News / Philippine Stock Market

PSEi Outlook For July 21 - 25, 2008 By Bonner Dytoc July 20, 2008

The support has become the resistance once again.

In a classic case of role reversal, the index this week came from a low of 2289 to retest the level of 2404 that acted as a resistance. It gapped up after testing the resistance so we already presumed that the 2404 would now act as a level of support after staying above that area for a few days. But since it lacked volume when it gapped up, we knew it was only a matter of time before the gap was closed.  And close it, the PSEi did. It crashed through the support of 2404 and has been trading below that area for the past few days.

The DJIA has been able to lift itself up by roughly 4% in 2 days but the best the PSEi could do to follow that act was to test the resistance of 2404.  This only shows weakness in our own market as most other markets were able to make the most out of the rally in the US.

Maybe the index could rally a bit more as evidenced by the MACD, or it will just wallow in this area for the time being.

We still have not seen any clear sign of a reversal in the chart. Until we see any clear and obvious sign of a reversal, there will still be some momentum for the PSEi to go lower.