The end of the bearish market is near.  At least that’s what our chart is telling us.

There have been numerous signs telling us beforehand that things were looking up.  The rise of the PSEi above the 3 moving averages is one.  The probable reversal pattern (rounding bottom) is another.

The past few days’ movement had the index close the gaps made back in October.  This is a good sign.  The support for the index now stands at around 2500, which is where the first gap started.

The index seems to be reaching for the primary resistance line to test it.  That now stands at around 2550.  Should that line be broken convincingly, the next resistance that the PSEi should watch out for is 2700-2750, the high made back in Aug.-Sep. 2008.  We did mention that we think that there’s a rounding bottom formed to reverse the downtrend.  Our projection based on this would bring the index back to 3250, more or less.

The momentum doesn’t seem to be fading either as seen in the MACD.  The fast line seems to be running away from the slow line and we could be nearing some overbought levels soon.  This could coincide with the PSEi testing the resistance line and we could see it back off after it hits that area.

I’ll give this week some more room for a rally but everything’s up in the air after that.

Recommendation: Hold
Support: 2500