Chart of the Week - Ayala Corporation

AC Daily Chart - Formed a V-Reversal at 307.50 but Nearing Overbought Conditions

Short-term Traders/Tsupiteros:	Medium-term/Position Traders:
Support - 337.50	Support - 307.50
Resistance - 357.50 to 370.00	Resistance - 400.00
Trend - Sideways to Up	Trend - Up
Recommendation - Hold / Take profits on strength	Recommendation - Buy the dips

Ayala Corporation (AC) has been in the spotlight recently as prices formed a peak at 357.50 last early April. The stock dropped to as low as 307.50 last April 20 but, after three days, already traded back up to as high as 355.00. It was able to close the week at the 347.50 level. Certainly this kind of volatility is uncharacteristic of AC and I can no longer remember the last time this stock was this wild. Anyway, after all that chaos, the still is trending up after all. Let's see how its charts look like right now.

On its long-term perspective, you can see in its monthly chart above that the stock has a range of between 200.00 and 600.00. It has obviously rebounded off the 200.00 level and is now climbing back up. Will it be able to climb back up towards 600.00? I don't know but the likelihood of the stock going back up to 600.00 is certainly more probable than the likelihood of the stock going back down to 200.00. Why? Because upward momentum is on the side of the bulls.

In the medium-term or with regards to its weekly chart, the stock is continuing to climb from its trough at 257.50. It encountered some resistance at the 357.50 level but was immediately able to bounce off of its support at 307.50. From the way I see it, that drop from 357.50 to 307.50 may already be the correction that the stock needs in order to continue to trend up. If so, the stock may already be on its way towards its medium-term resistance at 400.00.

As for the short-term, the stock has formed a spectacular V-reversal off the 307.50 level. In just three days' time, the stock was able to rally back up near its highs at 357.50. While I would not discount the possibility that the stock may even break above its previous high of 357.50, the stock may already be trading at overbought conditions in the short-term and will probably need to correct.

How do we trade this stock? For Tsupiteros, who are currently holding this stock, I would suggest to try and take profits as high as possible even above its previous high of 357.50 and just try to buy it back at a lower level. You may also want to hold but be sure that you can bear a possible drop back down towards the 337.50 level. I would not recommend Tsupiteros to buy this stock yet at this point unless a correction occurs. As for Position-traders, for those who are already long, I would suggest to just hold and use a break below the 307.50 level as your mental stop. Those who would like to buy this stock may want to buy it as close to 337.50 as possible and just place mental stops as well below 307.50.

Short-term Traders/Tsupiteros vs. Medium-term/Position Traders: Recommendation for short-term traders or Tsupiteros are meant to be used by traders whose holding period are limited to one day to two weeks. Medium-term or position traders are meant to be used by traders whose holding period are two weeks to three months. Long-term investors whose holding period is more than three months should not follow these recommendations.