The Philippine Stock Exchange Index (PSEi) was able to recover the losses that the index suffered the previous week.  From a high of 3342, the index has fallen to as low as 3093, which was quite bad as we were looking at 3145 as a critical support.  The good news is that the index looked strong in the last two trading days.  The bad news was that the volume did not increase significantly, which now makes the rise quite doubtful.  If we are to look at the support line drawn since the low of March 2009, and connected to the low of May 2010, the PSEi is still respecting this trendline.  However, looking at the bigger picture, the index is showing signs of sideways movement since March.  What is not clear is what direction the index is deciding to take.

The 130-day moving average has been acting as a support to the PSEi, Unfortunately, because the index has already pierced the 65-day moving average, it now gives us an impression that weakness is setting in.

Since August 2009, we’ve noticed that the PSEi has been rising steadily, however the MACD has not followed suit.  This is a clear case of bearish divergence.  This only means that our current trend could be reversing soon.

There would still be some buying opportunities in the market but we should be quick to take profits as the direction of the market has become uncertain.

Recommendation: Take profits
Support: 3145