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Chart of the Week - September 1, 2008

 Alliance Global Group, Inc. (AGI)

AGI Monthly Chart - Rallying from an Oversold Condition

charts are courtesy of Metastock

AGI Weekly Chart - Formed a Higher Low at 3.25,                       Approaching Resistance at 5.00 

charts are courtesy of Metastock

AGI Daily Chart - Strong Upswing but                                                      Already Trading at Overbought Conditions

charts are courtesy of Metastock

Legend: blue lines - range for Tsupiteros

            dotted blue lines - range for Position Traders

            red lines - important trend lines

Alliance Global Group, Inc. (AGI) along with Megaworld Corporation (MEG) announced a P5B Buyback Program last Wednesday. AGI was allotted P3B for the Buyback Program while MEG was allotted P2B. Obviously, the program was immediately implemented in AGI upon its announcement. From just P3.50 a day prior to the Buyback Program announcement, the stock was aggressively bid up all the way to 4.65 as of its close last Friday.

Prior to its Buyback Program announcement, the stock has already broken below its major support at around the 3.50 level and looked like it was going to continue to trend down. It registered a low of 2.46 and just never looked back. The fact that the stock failed to trend down below the 3.50 level and has immediately snapped back up above 3.50 from a monthly chart point of view, indicates that the stock's downtrend has at least subsided already. However, as long as the stock continues to trade below its previous high at 6.10, I will continue to expect the stock to trade within a sideways to downward trend, unless proven otherwise by the market. You can see in the monthly chart above that the 6.00 to 6.10 levels are not just the stock's previous high but is where the stock's previous major support line is located. Certainly, that level is a significant resistance line from all angles of the stock.

In the short-term, you can see that while the stock is indeed very, very strong, it is already trading at relatively high levels. From a weekly to a daily standpoint, the stock is now definitely quite high. For the short-term, the psychological 5.00 level may be a significant area to break, if not its current levels already. Notice in the daily chart above that the stock has even broken already above its short-term resistance line. While not exactly a cause for concern for the bulls, it does tell us that prices are indeed quite high already. Nevertheless, as long as Mr. Andrew Tan wants to bid up his stock, who knows where this stock will peak? With the stock closing last Friday at its highs and with a long white candle, I would expect prices to continue climbing higher in the short-term.

At current levels, I would no longer recommend buying AGI anymore since it is already trading at relatively high levels. However, for those who are still holding, I would suggest to just hold and use a break below 4.25 as your mental stop. Just slowly increase your mental stop as the stock continues to go up. For Position-traders who are currently stuck at higher levels, this Buyback program may be your opportunity to sell. I would also not recommend Position-traders to chase the stock at anymore current levels, although you may opt to buy it once prices drop back down or stabilize in the next couple of weeks or so.

Notes:

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.