Something felt wrong when we saw the PSEi break the 3 support lines of the fan before.  True enough, it’s now showing us why.

Using the fan principle, it’s said that when the 3 trendlines of the fan have been broken, an imminent reversal of the trend is just around the corner.  While it still wasn’t clear at that time, and we were still hoping something good comes out of it, we finally see that the index is forming something that looks like a double top.  We are not yet sure if this really is a double top or it could be something else since the neckline of the double top is not yet broken.  Assuming that this is a double top, the neckline is pegged at 2977.

Using the logarithmic chart, once the neckline is broken, we could see the PSEi going down to 2828.  Should this happen, we definitely will see that the 130-day moving average would be broken at 2899; that would be another bearish move.

The MACD has long been telling us that the momentum has been slowing down even while the index was going up.  This in itself was a bearish move, and an early warning sign.

We were warned before and now we have to follow the trend. The latest 200 point drop of the DJIA would be enough reason to push the index down again this week.  The question would now be how far would we go?

Recommendation: Sell
Support: 2977