The Rainbow After The Rain

After some selling pressure for more than a month, the Philippine Stock Exchange Index (PHISIX or PSEi) is now into the consolidation stage giving signs of a possible uptrend real soon. Some stocks have already broke loose from their short term (in the 1 month downtrend) resistance, some going into consolidation as well while some turned such resistance into supports. However, there are some that continued to go down.

Since the valuations went down for the past weeks, this is a very good time to buy as the much anticipated uptrend is just around the corner. PHISIX is flirting with it's 3900 resistance and as soon as it gains some serious bullish momentum and break such resistance, expect a good number of stocks and PHISIX as well to soar high.

The list entails a lot of Fibonacci retracements and Elliott Wave Theory wave 5 potentials. Elliott Wave Theory's wave 5 is an uptrend or in other words, the value of a particular stock continuing to go up. Fibonacci on the other hand notes some precalculated support/resistance levels that are found to hold true (not all the time but most of the time). If a price hits a Fibonacci support/resistance, it is most likely to reverse.

I have kept a handful of companies in my watch list and picked a few with some really good potential to invest in for at least this year. Most of the MACDs and RSI of such companies are positive indicating some good points of entry. Here's my list:

AC - For the past weeks, AC dropped from around 403 to just a little over 320. For the month of March, AC gained buying pressure as it rose to almost 355. In a two-year reference, AC is hovering above it's two year support and might possibly head into wave 5 of Elliott Wave Theory. My favorite part is seeing it bounce at 38.2% of Fibonacci since January of 2009.

AP - From mid-October of 2008 until this day, AP is on a very strong uptrend gradually yet consistently rising from barely a peso to as high as 35. However, a certain support (from around September of 2009) says that AP's support has turned into a resistance which it is currently challenging right now. Fibonacci suggests that AP might have bounced at 23.6% already (which is a minor support in Fibonacci). As of now, there is no clear indication as to where AP would head next but as soon as it breaks through its resistance at around 32, it's going to be a good buy.

DMC - Technicals are really looking so good for DMC. First, it is resting on a very solid uptrend support and just bounced recently at around 33-34. Second, in a two year span, DMC's position for an Elliott Wave Theory wave 5 is looking really good. For the entry, DMC just broke it's resistance at around 37. It is going to be on its way to challenge its previous high at 40. I'm very optimistic about this one.

JGS - JGS broke its uptrend support and went sideways for the past 2 1/2 months. However, JGS is forming an ascending triangle and should the resistance at around 19.8 will be broken, JGS could go high fast. In a 1 1/2 years span, JGS could enter Elliott Wave Theory wave 5. It needs some confirmation though as MACD is showing selling might just be ahead. JGS has already hit its 38.2% Fibonacci support in a two year reference.

MBT - Another Elliott Wave Theory wave 5 candidate. However, MBT's support for the last 2 years has become its resistance. If it could break its resistance at 72, it will be on its way up, wave 5 might come after all. It is also resting on its 38.2% Fibonacci support. A bounce is more likely.

MEG - From April 2009, MEG is an eye candy for Fibonacci players. MEG is well resting on its 38.2% support, consolidated, and resumed an uptrend. MEG also just bounced from its 2 year uptrend support, quite a solid support that is.

RCB - In nearly two years, RCB just bounced from its 23.6% Fibonacci support. However, on the same span of time, it has just gone below its uptrend support and challenges to break through it. Should RCB break such resistance and turn it back into a support, it will be on its way up.

SCC - Not really much to say about this one. It's uptrend support is very strong. One of my best picks for the year.

SMC - After a strong uptrend, SMC is consolidating as of the moment. Considering all the fundamentals that this company has, SMC remains a strong one for 2011. Confirmation is needed for entry. From the foot of its uptrend late in 2010, SMC is on the 23.6% support of Fibonacci at roughly P160.

SMPH - As of this writing, SMPH just broke out from its downtrend from December of 2010. A support at 10 is somewhat found but as far as Fibonacci is concerned, it might fall down as it hits the 23.6% ceiling. However, in a two year span, SMPH might head into Elliott Wave Theory wave 5. Quite worth looking at.

However, these are all just based on my analysis of the charts and doesn't include fundamentals yet. Always keep in mind that the most important thing in all of these is the price action. Technicals are just signs of the possible behavior and to project the possibility of the direction of the price. If things won't go as expected, bail out. Your decisions will never be right all the time. And lastly, cut hoping (that the price will go up anytime soon). Hoping can lead to false hopes.

DMC: Feels Really Good to be Home

This is the right time to do some stocks window shopping. The market is in the consolidation state for almost the whole first quarter and a correction is just waiting around the corner. While looking around for some potentially good stocks, I have stumbled upon DMC.

The chart below shows that DMC is getting near it's two year uptrend support at around 30ish. If the support holds, DMC is bound for another strong uptrend. In approximately 2 years time, DMC rose from barely a peso to as high as P35 or 3500%. Should such slope and momentum continue, DMC could go as high as P50 or even P55.

