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Chart of the Week - Apr 27, 2009

 Filinvest Land, Inc. (FLI)

FLI Monthly Chart - Rebounding Strongly from its All-time Low Level

charts are courtesy of Metastock

FLI Weekly Chart - Breaking Out of its Medium-term Resistance Line 

charts are courtesy of Metastock

FLI Daily Chart - Uptrend Continues, Accelerating Upwards

charts are courtesy of Metastock

Legend: blue lines - range for Tsupiteros

            dotted blue lines - range for Position Traders

            red lines - important trend lines

A lot of people got a bit surprised on how strong Filinvest Land, Inc. (FLI) has been in the last few days. I guess some people suddenly found out how cheap this stock is relative to its "intrinsic value" so they began to bid up the stock aggressively. I expect the same thing to happen to some of the other property issues in the next coming weeks ahead. For the meantime, let's take a look how FLI's technicals look like.

You can see in the monthly chart of the stock above the relentless downtrend that the stock has experienced over the last from June 2007. From a high of 2.44, the stock dropped to as low as 0.28 just last month, an 88% drop in just 21 months time. The all-time low of the stock, which was registered in Jan 1998, was 0.32. Thus, it even exceeded that low for this drop. This last few weeks though, the stock has climbed very strongly from its low of 0.28 and is now trading at 0.50. The big question is, has FLI finally found a bottom at the 0.28 level, or, is the stock merely rallying from an oversold condition but will eventually drop back down in the next few months time? In my opinion, the patterns certainly looks encouraging from the perspective of the bulls, however, the bottom isn't confirmed yet.

The weekly chart of the stock is also showing that prices may have bottomed-out already. The major resistance of this stock in its weekly time-frame is the 0.47 to 0.48 levels (0.50 to round it off). Notice the huge volume on the stock in the last two weeks. This is a bullish indication since it means that the sellers are being absorbed by the buyers, who are willing to buy at current levels. If everyone, who wanted to sell this stock, has already done so, then, there is probably little supply left that could derail this uptrend of the stock. A breakout above this weekly resistance line will mean that the stock may already be trending up in the medium-term. If so, minimum target to the upside will now be the 0.68 level. Expect some resistance though as the stock comes closer to the 0.60 to 0.62 levels. If the stock is able to take out that resistance line, then, its next heavy resistance will already be at the 0.88 level. Just remember, for this time-frame, I will continue to be bullish on this stock as long as prices stay above the 0.40 level.

Now, let's get a little more detailed and look at its daily chart. The daily chart shows the strong uptrend that the stock is currently in. Some people thought that the 0.40 level would provide significant resistance for this stock but it didn't. Some people thought that the 0.42 level would provide significant resistance for this stock but it didn't. Finally,  Some people thought that the 0.48 level would provide significant resistance for this stock but it still didn't. As you can see, based on the movement of the stock, there were a lot of instances for people to get scared but they just ended up regretting afterwards for selling. In the last few days, it would seem that some people have begun to conclude that the stock has certainly bottom-out already and are now buying the stock aggressively. What's the effect on the chart? The uptrend of the stock has begun to accelerate. The red parallel trendlines shows the previous slope of its uptrend. The blue parallel trendlines shows the accelerated slope of its uptrend. For this current run, I expect prices to climb up to as high as 0.55, if not higher. However, even if prices do encounter resistance at 0.55, the stock may already find support at the psychological 0.50 level. Remember, there was a ton of people that sold at the 0.45 to 0.50 levels. Can you imagine how these people would feel if prices climb up to as high as 0.55? Will they buyback their positions if prices drop back down to 0.45 to 0.50?

Tsupiteros, who currently have positions in this stock, are recommended to just hold and use a break below the 0.47 level as your mental stop. For those who would like to buy this stock, I would suggest to buy it as close to 0.47 as possible. As for Position-traders, it's a little bit tricky to enter this stock right now since, although the short-term momentum of this stock is definitely strong, prices are already relatively high. There is no problem if you are already holding it. I would suggest to just use a break below the 0.40 level as your mental stop. However, if you are entering just now, you will be in a dilemma. You'd certainly want to buy if prices drop back down, hopefully, you can still buy it near the 0.40 level. However, the only problem is, what if prices no longer drop and it continues to climb up from here? Do you chase it or do you just still wait for a correction before buying?

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.