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Chart of the Week - December 8, 2008

  Alliance Global Group, Inc. (AGI)

AGI Monthly Chart - Continuing to Trend Down

charts are courtesy of Metastock

AGI Weekly Chart - Formed a Lower High at 2.26, Continuing to Trend Down   

charts are courtesy of Metastock

AGI Daily Chart - Trying to Hold Above its Previous Low at 1.46

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) has been one of the most battered stocks last week as foreign funds suddenly became aggressive with their selling. I haven't heard anything new on this stock why it was suddenly sold down aggressively. I guess with the stock not as liquid anymore like before, just a small amount of foreign selling could already do this much damage to the stock. Will the stock continue to trend down from here?

The monthly and weekly charts are certainly not projecting a very bullish picture for this stock. There's not much we can see in its monthly chart except that the stock is continuing to trend down and, if worse comes to worst, may eventually retest its all-time low at 0.71. The weekly chart is also not looking very good as prices have already formed a bearish lower high at the 2.26 level. The fact that prices have already formed a bearish lower high at the 2.26 level and have dropped back down to its previous low at 1.46, tells me that prices will continue to drop further. If the stock were really strong, it should not even have retested its previous low at 1.46 anymore. The weekly chart above is pointing to a drop towards the 1.24 level but if the stock is really, really weak, there is possibility for the stock to even drop to as low as 1.00 or 0.90.

For the short-term, the formation of a Doji pattern on a small candle, indicates that the stock's downward momentum has abated somewhat. However, this is but natural since it is now trading right at its previous low at 1.46. I wouldn't discount the possibility that the stock could possibly rally from here. However, with the stock's short-term trend being down and with prices having formed some heavy resistances near the 1.74 level, I would tend to expect prices to just bounce off current levels but encounter heavy selling once it gets closer and closer towards that 1.74 level. Take note, if the stock is not able to rally at 1.46 and continues to trend down, it would indicate that the stock is very, very weak.

With the medium-term trend of this stock being down, I would not recommend Position-traders to buy this stock right now. For those who are currently stuck with positions in this stock, I would suggest to just try and sell as close to the 1.74 level as possible. If you are lucky, then, you can probably try and even sell it as close to 1.86 as possible. More conservative Tsupiteros are also not recommended to buy this stock but, if you do not mind being a bit aggressive and would prefer to use counter-trend trading strategies, you may want to buy right now and try to sell as close to 1.74 as possible. Just place mental stops on the break below 1.46.

With the window-dressing season just around the corner, I doubt whether this stock will continue to trend down aggressively for now. However, the window-dressing season at the end of the year may be the best time to sell this stock if you are currently long. Hopefully, by the end of the year, you may find this stock trading back up towards the 1.74 to 1.86 levels, if not higher. I'll be damned if this stocks drops to as low as 1.00 in the last two weeks of the year.

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.