PSEi Outlook for Sept. 26 – 30, 2011

Posted by Bonner Dytoc
Saturday, September 24, 2011 17:22

The Philippine Stock Exchange Index (PSEi) has finally succumbed to what the whole world has been doing lately; the index has also fallen and it has fallen hard.  The 210 point drop we had was the worst fall of the index since October 2008, where we had a 239 point drop.

The index has fallen through the 200-day moving average at 4170 and has fallen way past that area.  The other moving averages have yet to react to this drastic drop.  The MACD has already started to show just how bad it has been as the fast line has started to go down even further giving us an indication that things are going to get worse.

The last two trading days have only confirmed what we feared; that the PSEi has formed a head & shoulders since March and has already started the bearish sentiment in our market.  We also noticed earlier that the index was having a bearish divergence, which made us suspect that a reversal was in the making.  Our initial downside target is at 3736.  If you could liquidate your positions and stay on the sidelines for the moment until things become better then this could be the best thing to do.

Recommendation: Lighten up
Support: 3705

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