out for the near term.
Saturday, 21 July 2007
As we see in the chart, there was a time that BEL came from the 3 to 4 peso level. It dipped so low that it looked like a deep sea diver when it dropped below 0.60. How times have changed. Right now, BEL seems to be consolidating near the 1.84 resistance. Should this breakout, there are 2 ways for us to play BEL using the cup and handle.
- Use the rounding bottom since 2005. With this, I would buy on breakout at 1.86 and look at a target of roughly 2.80. Cut loss would be a return below the resistance line.
- Use the big rounding bottom since 2000. The same trigger buy would be used here but target would now be higher at 3.45. Again, cut loss would be a return move below the resistance line.
Saturday, 14 July 2007
It is evident though, that PAYX is undergoing some consolidation as can be seen by the moving averages oscillating with each other and the MACD hovering around the zero line.
So definitely, something was going on but it was not yet clear what…until we zoomed out.
Upon zooming out to a bigger time frame, what we saw was a pleasant surprise.
I see that this initial inverted head & shoulders that I saw is actually the right shoulder of a bigger inverted continuation head & shoulders. At this point, it seems that volume may be confirming what we see despite the area pattern being secularized.
With this new development, we were now able to draw our neckline and find our breakout price. The neckline was situated at $42.24 on the day it broke out, July 13, 2007. As we project our upside target from the breakout point, we see that we can expect the price to go to $51.90.
This is one of the rare times that I have seen any head & shoulders pattern have a smaller head & shoulders pattern to be part of it. But it doesn’t end there.
If I were imaginative enough, I can now even consider this to be a big cup with handle where the inverted continuation head and shoulders that we saw (2nd chart), is now serving as a handle, as some may see it as a symmetrical triangle.
However, I don’t think I’m going to go that far to wait for this to shoot up to the moon. I’m not that greedy. But for those who want to go really long for PAYX, it can probably go to $65. Of course, in my case, I’m probably satisfied with the target of $51.90 and I would have the option of keeping some just in case this does go up to $65.
For those who are looking for some meat in the chart, the latest word on the street is that PAYX directors have agreed to buy back $1B worth of their own shares.
But lest I be accused of turning into another trader, I just happened to read upon that news AFTER I saw the charts.
So show me the money, PAYX!
MBT is one of the most liquid bank issues listed in the PSE. Unfortunately, they also move very slowly. Despite it being a normally slow mover, it has broken out of a symmetrical triangle and is now consolidating inside a smaller symmetrical triangle. It is currently knocking at heaven's door at 73.50. On breakout at 74, I expect an upside target of 81 for MBT.
Next up is one of the speculative plays. I know everyone wants the PWR.
"It's gettin', it's gettin', it's gettin' kinda hectic..." so the song goes.
After a long consolidation, PWR broke out last Wednesday and volume was significant. Thursday continued the run and it backed off the high on Friday. I immediately saw this has become a candidate for a very short play as it is now in the midst of creating a pennant. I'm expecting PWR to consolidate for one more day before breaking out giving me a resistance of 0.55. Therefore, breakout price is 0.56, with an upside target of 0.81.
When it does breakout, "I will attack and you don't want that."
I'll have this PWR...
Saturday, 7 July 2007
IPVG is the latest to enter the Call Center fray. Regardless of what business it entered, we see that the movement is quite exciting. It has a 2 day pole that is quite substantial. I expect the resistance of IPVG to be at 9.50 for July 9. I also expect that this is when prices should breakout. I would call a buy at 9.60 as the pole is giving me a target of 11.25. The cut loss is set at 9.20.
For those who love flags and pennants, this one could be your next baby.
Sunday, 1 July 2007
Once again, we feature our weekly fearless forecast. For this week, we feature PLTL & RLC.
PLTL has consolidated in a symmetrical triangle for 5 months. My resistance currently is 7.10. If this breaks out, my target for PLTL would be 8.50.
Next up, is RLC.
It's rare that I monitor a Gokongwei stock. But this one seems to good to pass up. The triangle base is quite wide. My resistance is at 21.75. The target here is 29.00.
Ladies & gentlemen, these are not sure shots but they could be worth it when they break out.
Saturday, 23 June 2007
Here we are again with our picks for the week. This time we saw 2 similar looking patterns on 2 different issues. First off the bat is DGTL.
As can be seen in the chart, we clearly see a cup w/ handle with a falling wedge acting as our handle. I'm just waiting for a breakout at 1.72. If it flies from there, I'm looking at 2.85 as the target. However, we must also take note of previous resistances at 2.00, since this is also a psychological resistance, and 2.10 as another resistance. After that, we should see DGTL fly.
Next on the radar is EIB. The pattern may not be as clear as DGTL, but it could also be worth looking at. I believe that there is also a cup w/ handle here. A symmetrical triangle serves as the handle. If it breaks out, I'm looking at a trigger price of 0.59 and seeing a target price of 0.78.
But between the two, I prefer DGTL. Okay, time to place your bets!
Friday, 22 June 2007
As seen in the chart, COL has a nice healthy uptrend which went sideways for a while. It broke out of that consolidation to climb all the way to 11.00. Now, the set up is there. However, the volume is not the textbook description of how the volume should be.
So this could be nothing but a false alarm. Otherwise, we might see this easily go to 13.00. No such luck.
Tuesday, 19 June 2007
Now let's talk about the Nasdaq 100 index issue, Irish airline Ryan Air (Nasdaq: RYAAY). Everyone is talking about the troubled sector, the airline industry. There are a lot of candidates to short in this sector but I decided to concentrate on RYAAY as it has a distinct double top formation coming from an uptrend. Add to that, prices are trading below the moving averages. So if we want to talk about a weak stock then this has got to be one of them. Order #2 for the day was executed probably near the end of the trading day as my shorting price was where the low and close was made. Downside target for RYAAY is around $31.72. As to when it will hit its target remains to be seen. Will this be a soft landing or a crash landing...?