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Chart of the Week - Dec 24, 2007

Digital Telecommunications Phils., Inc. (DGTL)

DGTL Monthly Chart - Held Above its Support at 1.10, Looks Poised to Climb Back Up Towards 2.00

charts are courtesy of Metastock

DGTL Daily Chart - Trending Up Strongly but Testing Major Resistances 

charts are courtesy of Metastock

Legend: blue lines - range for Tsupiteros

            dotted blue lines - range for Position Traders

            red lines - important trend lines

Digital Telecommunications Phils., Inc. (DGTL) has been suspiciously bucking the downtrend of the market the last few days and has been unusually very, very strong. Rumors are circulating that the Singapore Investment Corporation is negotiating for a possible buy-out of the company.

The monthly chart of DGTL above shows that the stock is trading within a very wide 1.00 to 2.00 range. With the stock closing last Friday at 1.64, it is now trading at the middle of its range. However, with the stock closing the previous week at its highs and with a long white candle, prices may continue to climb higher this coming week, especially since we are in window-dressing season. The previous high of the stock is at the 2.12 level. If the stock is really, really strong, it may try and attempt to head back up to that level in the next few weeks. Of course, if it does, you may want to take profits as close to that level as possible. Medium-term traders may want to buy as close to 1.42 as possible.

In the short-term, wherein we look at the stock's daily chart, you can see that the stock has been climbing up non-stop for the last five days in a row now. You may probably think that the stock is overbought already at current levels and may be vulnerable to profit-taking, however, corrections have been occurring daily in this stock intra-day. If so, this stock will most probably continue to climb higher in the next couple of days more. You can also see in the daily chart above that the stock is currently testing the neckline of a possible bullish reverse head and shoulders formation. Notice that volume in the right side of the chart is relatively higher than the volume of the left side of the chart. This is classic reverse head and shoulder behavior. If the stock is indeed able to break above this neckline of around 1.66, target to the upside would already be the 2.00 level. Tsupiteros, who currently have positions in this stock, are recommended to just hold and use a break below 1.58 as your mental stop. Those who would like to buy this stock are recommended to buy as close to 1.58 as possible. Previous highs of this stock are at the 1.66, 1.72 and 1.84 levels. Just remember, once the stock breaks out of its neckline, you should see volume continue to increase as the stock continues to climb. An increase in volume would indicate that new players are starting to accumulate the stock from the old positions who would be taking profits. That behavior will ensure that the stock may continue to climb further. If the stock continues to climb but its volume fails to keep up, then the uptrend may become suspect.

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.