PSEi Outlook for May 4 – 7, 2010

Posted by Bonner Dytoc
Tuesday, May 4, 2010 7:19

What should we expect from the week before elections?  On one hand, we can expect a correction for two reasons: the 158 pt. drop of DJIA on Friday and the bearish outside day experienced by the PSEi.

The bearish sentiment coming from the US is understandable as more often than not, whatever happens there spills over to here.  The bearish outside day is one more reason why we won’t expect the market to move higher before elections as it made a higher high and lower low compared to Thursday’s movement.  This only means that people were more bearish on Friday for one reason or another and the selloff will extend into this week.

Even if people will be selling, I see this as nothing more than a correction, not a bear market.  The PSEi has shown us many times over that it has been resilient despite the odds.  Add to that, all indicators (moving averages & MACD) are also showing us bullish signs up to this point.

However, that doesn’t mean that we are free to trade with abandon.  Play it safe until things clear up.  If you have profits, take it since there’s nothing wrong with that.  If you’re liquid and not sure where to put your money, it’s alright as sometimes having cash only is still a good position.

Recommendation: Buy selectively
Support: 3212

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