Chart of the Week - Philweb Corporation

WEB Weekly Chart - Dark Cloud Cover Pattern in an Extremely Overbought Condition is a Concern

Short-term Traders/Tsupiteros:	Medium-term/Position Traders:
Support - 10.00 / 11.25	Support - 6.25 / 8.75
Resistance - 13.50	Resistance - 15.50
Trend - Sideways to Down	Trend - Up
Recommendation - Sell	Recommendation - Take profits

Philweb Corporation (WEB) has had an unbelievable run in the last few weeks. From a low of 5.25 just last Aug 4, 2009, the stock was able to climb up to as high as 15.50 last Sept 14, 2009. That was an almost 200% return in just more than a month's time. The reason that people were giving for this tremendous price increase, aside from its earnings, is a plan of the company to change its par from 0.01 to 1.00 (I have already adjusted the chart above to a par of P1.00). I really don't understand why one should be bullish simply because it's par changed. I guess some people also believed that big things will happen to this company because this too is an "MVP stock". In any case, in my opinion, whatever the reason is why people bid this stock up so aggressively in the last month or so, has already been discounted by the market. From the way I see it, WEB at 15.50 is like MER at 300.00.

The monthly chart of WEB above shows a very strong upswing in the last 10 months. From a low of just 2.20 last November 2008, the stock was able to climb more than 600% to 15.50 this month. While a big ascent may not necessarily be a cause for concern, it is the location of prices right now, which is more of a worry, in my opinion. You can see in the chart above a clear-cut sideways to upward trend, wherein the support of this trend is at around its trough at 2.20 and its resistance is at around its current price right now. While there are no bearish reversal patterns yet in the short-term, I would be very, very watchful of it already from this point on.

The weekly chart of WEB is the scarier picture, if you ask me. You can see in the chart above the near vertical rise of the stock right after breaking above its consolidation at 5.50. The stock were able to climb from 5.25 to 15.50 - an almost 200% increase in just six weeks time. If you don't think that's too fast, too soon, I don't know what is. The thing is, notice that the stock formed a bearishly-looking dark cloud cover pattern last week. From the way I see it, the six week upswing of this stock had just ended last week and prices may just move sideways right now, at best. Worse, it may start to drop back down.

The daily chart of WEB is the most concerning of all. Of course, in any kind of peak, it is the short-term trend that becomes bearish first. The medium-term and long-term trends of the stock is still naturally trending up. The problem is, even if WEB drops back down to 7.50, the medium-term trend of the stock is still up. And, even if the stock drops back down to 5.50, the long-term trend of the stock will still be up. Can you still hold WEB even if it drops back down to 5.50? Maybe MVP can but I'm pretty sure the typical Tsupitero will not be able to bear that. In the daily chart of WEB above, the chart shows that it tried to rally a couple of days ago and go for another higher high. The fact that prices were no longer able to climb back up to 15.50 and already dropped back down to 12.50 may indicate that the short-term trend of WEB may already be down. If the stock could no longer trend up, then, maybe it will already trend down, especially since it is at an extremely overbought condition in the medium-term.

To summarize, WEB is now a "strong sell" to me. In the monthly chart, it is overbought. In the weekly chart, it is extremely overbought. In the daily chart, it may be beginning to trend down. I would advise all Position-traders and Tsupiteros to try and sell this stock on any strength at this point. Tsupiteros, who are adventurous enough, may want to buy as close to the 10.00 level as possible but don't expect prices to climb back up anywhere near 15.50 anymore anytime soon.

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.