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Chart of the Week - August 11, 2008

 Benpres Holdings Corporation (BPC)

BPC Monthly Chart - Rallying from an Oversold Condition

charts are courtesy of Metastock

BPC Weekly Chart - Approaching Resistances 

charts are courtesy of Metastock

BPC Daily Chart - Uptrend Continues

charts are courtesy of Metastock

Legend: blue lines - range for Tsupiteros

            dotted blue lines - range for Position Traders

            red lines - important trend lines

Benpres Holdings Corporation (BPC) was one of the highlights of the market last week as prices catapulted to the upside on news that the company sold its stake in the Manila North Tollways Corporation (MNTC) to Metro Pacific. It's a bit puzzling to me that prices continued to climb higher in spite of the news because that was suppose to be bearish for BPC. While MNTC does not contribute a significant part of the company's earnings, it is a cash cow. Anyway, I guess that simply tells us on how strong this market is right now - prices are now climbing even on bearish news.

The monthly chart of BPC above shows that the stock is now trending down in its long-term chart but is simply rallying from an oversold condition. The fact that it rallied from its support at 1.00 is not surprising since there is a very strong support at the 0.90 to 1.00 levels. At this point, you can see in the weekly chart above that the stock is now approaching its medium-term resistances at 1.70 to 2.00. Will it be able to break above those resistance levels? I'm not so sure but, give the strength of the overall market right now, I wouldnt't be surprised if prices would be able to climb to as high as 2.30 in the next few weeks. For the meantime, I would expect prices to probably consolidate first at around the 1.70 area before it eventually climbs higher, if ever. The big volume that the stock developed this week is bullish since it indicates that the sellers were absorbed by new buyers in the stock. I will continue to expect prices to climb further as long as the stock is able to hold above its support at 1.34.

In the short-term, you can see that the stock is also testing its resistance in the daily chart but is still continuing to trend up. The levels to watch out for in the short-term are the 1.54 to 1.58 level. As long as prices hold above these levels, I will continue to expect higher prices in the short-term. If, on the other hand, the stock fails to hold above these support levels, the stock may drop back down to its support at 1.34. Since the stock is already near overbought conditions in the short-term, I wouldn't be surprised to see prices consolidate first in the next coming days. However, if prices consolidate at its highs and continue to hold above 1.54, that may already indicate that prices may just be consolidate before it continues to trend up.

How do we trade this stock? Those who would like to position in BPC are recommended to buy as close to 1.34 as possible. At current levels, I would probably not buy this stock anymore, however, I may be tempted to buy if prices start correcting or consolidating from its highs.  For those who are still holding this stock, you may just continue to hold and use a break below 1.54 as your mental stop. Who knows? Maybe this rally is going to go straight up towards its psychological resistance at 2.00 already.

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.