PSEi Outlook for Mar. 14 – 18, 2011

Posted by Bonner Dytoc
Saturday, March 12, 2011 5:50

The Philippine Stock Exchange Index (PSEi) has continued to climb higher and has already risen above the resistance of the small double bottom.  But this doesn’t mean that we’re extremely bullish just yet.

Initially, we saw a problem when the index fell below all three moving averages as this was very bearish.  However, that was very short lived as it was able to rise above the 200-day moving average.  Slowly, it was able to reach the resistance of the double bottom at 3894.  The PSEi was strong enough to rise momentarily above the 50MA but it succumbed to selling pressure that was felt as an aftershock of the massive selling in the US.  Because of this, the index breached the 3894 level again but it was able to close much higher at 3924, thereby showing its resiliency.  The MACD has also shown us that it is turning bullish as the fast line is now above the zero line.

Should the index continue rising on strength, then its upside target is 4088 but we do expect that there will be resistance at 4015, where the resistance of the downward channel and the support of the primary uptrend merge.  Lastly, we should expect selling pressure at 4054 at the 100MA.  But once the PSEi surpasses all those levels then we should expect the index to continue rising up to 4376.

We should start buying issues that have already retraced significantly, especially the index issues.

Recommendation: Buy
Resistance: 4015

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