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Chart of the Week - Mar 17, 2008

 Petron Corporation (PCOR)

PCOR Monthly Chart - Continuing to Trend Up Strongly

charts are courtesy of Metastock

PCOR Weekly Chart - Expanding Triangle Pattern 

charts are courtesy of Metastock

PCOR Daily Chart - Reverse Head and Shoulders Pattern 

charts are courtesy of Metastock

Legend: blue lines - range for Tsupiteros

            dotted blue lines - range for Position Traders

            red lines - important trend lines

Petron Corporation (PCOR) has been one of the last remaining stocks that are still standing in this bear market. I don't know whether it is because its earnings were better than expected, the high price of oil, or, because of the opening of its petrochemical plant. Whatever it is, someone definitely thinks this is a bargain.

In its monthly chart, you can see that the stock has held above its upward channel very well, unlike most of the other stocks in the market. This strong relative strength vs. the market is certainly a bullish sign. This probably indicates that this uptrend of PCOR since the year 2003 is not over yet and we may very well see the stock form another higher high in the next few months to come. If it follows its upward trend, next target may already be the 8.00 level. I will continue to expect the stock to hit 8.00 in the next few months as long as it does not break below its previous lows at around 4.45 to 4.70.

In its weekly chart above, you can see that the stock is currently trading sideways within an expanding triangle pattern. Expanding triangle pattern are usually bearish toppish formations. However, given the look of its overall pattern, including its long-term trend, I would tend to think that this expanding triangle is nothing more than a consolidation within its overall uptrend. Once the stock is done consolidating within this pattern, that will probably be the time for it to form higher highs. Furthermore, if the stock continues to trade within this expanding triangle pattern, the stock may actually climb to as high as 8.50 in the next few weeks to come. Notice that the stock tried to start dropping last week but failed. I wouldn't be surprised if the stock continues to consolidate first for a while at current levels before it continues to climb. As long as prices does not break below the expanding triangle pattern at 4.70, I will continue to expect a sideways movement from PCOR between 4.70 and 8.50.

In the short-term trend of PCOR, the stock appears to have broken out already of a bullish reverse head and shoulders pattern. The neckline of the pattern is highlighted by the red horizontal trendline and is pegged at the 5.70 level. It is now consolidating on top of the neckline between 5.70 and 6.20. The fact that the stock continues to just move sideways despite the very weak, is already a good sign for the bulls. However, the stock will need to continue to hold above this 5.70 level in order for it to remain bullish in the short-term. With several attempts at the 6.20 level already, prices will need to start breaking out above that 6.20 level soon, otherwise, some people might get impatient and start to sell down. Of course, if the market continues to trend down in the next few days yet PCOR continues to hold above that 5.70 level, that would still be bullish for the stock. Next resistance after 6.20 is the 6.50 level. However, I wouldn't be surprised if the stock climbs a lot higher than 6.50 if it is able to break above 6.20.

Position-traders, who currently have positions in this stock, are recommended to just hold and use a break below 4.70 as your mental stop. Those who would like to buy this stock are recommended to buy as close to 4.70 as possible. Tsupiteros, on the other hand, may want to trade this range of between 5.70 and 6.20. Just be sure to reverse positions and sell if in case the stock fails to hold above 5.70.

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.