Chart of the Week - Philippine Long Distance Tel. Co.

Short-term Traders/Tsupiteros:	Medium-term/Position Traders:
Support - 2,000.00	Support - 1,600.00 / 1,810.00
Resistance - 2,140.00	Resistance - 2,300.00 to 2,400.00
Trend - Sideways to Down	Trend - Sideways to Down

Just when the whole market looks set to climb already, Philippine Long Distance Tel. Co. (TEL) just had to spoil the party last week and became the single biggest drag on the entire market. With this stock comprising more than 30% of the PSEi Index, the direction of this particular stock is critical if you want to know where the entire market is going to go. Unfortunately, it just doesn't look bullish at all from where I'm standing.

The monthly chart of the stock above shows that bull run that TEL has had since the year 2002 appears to have ended already. Its peak at 3285 last October 2007 was never even retested anymore. Furthermore, if you will look at its weekly chart above, it would appear that the stock has now even formed a lower high at the 2795 level last September 2008. Last October 2008, the stock broke below its major support at 2250 and even dropped to as low as 1810. It looked like the stock was going to drop from a cliff already but it was still able to rally back up towards the 2400 level. Last week, the stock has confirmed the peak at 2400 by dropping to as low as 2080, thus, forming another lower high at 2400. This series of lower highs and lower lows simply tells us one thing - TEL is now trending down in the medium-term. If you go back to the monthly chart of TEL, next major support of the stock is already at the 1000 and 1300 levels. Anybody would want to make a guess where the PSEi would be if TEL drops to 1300? Of course, this is no certainty at all but the peak at 3285 does look ominous, if you ask me. The best that TEL could do right now in the medium-term is to just move sideways between its trough at 1810 and its previous peak at 2800. Trending up in the medium-term is simply out of the question right now for TEL.

How about in the short-term? Obviously, as one can see from last week's behavior, TEL is very weak. It is already trending down in the short-term and every rally last week has become an opportunity to sell the stock at a high price. If we follow its short-term trend, prices may drop back down towards the psychological 2000 level soon. I expect the bulls to start fighting near the 2000 level, especially since window-dressing may also occur next week for TEL.

So how do we play this stock? With the stock trending down in the medium-term, I would naturally advise Position-traders to sell the stock on strength. The best that Position-traders can hope for right now is to probably just sell the stock as close to 2400 as possible. I would certainly not recommend TEL right now for Position-traders. There are so many blue chip stocks in the market right now that are down 50, 70 or even 90% from their highs. I don't understand why one would want to position in a stock that is only down by more than 35% from its highs. As for Tsupiteros, you may want to try and catch the bottom of this stock by Monday or Tuesday and try and sell it as high as you can on Wednesday. Despite its weakness in the last few days, I expect prices to start stabilizing by Monday and Tuesday in time for the window-dressing day on Wednesday.

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.