Last January 24, I posted my stock analysis on First Philippine Holdings or FPH in the Philippine Stock Exchange and mentioned that there was symmetrical triangle pattern forming (kindly check here). I was leaning towards a breakout from the triangle rather than a breakdown since the usual bias for such pattern is with the trend. However, what seemed to be a bullish pattern was indeed a reversal that brought down the 2-year uptrend. Upon the breakdown, my minimum downside target of 51.00 Philippine Peso was reached.
FPH is currently moving in a 2-month descending channel. From PHP69.50 at the start of 2011, it closed today at PHP52.85 which is a -23% loss for the stocks. Within the channel, there could be an inverted pennant formation as well. Some of you wouldn’t agree with this inverted pennant that I’m seeing since its consolidation phase is not represented by a decline in volume. But yeah, I’ve seen similar pennants in the US stock market and forex and many times, the volume didn’t count so I’d take this as one. Anyway, if FPH breaks down from this inverted pennant, it could decline to the PHP48.00 area or at the descending channel’s support. However, the PHP51.00 support and the PHP50.00 psychological level could be the biggest hurdles of the bears. On the upside, FPH needs to break above the descending channel’s resistance to get back on the bull track. If it does and moves higher, it could encounter some resistances at PHP55.00 and PHP58.00.
The stocks of First Philippine Holdings may be bearish chart-wise but it doesn’t mean the company isn’t doing well. In fact, this is one of many blue chips I’d prefer getting into given the company’s strong fundamentals but still, I’d only enter when the chart shows me a buy signal. Above all, as long as the 2-month descending channel remains intact I’m bearish with the stocks of FPH in the short term. I’m also bearish in the long term as long a the the price is moving below the 100 and 200-period moving averages. Although, I might consider entering around the PHP50.00-51.00 level and place my stop loss below PHP50.00.