The chart below shows where DMC stands in the Elliott Wave Theory. Though not as steep as it should be, I think that DMC is already at wave 4 and wave 5 is coming up soon. DMC is also at its 23.6% Fibonacci support level. Though 23.6% doesn't hold strong in comparison to 38.2%, 50%, and 61.8%, it is still a valid support. Considering that DMC is in consolidation and it's short support holding quite well, I think that makes 23.6% valid.

Fundamental wise, DMC has just bagged in 3 contracts for 2011 worth billions. This news actually prompted me to give DMC a look.

I still don't think that DMC's fundamentals is that strong to push it back up. However DMC is really looking good technically and just like most of the stocks that I'm looking at, a few more fundamentals are needed to trigger an uptrend.

JFC: The Bee is Buzzing

After reaching the P100 plateau by late October of 2010, JFC (Jollibee) has somewhat gone sour and went down. From November 1, 2010 until early February of 2011, JFC went down from P90 to as low as P70, about 23% decrease in value.

JFC isn't getting much attention lately but I think that JFC has great potential than it's price action dictates. The chart below shows that JFC is potentially starting an upward momentum. The price picked up since it reached P70 and in nearly a week, it is hovering around the P75 mark. MACD and RSI are also positive. JFC's MACD signifies that an uptrend is somewhere ahead and it's RSI shows that it is strengthening both marking that it will go up sooner or later.

The graph below shows that JFC is approaching the 38.2% mark of Fibonacci. Theoretically, prices changes direction when it hits the 38.2%, 50%, and 61.8% marks of Fibonacci. 23.8% and 76.4% are areas worth looking at but not as strong as those 3.

JFC's behavior follows Fibonacci religiously. It went down when it hit the 61.8% mark in 2006 before bouncing back up when it hit the 76.4% mark later in 2006. It went down again after hitting the 50% mark in 2007 before bouncing back up after hitting the 76.4% once again in mid-2008. 38.2% could be a potential support if JFc would continue to follow Fibonacci.

JFC found a long term support at P30 but after surging past it's resistance at around P55, it might turn such resistance into support.

If worse comes to worse and JFC won't bounce back at 38.2%, it could go further down to P55 which is it's next support (shown on the chart below).

Fundamentally, JFC hasn't been a talk of the town lately. However, as soon as their Ti Amo coffee shops will start to materialize, expect JFC to take some serious momentum going up. The acquisition of Mang Inasal spurred the bee up in 2010, Ti Amo might do the same as well.

JFC still lacks market sentiment as of the moment but as soon as the fundamentals will start to come in, it will further strengthen it's technicals and there's no reason for it not to go up.

JFC went up from a little less than P10 in 2001 to as high as P100 in near end of 2010, some 900% growth in nearly a decade. From mid-2008, it went up from about P32 to a high of P100, more than 200% growth in just a year and a half.

It think that JFC still has a lot of room to grow given it's current price. P110-P120 range is doable before 2011 ends as long as fundamentals and market sentiment could back it up.

2011: Go high with JGS

If you're shopping for stocks to go long for 2011, JG Summit (JGS) is definitely one of the best picks. Just in case you don't know, JG Summit is the umbrella corporation of Cebu Pacific, Universal Robina Corporation, Robinsons Land Corporation, Digitel Philippines, United Industrial Corporation, Robinsons Bank, and JG Summit Petrochemical Corp run and owned by the Gokongwei family. JGS is one of the leaders in agro-industrial and commodity food products, telecommunications, property development and hotel management, air transportation, petrochemicals, information capital and financial services, and other supplementary businesses.

Probably you've heard me fantasize about JGS for a number of times already but who won't for a company that gave a growth of roughly 2000% in less than 2 years? In fact, it went up for as high as 2500% by near end of 2010 before starting to go down slow. If you had placed P100,000 in JGS back in March of 2009, you'd be having P200 million by now!

Anyway, speaking of JGS's potential, the chart below shows that [1] JGS is resting on it's uptrend support (which is very well inclined by the way), [2] it is bound for wave 5 according to Elliott Wave Theory, and [3] MACD (encircled below) signifies buying spree is just around the corner.

Take away the complexities of the analysis and summing it up, JGS is bound for another uphill climb and based on it's performance over the past 2 years, we're talking about some serious growth. Another 2000% gain might sound too ambitious but 500-1000% or maybe lesser won't hurt either. If that won't excite you, I don't know what will.

The chart below is JGS's chart from November of 2010 until February of 2011. The first line (longer line) shows that JGS was resting on it's downtrend support from November of 2010 until around mid-January of 2011. The second line (shorter line) shows that JGS didn't return to it's support and started to go back up. JGS is starting to gain momentum and it won't be long until it will start to rise again.

According to experts and professionals, PHISIX will get back up soon and by that time, expect JGS to continue it's uptrend too.

JGS is at P19.60 right now, quite a bargain if you ask me. We still haven't heard anything from JGS yet but as soon as fundamentals could back the technicals up, it will further solidify JGS's rise.