Daily PACS Nov. 29, 2011
Author’s additional notes:
For two days, I been sounding off an alert that Dow may rally anytime. Well last night, it heard my call and rallied big time. It closed near the high of the day and up by 291 points. I guess it is already given that for today our bias will be to the upside just like what i said yesterday and also last Friday.
But before we all get excited and buy the first stock that moves today, let me just bring all your attention to the general market condition. For that, we will need to look at PACS numbers. Let’s check the PHISIX first. We currently have a market that is trending downward. In order for its trend to reverse, the local market have to rally at least 45 points and closed above 4272. Once that happens, the general trend will now start to trend upwards. That is the time we can really rejoice and start looking for buying opportunity especially on weakness.
Another thing to note are the trend of each stock issues especially the blue chips and second liners. They are mostly down and are on red ink. Remember that price action reflects the confidence of every trader and investor. It simply means that overall sentiments of the market are still bearish. This is one reason why some issues wants to rally but can’t seem to find the right traction and therefore are not moving upward.
The lesson here is to be mindful of the trends of each stock not just the stock you own. It will give you an idea whether a rally will sustain of not. This is one way to use PACS as a sentiment indicator.
That said, we will be looking at issues with low risk and see if they can manage to have a sustainable rally. They are TA, VUL, GERI, MEG, ALI, EDC, MWIDE, BPI, SMPH, SMDC and JGS. We will be observing in accordance with PACS numbers.
*For new readers check out “How to use” PACS page found at the sidebar or click this message.
*Please note that PACS’ price alert level will always supersede any opinion coming from the author.
*Try not to chase stock and always try to buy or sell near PACS given points.
Daily PACS Nov. 28, 2011
Author’s additional notes:
Last Friday, I said that the market will rally in anticipation of good closing numbers from the DOW. The Dow indeed rallied but it was not enough to last until the closing time. It closed down by 26 points. There is still a good chance that Dow will rally tonight. Initial black Friday’s sales figure was up compared to last year. That being said, our bias will remain to the upside.
For today, we will be watching for stocks that showed strength during last Friday’s session. They are AGI whose trend reversed and is now trending up. It also includes Food which is demonstrating a good support 1.30 and MER which broke above 250 resistance level. I also mentioned that NI was already trending down and that a close above 4.19 will be the only way for it to go back to trend up again. Well, it did. Furthermore, I also went around to find out more regarding the rumored 6 pesos target for NI. It turned out that the 6 pesos target was not a rumor but instead a projected valuation based on a study done by one of a reputable brokerage house in the industry. In line with this, I did my own chart study. I am posting it here and you readers can check it out. Let me be clear that the study I did is not a recommendation to buy or sell but rather a guide to help you to make your own trading decision.
*For new readers check out “How to use” PACS page found at the sidebar or click this message.
*Please note that PACS’ price alert level will always supersede any opinion coming from the author.
*Try not to chase stock and always try to buy or sell near PACS given points.
Trading Education: Some new questions regarding the use of PACS – Nov 28, 2011
Am sharing some questions and answers regarding PACS….
“For example yung MPI, UP ang trend nya, meaning its ok to buy kasi up ang trend nya? say bumili ako at 3.44 den halimbawa tumaas(since up naman ang trend) pagkabili ko at pumalo ng 3.51 pero ang analysis eh magreduce na ako pag pumalo sa 3.51.. so ganun po ba? hehe.. medyo nakakalito pa.. Pasensya na po at maraming salamat..”
PACS works well at reversal tops and bottoms. Whenever the trend is already up, it assumes that you already have a position and that you are just looking where to sell it.
In the case when the trend is already up and you’re looking for entries, it is highly advisable that you use other tools such as technical chart to time your entry well.
For those who are not familiar with technical charting or don’t have any other method to use, there are two possible ways to use PACS and still be able to trade on stocks whose trend are already up:
One is to buy when recent high of stock is broken. For example, Y stock trades from 3.00 to 3.50 on a zigzag pattern. After hitting 3.50 level, the price retreated at 3.35 level and consolidated. In this case, buy trigger will only come once 3.50 is broken which will probably be at 3.51-3.54 levels. Remember to keep your buys as close as possible to the recent high and never chase stock price.
The other is through the use of “weakness pivot point” or “bearish confirmation level”. Instead of using this as your exit point, you will use it as your buy point reference guide. You will need to monitor and wait for the stock to bounce above the levels given before executing a buy. Waiting for a bounce will give an added margin of safety to avoid buying into what suppose to be a sell. This method requires one to have a good judgment whether the stock you want to buy is in a strong uptrend or not. Note that only stock whose trend are up and strong are usually the ones that doesn’t pierce through the “bearish confirmation level”.
