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Chart of the Week - January 26, 2009

First Philippine Holdings Corp. (FPH)

FPH Monthly Chart - Wide Expanding Triangle

charts are courtesy of Metastock

FPH Weekly Chart - Continuing to Trend Down but Currently Rallying   

charts are courtesy of Metastock

FPH Daily Chart - Broke Above its Resistance, Trending Up Stronglyu

charts are courtesy of Metastock

Legend: blue lines - range for Tsupiteros

            dotted blue lines - range for Position Traders

            red lines - important trend lines

While the whole market is looking vulnerable at this point and is trading at its lows, FPH is moving on its own and is exceptionally strong. There are rumors circulating that the San Miguel group will buy-out the entire block of the Lopezes in Meralco, which is probably why this stock has been trending up. It puzzles me why this stock alone is extremely strong. I was thinking that people bought this one because Meralco was suspended. However, it's been a couple of days now since Meralco's suspension was lifted and this stock continued to remain strong and Meralco's stock was merely flat. Something is bound to give way, either this one will eventually fall, or, Meralco will eventually become strong. My bet is the latter.

The monthly chart of FPH above shows how brutal this bear market has done to the stock of FPH. From a high of P92.00 last July 7, 2007, the stock has dropped to as low as P12.25 last October 20, 2008. A more than 86% drop in just 15 months time. Whew! The big question now is, could the stock have finally found a bottom already at the 12.25 level? In the monthly chart of the sock, you will see that the major support of the stock is at the 6.80 to 7.20 levels. That was where the stock bottomed-out in 1991 and that was where the stock bottomed-out in 2003. However, the difference between 1991 and 2003 to the present condition is that FPH, during those times, did not come from 92.00. The high of FPH last 1993 was merely 33.50 while its high last 1999 was merely 39.00. So, if you look at it from that angle, I would suppose that there probably is a very good possibility that the stock has indeed already bottomed-out at the 12.25 level.

To confirm a bottom in the stock, the stock first needs to bottom-out in the weekly chart. As you can see in its weekly chart above, the stock is still trading within its downtrend, which started in November 2007. However, it is currently approaching its resistances at around the 20.00 to 22.50 levels. Will the stock be able to break above this resistance levels? A convincing breakout above these levels will signal that the stock's downtrend has indeed ended already. But, if the stock holds below these levels, it will indicate that the stock is still trending down and there is still that possibility that prices may retest those historical support levels at around 7.00. While the stock is behaving quite bullishly as compared to the rest of the market, one thing that is bothering me about this current rally of the stock is its low volume. Although the stock has indeed been generating volume already from mid-Sept last to mid-Nov last year, its volume is no longer as big after that period. This indicates that, while there are a lot of buyers when the stock went down, most are probably no longer interested to buy the stock as it continued to climb up from that time. Remember, if the stock continues to climb without much volume, the stock will be vulnerable to a decline. For the meantime though, the bulls of this stock are in charge. I just hope that they could recruit more believers soon so that the stock's current upswing could be sustained.

The short-term trend or its daily chart is where the action is in this stock. You can see in the chart above that the stock is now trading within a fairly strong uptrend and is now trading at a new three and a half month high. It consolidated for a while between 15.00 and 18.50 but has now managed to break above that consolidation. It looks as if the stock is home-free and is ready to trend up. The only problem is, the stock's medium-term resistances are just around the corner.

Tsupiteros, who currently have positions in this stock, are recommended to just hold and use a break below 18.75 as your mental stop. For those who would like to buy this stock, you may want to buy as close to 18.75 as possible. I would also look to take profits though as close to the 22.50 level as possible. With the volume of the stock continuing to be small and the whole market looking vulnerable, I just don't think the stock will easily get passed that 22.50 level. Position-traders, on the other hand, are recommended to just watch this stock for now and see if prices will be able to convincingly breakout above those 21.00 to 22.50 resistance levels. If the stock holds below 22.50 and starts to drop back down, I would suggest to just avoid this stock and wait for it to make a lower low below 12.25 before buying. But if the stock breaks out convincingly above that 22.50 level, I may recommend to start buying the dips already on its next correction.

Good luck Tsupiteros!

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.