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Chart of the Week - Jun 2, 2008

 First Philippine Holdings Corp. (FPH)

FPH Monthly Chart - Continuing to Trend Down

charts are courtesy of Metastock

FPH Weekly Chart - Continuing to Trend Down 

charts are courtesy of Metastock

FPH Daily Chart - Testing its Previous Low at 33.00

charts are courtesy of Metastock

Legend: blue lines - range for Tsupiteros

            dotted blue lines - range for Position Traders

            red lines - important trend lines

Being the mother company of Meralco, First Philippine Holdings, Inc. (FPH) was not spared from the negative sentiment in its mother company and was aggressively sold down last Friday. Could this be an opportunity to buy the stock cheap? Or, would prices continue to trend down from here?

First, let's look at the long-term picture of FPH as shown in its monthly chart above. Obviously, the stock has already established a peak at the 92.00 level and is now trending back down. The question that everybody would like to answer in this stock is, is this already the bottom of the downtrend? Certainly, no one can answer that question and I will simply try to answer that question based on the direction of the stock's trend right now.  If one will look at the monthly chart of the stock above, you will notice that there was a relatively long consolidation in the stock from early 2005 to mid-2006. This consolidation is between 36.50 and 63.50. Notice that prices simply disregarded this consolidation and just continued to trend down. That behavior alone tells a lot of how weak this stock is. The stock has not had a white candle in its monthly chart for the last five months now. With prices again closing the month with a long black candle, I would tend to think that prices will continue to trend down further this coming month. If you will again look at the monthly chart of FPH above, you can see that it is just in the middle of its historical price range. Potentially, there is still so much downside in this stock if its downtrend continues. The low of the stock during the Asian Financial Crisis was at 7.20.

In its weekly chart, you can see that the stock is trading within a clearly defined downtrend. If prices continue with this path, I would tend to expect FPH at around 15.00 to 17.50 in the next few weeks to come. To invalidate this bearish forecast on FPH, prices must first take out 40.00 to the upside. However, I will only be bullish on FPH if prices are able to convincingly breakout above its previous high at 47.00.

In the short-term, the stock was sold down aggressively back to its previous low at 33.00 on relatively big volume. While I certainly wouldn't discount the possibility that the stock rebound from current levels since everybody would like to buy at the previous low of the stock, I would tend to think that any rebound at this point will just be nothing more than a dead-cat bounce. The 36.00 to 37.50 levels should be a tough resistance for the stock in the short-term, that is, if it is able to bounce back from current levels. If the stock continues to trend down on Monday and heads towards its psychological 30.00 level, I'm afraid the stock's previous low at 33.00 might already become a source of resistance on the next swing up.

I can't blame Tsupiteros if you bought the stock last Friday near or at 33.00. However, since the stock is trending down in all its time-frames, I would certainly not be greedy on this stock and just try to take profits as close to 36.00 as possible. For those who have costs at higher prices, I would suggest that you also try and sell as close to 36.00 or 37.50 as possible. I would not recommend Position-traders to buy this stock at this point.

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.