The Philippine Stock Exchange Index (PSEi) has reached its 30 month peak last week at 3539 and has backed off from that level.  Despite the correction, our local index is still in the midst of a bullish trend.  Should the index continue correcting, the most immediate support that we see is at 3400.  The support line that we’ve made since March of last year is also pointing to roughly around that level.  If the index will still have the strength to move higher, we are seeing 3600 as the most immediate resistance area.

The moving averages are still arranged in the bullish setup to confirm our trend.  At the same time, our MACD is still oscillating above the zero line to confirm the bullish trend.  There have been no changes in both these indicators for the past few weeks as there also has been no change in our trend.

There has been concern that because we are in the midst of the Chinese ghost month, liquidity will dry up and we would expect a lax market.  However, based on previous years’ data, the index has proven this notion otherwise as it has either moved sideways or even higher with the volume being maintained.

To be on the prudent side, we should take our profits when we are satisfied with them and then reenter the market again when the situation has become clear once more.

Recommendation: Take profits
Support: 3400