Chart of the Week - MRC Allied Industries, Inc.

Short-term Traders/Tsupiteros:	Medium-term/Position Traders:
Support - 0.54	Support - 0.37
Resistance - 0.76	Resistance - 0.88
Trend - Down	Trend - Up
Recommendation - Sell on strength	Recommendation - Take profits

MRC Allied Industries, Inc. (MRC) has been the beacon of this market since the start of the year. After closing the year 2009 at the 0.36 level, the stock just took off and climbed up to as high as 0.88. This is on the back of rumors that Mr. Bong Tan, the son of Mr. Lucio Tan, is buying into the company. He is rumored to put some assets in the Company in the process. However, after confirming the said rumor, the stock appears to have weakened. After already climbing for almost nine times what it was worth last Dec 2008, is there still anything more that investors can ask for in this stock?

In the big picture, you can see in the stock's monthly chart that the stock has a tendency to find support near the 0.10 cents level and find resistance near the 1.00 level. In Dec 2008, the stock made a low of exactly 0.10 after forming a peak at 1.12 last June 2007. At its recent peak of 0.88 cents, the stock was already very close to its major resistances near the 1.12 level. Could it have already peaked at the 0.88 level?

In the medium-term or in its weekly chart, the stock is obviously trending up and is following a very strong uptrend. However, as you can see in its weekly chart above, the stock has a tendency to peak everytime it tests its resistance line. At 0.88, it looked as if the stock was going to break its trend and even go beyond its resistance line but, unfortunately, with the stock closing the week below its resistance line once again, I would tend to think that prices may have held below its resistance line after all. Again, the question is, could it have peaked at the 0.88 level?

The short-term trend of the stock is certainly a worrying picture right now. Last Thursday, with the stock already trading at overbought conditions at 0.88, the stock just couldn't sustain its gains and has closed the day at 0.77. While it still closed the day higher than last Wednesday's close, its behavior during the day was certainly a concern for the bulls. On Friday, the worst fears of the bulls became a reality - the stock broke below its support at 0.76 and has plunged down to form another long black candle. This behavior last Friday has confirmed that the stock has indeed formed a peak at the 0.88 level and is now trending down in the short-term. With the stock closing the day at its lows, I would tend to think that prices may close its gap at the 0.54 level, if not continue to drop even lower.

So, how do we trade this stock? I sure hope most Tsupiteros were able to take profits in this stock last Thursday or early last Friday. For those who are still long, I would suggest that you sell as close to 0.72 as possible. I would not recommend buying this stock yet at this point, especially if it rallies. Would it be safe to buy the stock at its gap at 0.54? Maybe but don't expect prices to rally strongly soon thereafter. As with Position-traders, although the stock's trend is still up, I would suggest to take profits right now. You can buy back the stock later on if it drops back down towards its support. Remember, even if the stock drops back down to 0.37, the stock may still be considered to be trending up in the medium-term. With prices just a mere 0.24 cents from its previous high at 1.12 when it was trading at 0.88 last Thursday, the market may have already anticipated the peak at 1.12 and have sold before reaching that level.

Some would argue that since Mr. Bong Tan is now an investor in the Company that the fundamentals of the stock may have changed already as his presence alone may have added value to the Company. My counter-argument is, just look at the stocks of Mr. Lucio Tan himself in the PSE like PAL, MAC and ETON, don't you think that they don't get subjected to the seasonal cycles of the market? Be careful on this one Tsupiteros!

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.