Whatever method you decide to use, be sure to always follow PACS when a sell signal is given. There is no IF’s or BUT’s when stock close below the bearish confirmation point. One has to learn to accept mistake and just sell.
Lastly, always remember your trend is always your friend. Own stocks who’s trend are up or about to go up. They are stocks we consider expensive today but they become more expensive as days pass by. Don’t just buy stocks because they are cheap. Usually stocks that are considered cheap today will become cheaper by tomorrow. They are stocks that are trending down.
“Boss alpha, MARC hit a high of 2.27 last week but closed 2.19. PACS is recommending a strong buy if it breaks 2.25. Does this mean it should close above 2.25?”
Yes.
let me lift some words from that “How to Use” PACS section to help me answer your question…
“*PACS works better if applied to closing prices but there are instances that waiting for the final closing numbers will result in getting left behind especially if a stock price is in a runaway mode (either up or down). Traders are therefore advised to exercise best discretion.”
From my experience, the best way to tell how closing will look like will be to buy near closing time. Generally, morning trades are ideal when you’re selling stocks, the middle hour are usually reserve for scouting trades while the last hour works best for buying.
Hope i was able to answer your question well. 
“boss..question.. newbie here… reason bakit di completo ang Pricesheet mo is gusto mo kami ang pupuno?? like ung iba sa bearish lang may data ang iba sa bullish..parang ganun???? pero if u were to ask..alam mo lahat un?”
They are complete.
PACS thrives on a principle of trading with the trend and not against it. Therefore when the trend is down, the main focus of PACS will be to tell readers when to enter just in case the trend reverses. It assumes that your not holding any position during the time that it is still trending down and so it doesn’t list any data for “bullish confirmation and weakness pivot” which you won’t need anyway.
The same thing goes when the trend is up; the main focus of PACS will be to tell readers when to exit. Again, it assumes that you’re already holding a position of the stock that is trending up.
NI Chart Nov. 28, 2011
NI is suspected to be trading in a bullish Inverted Head and Shoulder formation and might be in a Cup and Handle pattern to others. Note that for this pattern to have some form of legitimacy, four things must be present: a neckline (breakout point), head, symmetry between left and right shoulder and a good volume on the right shoulder. As such, all four are present in the chart above.
Knowing that a possible Inverted Head and Shoulder pattern exist won’t be enough if we are to try to deduce future price action of a stock. We will have to go further and look at the underlying formation hidden inside the general pattern. Let’s begin; a closer look at the right shoulder of the Inverted H&S formation reveals that there are two more patterns within. One is the uptrending “Rectangular Channel” denoted by solid black line (upper border) and the broken black line (lower border). The other pattern which is the bearish “Ascending Triangle” as shown by the blue lines is seen within the “Rectangular channel” formation. Basically what we have here is a pattern within a pattern.
Now that we are aware of the patterns involve in this stock, let us now discuss the resistance, support and possible future price action that the stock may take.
Scenario #1 (A-B-C movement)
Under this scenario, stock will trade within “up-trending channel” seen at the “right shoulder”. The stock price is expected to break above the strong resistance found at 4.45-4.67 (letter A) which is the neckline of the Inverted H&S pattern. It will then move towards the next resistance seen between 5.37-5.50 area (letter B) where profit taking will occur. Price will then retreat just above the neckline area (letter A). It will then resume its uptrend movement and march towards 6.00 where price level target is expected to be completed. This is the most bullish of all scenarios.
Scenario #2 (A-D-C movement)
Here NI is expected to test major resistance levels found between 4.45 -4.67 (letter A) but will fail to break above on the first attempt. The overall bearish tone of “Ascending Triangle” pattern will lead to a price pullback towards 4.08 or 3.85. (letter D). Attempts made to break above the neckline resistance (letter A) will be seen to become successful on the 2nd or 3rd try. After breaking above, the stock price will then track the movement under scenario # 1 which will eventually move towards the target price seen at 6 (letter C).
In summary:
4.45-4.67 – initial resistance
5.37-5.50 – secondary resistance
6.00 – possible target resistance
4.04-4.13 – initial support
3.75-3.85 – secondary support
Remember once resistance is broken, it becomes a support and vice versa. The most crucial area to take into account is the neckline found between 4.45-4.67 (letter A)…bull above and bear below. Lastly, all bets are off at the close below 3.75 level.
Daily PACS Nov. 25, 2011
Author’s additional notes:
Yesterday, I warned regarding how property sector has become susceptible to correction. Indeed we saw property issues hit hardest. Dow is also closed last night for Thanksgiving holiday but Europe stock exchanges were open. European stock losses were a bit mild. I guess our market will track what the European market with a little bias to the upside. Why the upward bias? Remember that 80-90% of the time, the Dow usually rally before Thanksgiving weekend. Some local traders may anticipate this movement.
