Just last September 8, 2011, the shares of SM Prime Holdings, Inc. or SMPH in the Philippine Stock Exchange caught the market’s attention when it suddenly rose by 3.87% on a huge volume to finally break the Php 12.00 barrier. SMPH has continued to rise but now it seems that a temporary correction could be on the watch in the near term.
In my last post about SMPH (kindly see it here), you would see that it had just broken out from a cup and handle pattern. Judging from the height of the formation, I mentioned that it had a potential to go up to around Php 14.00. Now, however, it looks that SMPH has been seeing some resistance at its former all-time high at just above Php 13.00 for the last 2 days. Notice that there is already a bearish divergence between the price and the RSI, suggesting that its up move is starting to lose some momentum. Note also that the volume that pushed it at its new all-time high is not as much as the one that pushed it past the Php 12.00 resistance. Logically, a move higher should be accompanied by a higher amount of volume which is not the case in this one. This further indicates a possible weakness soon. A couple of dojis, one regular and one gravestone doji, at the peak of the recent up, even adds to the possibility of some profit taking actions in the near term. In any case, a correction could lead SMPH back to around Php 12.50. This, in my opinion, would allow it to recoil and build on its momentum for it to eventually reach its target of Php 14.00. On the flip side, all of these bearish signals will be invalidated if SMPH manages to close above its present all-time high for at least 3 days.