Waiting and Hoping for Handles

Many of our favorites are overbought, and small-time investors like us, expectedly, are on the sidelines waiting for them to "cool down" before getting in again. In Technical Analysis parlance, this means that the RSI is already above 70. DNL for example is already hitting 85 and TA 75. Chartists want this to go down to a 'healthy' 50 or so for these stocks to resume an uptrend again.

If all goes according to plan, a familiar cup and handle pattern would also emerge. So this means that many are also waiting for the handle portion You should read up about it if you're not familiar with cup and handle.

I have unloaded completely DNL and BDO. Also, offloaded substantial MEG and TA, and a small amount of MBT. All of them green. The critical thing now is to know if a real handle will form and how deep a handle to wait for before getting in again.

References say that the handle downtrend shouldn't last longer than half-the-time of the previous uptrend. So, if DNL has been on the second half of the cup for 5 weeks, the downtrend should not last longer than 2.5 weeks.

The depth of the downtrend should ideally not be more than 25% of the cup's tip. So, if DNL peaked at around 7.1 from cup's bottom at 6.03--the handle's bottom should only be around 6.8.

Finally the volume should not be going up (preferably very small) during the downtrend of the handle.

I dont fully believe and subscribe to Technical Analysis as a whole, but the The RSI can be just a simple tool to check if the stock is just going down or up too fast, so we should also check it from time to time.

Cup and Handle I think is also solidly based on a psychology of investment crowds, so I always look for its emergence myself. Although in the end, all of these could be crapshoots/casino_bets only, especially if the PSEi and the overall market is really not in an uptrend (not confirmed up to this day).

So, in the words of the great Philosopher Inday Badiday... if youre still playing the PSE, still be "careful, careful. Kailangan parating maging careful."