News / Philippine Stock Market

PSEi Outlook For Jan. 28 - Feb. 1, 2008 By Bonner Dytoc January 26, 2008

Things looked bad after the PSEi fell off the channel 2 weeks ago.  It immediately reached the downside target we were seeing; which was 3025, and still surpassed that.

Things really looked bleak until the market reversed due to the emergency Fed rate cut of 75 basis points on Tuesday night.  Due to this, the index suddenly looks like it’s doing a V reversal.  Despite that, we’re still not out of the woods yet.

Fact #1.  The index broke down, surpassing the minimum downside target.  At the same time, it also broke the intermediate support at 3190.

Fact #2.  Upon reversal, the index not only tested the trendline again at 3190, but has now surpassed that.

Fact #3.  We’re not back in the channel yet.  Add to that, the index is still below the moving averages.  This means we could have a harder time bringing the index to 3600 or higher.  But I’m not saying it’s impossible.

Fact #4.  Our long term support is still pegged at around 2500 (see the red line just above 2400), therefore we were never in any big danger of breaking down and becoming bearish for the bigger picture.

We now expect that with this sudden surge of resilience, the index will first retest the support of the index at 3322.  Will it return inside the channel?  We hope so to erase any fears of a continued bear move for the market.

Here’s to hoping.