I also received and read a lot of posting regarding how NI will rally and go to 6 bucks. I noticed that this rumor coincides with the trend changed of NI. The stock is now is now trending downward from up. My thinking is that somebody planted the rumor in order to entice buying so that he or she can get out of the position. I really don’t know how true the rumor is…but at present, price action seems to be saying otherwise. Show me a closing above 4.19 today and maybe I will start to believe. The lesson here guys is to know when to believe and when not to believe. Always take rumors as a grain of salt. Be skeptical and try to validate it by cross-checking it with stock’s price action. Remember in the world of stock market, price action is always the king and the final arbiter.
For those who followed my recommendation and bought IP below 2.00 pesos, I posted a chart where resistance and support will most likely be found. It will serve as your guide for today’s trading decision. Kindly check it out.
I been receiving a lot of questions regarding PACS and trading, I’ll try to answer them as soon as I find time. I’ll post the answers here together with other stock studies I have in mind which will help readers in their trade. Hopefully I find time to do it this weekend.
*For new readers check out “How to use” PACS page found at the sidebar or click this message.
*Please note that PACS’ price alert level will always supersede any opinion coming from the author.
*Try not to chase stock and always try to buy or sell near PACS given points.
IP Chart Nov. 25, 2011
Here is an updated chart of IP. The areas of resistance and support are basically the same based on the chart I posted last November 14, 2011. Depending on how fast prices will rise, strong resistances are most likely to be seen in the areas between 2.71-3.20 levels (triangle, letter B). Initial resistance will be seen between 2.71-2.78 levels. These are the areas where sellers are likely seen to converge. It will then be followed by 2.88-2.92 and then 3.08-3.16 levels.
Momentum will be seen to resume again once stock price moves above 3.20 level with the next possible target resistance seen at 3.75 (letter C).
On the other hand, failure to move past the triangle area resistance posted (triangle, letter B) will mean a pullback and possible retesting of strong support areas found in between 2.35-2.43 levels (letter A). Specifically, 2.43 as first support then 2.40 and followed by 2.35 level.
Daily PACS Nov. 24, 2011
Author’s additional notes:
I still become fascinated on how price action tells and warns about impending events that can occur which ordinary traders like us does not know. Yesterday was one of its many classic examples. I mentioned yesterday that we only need 14 points rally in order to turn market’s trend from down to up. I also stated that if we do get that rally and trend changes, we have to watch MEG and GERI for a potential buy. Well, price action spoke. We did not get that rally we are hoping for and our market expectation was not met. Therefore, PACS prevented us to take position yesterday. It was probably forecasting another down day on the DOW. Well today that reason is clear, DOW is down again by 236 points. PACS somehow helped us avoid another potential loss especially today wherein it is more likely to happen.
I guess we learn another lesson here which is “TO NEVER TO ARGUE WITH THE TICKER TAPE.” We just have to accept the hard reality regarding general trend will continue to go down until market proves otherwise. We just have to continue to monitor PACS prices. (Oh boy! Trading will continue to be tough. Whew!)
Well despite market’s ongoing correction (general level going down). There was one stock on our yesterday’s watch that was able to buck the trend. We saw IP climb past 1.98 level and closed at 2.02. The trend now has changed from down to up.
This is the best time to determine if the stock really has some intrinsic strength. For today, we will be monitoring IP if the it can hold above 1.96/1.97 level. We will also keep our cut loss point ready just in case it closed below 1.92 level. Remember, above 2.0 is bullish while below will need further work from the bulls to help stabilize the stock price.
It is be of value to note too that the “Property Sector’s trend” had turned bearish. It means that property issues will now become more susceptible to correction along with other issues that are already trending down. One stock that already fall victim to it is MEG. It is now trending down. Monitor other issues alike and watch your exit point closely.
Lastly, I took out ICTV form the list because the stock is for short term play only. It already has served its purpose. SLI is also out of the list because of failed breakout attempt.
*For new readers check out “How to use” PACS page found at the sidebar or click this message.
*Please note that PACS’ price alert level will always supersede any opinion coming from the author.
*Try not to chase stock and always try to buy or sell near PACS given points.
Daily PACS Nov. 23, 2011
Author’s additional notes:
Yesterday we saw some resiliency in the market. As such, we will be watching if that buying interest will be carried forward today. Based on PACS, we only need to close 14 points higher from yesterday’s closed in order for downtrend to reverse. If that happens, I suggest focusing on MEG and GERI as they are nearing support levels already. At the same time, I am reiterating my call to watch IP especially if its trend reverses and PACS confirms a buy. IP’s price action is seen to improve more if it can close and sustain a move above 2.00. Another stock to watch but a bit high on risk is JTH. With regards to LC, I believe it is on auto-pilot from here on. Just watch your exit points and refer to PACS level.
