After several months of hibernation, the shares of Henry Sy’s SM Prime Holdings, Inc. or SMPH have finally awaken. Now that it does, a move past its present all-time high of Php 13.50 may not be farfetched anymore.
For a time, SMPH looked bearish as it failed to move above Php 12.00 after rallying from Php 10.00. From its high back in October 2010 and the Php 10.00 low, the 50% Fibonacci retracement level lined up exactly at Php 12.00, suggesting that it would start to fall from there which it did eventually. To make the matter bleaker at that time, its rally from the said low towards Php 12.00 seemed to take the form of a rising wedge pattern, which technical analyst consider as bearish as it just resembles a temporary bounce in prices. SMPH then broke down from this rising wedge which brought it down to Php 11.00. Buyer then jumped in which pushed SMPH back to Php 12.00. It touched this level several times for the last 6 month but it failed to clear it until today (September 8, 2011).
From October 2010 to present, SMPH’s price movement eventually developed into a cup and handle pattern which it broke today. Today’s price action was accompanied by a huge spike in volume and a break of a resistance above its RSI covering the same period. These, in my opinion, makes this ‘breakout’ a valid one. Hence, if buying interest persists, SMPH could continue to move higher and aim for its minimum target price of Php 14.00 (gauged by projecting the height of the cup and handle formation from the point of breakout). Though, some resistance could still be met at around Php 13.00. In any case, some profit taking action could still occur which could also temporarily weaken it. However, the former resistance at Php 12.00 should, in my opinion, now act as a sturdy support since it has been tested a lot of time previously.