Saturday, 28 July 2007

PX on my Mind

Many issues in the local market broke down last Friday. It's a good thing that PX isn't one of them, at least not yet.

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

Ring My BEL

I have probably given up on BEL as it initially didn't look that attractive. Not until I zoomed out to a big picture of around 7 years.

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.
BEL definitely looks promising. It's now just a matter of waiting for the breakout.

Saturday, 14 July 2007

Show Me the Money!

Once in a while, I see something that is very hard to ignore. Especially when the chart jumps at me while I'm fighting to stay awake. Such is the case with Nasdaq 100 index issue Paychex (Nasdaq: PAYX).

At first glance, PAYX’s chart was easy to ignore. Although it seems that there is an inverted head & shoulders pattern, the volume just didn’t agree that this was what I thought was a strong pattern.

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.

Upon another zoom out view to see what the overall trend is, what I saw is another big head and shoulders that formed since end-2000 to 4th quarter 2005.

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!

PSE Stock Picks for July 16

Hi fellow traders, it's time once again for our fearless forecasts! Let's start off with a safe pick.

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

Calling for a Hero

Our latest find is one that I really like as it involves my favorite pattern: a flag or a pennant.

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

PSE Stock Picks for July 2

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.