*For new readers check out “How to use” PACS page found at the sidebar or click this message.
*Please note that PACS’ price alert level will always supersede any opinion coming from the author.
*Try not to chase stock and always try to buy or sell near PACS given points.
Trading Education: PACS in Action – Nov 22, 2011
Today I’ve decided to give a tutorial regarding how to use Price Action Cheat Sheet (PACS). My objective is to teach and give readers a better understanding how PACS work. I will be doing this by sharing some trading examples. So here we go…
Let’s start with the recommendation I wrote yesterday. This is what I said “Lastly, watch also IP and ICTV. They are potential buys with low risk.” Now if you immediately bought two stocks into the open without studying and understanding deeper what my statement means then am sure you are now half smiling and half frowning (ICTV went up while IP went down). Again I can’t emphasize enough the importance of checking PACS before implementing or acting on a trade. Guys please remember that PACS will always act as the final arbiter. Let’s now look at closely what happened in yesterday’s trade.
Note that before the opening bell, ICTV’s buyers were already lining up and bidding the price higher. This price action tells us that there is already a lot of interest coming from traders who were willing to pay higher just to acquire the stock. This is another encouraging sign that should have been taken into consideration.
So there were the alert I issued and then the higher opening price. They were all pointing towards a potential buy signal. The determining factor came when ICTV started trading above .44. Remember that based from yesterday’s PACS (posted above), a buy should be initiated above .44 level. When ICTV started to trade at .45, there was already a confirmation to buy.
I know some of you might be also be thinking that PACS works well only on closing and not on intraday trades. Just like what I already mentioned, there were already potential buying signs at hand (gap up, alert issued and confirmed break point). We don’t want to wait until everybody bought before we act.
Some of your next question will probably be…”What if the breakout failed to hold and stock fell back below .44 level again?” That is the beauty of PACS, we know that our breakout point was above .44 and therefore we will also have an idea where failure will occur. Since a price move below .44 is considered as a failed break then we are expected to act accordingly and cut immediately. Having this knowledge still puts readers to an advantage over the rest of traders because we have a reference point to use to decide decisively of where to cut. This helps us manage our risk.
Let us now compare ICTV with the other stock alert that i made which is IP. The stock also opened higher at 2.00 (previous close was 1.98) but after opening, it immediately started to tumble. Based from above PACS, the “bullish confirmation” column where a buy should be initiated is above 2.07. IP never reached that price therefore the alert which was to “watch IP for a buy” never materialized.
I hope you guys were able to learn something today. I will continue to educate readers more on how PACS can be effectively utilize in trading.
Daily PACS Nov. 22, 2011
Author’s additional notes:
It’s been four days since about market’s trend turned lower. During this time, speculative issues have become the stars of the show. I guess majority of traders have given up value investing to a more lucrative gambling style of trading. Even though the risks are high, it’s hard for an ordinary trader to resist the lure of having the chance to double or even triple his/her money in such short span of time. I find nothing wrong in this kind of casino type of trading. Just don’t forget that the odds are always stacked against the players placing the bet because the “House” will always have the edge. And like in any casino play, one has to know when to stop.
Yesterday, AAI which started the gap up plays failed close on ceiling price (50% up). It instead pulled back and closed lower than its opening price. To me, this kind of price action is a sign of momentum weakness. There is a chance that this can turn and develop into a full-blown correction (a move going down/profit taking) which could also affect other similar issues. As such, I am advising readers to stay away from speculative issues and to play it safe. If you bought speculative issues like ICTV as what I have recommended yesterday or any other kind, consider taking your profits off the table.
I also warned yesterday regarding susceptibility of LC to profit taking because of its third day of ascent. Indeed we saw LC rose to a high of 1.48 (refer to resistance posted below on LC’s chart Nov. 18, 2011) and pulled back. Today we will be watching if 1.38 (weakness pivot point) will be broken or not. If this level breaks down then we probably will see LC head lower and retest breakout point found in between 1.30-1.33 levels. This will become a crucial point in deciding whether to add or sell your position. I suggest to watch these areas carefully and to add or buy only on the way up after confirming that the areas mentioned (support of 1.30-1.33) have strongly held ground.
On our PACS list, one issue turned bearish yesterday which is BEL while two turned bullish, PAL and EVER. SLI also seen to lose its breakout momentum if it continues to go lower than .76 level.
Lastly today, our biased will be towards the downside. But of course if we see some issues bucking the general trend, that means that the stock is exhibiting some form of strength and therefore will become a buy target suspect. Remember guys if the sells don’t sell, the buys will buy.
*For new readers check out “How to use” PACS page found at the sidebar or click this message.
*Please note that PACS’ price alert level will always supersede any opinion coming from the author.
*Try not to chase stock and always buy near breakout point.
Price Action Cheat Sheet 