PSEi Outlook for Nov. 28 – Dec. 2, 2011

Posted by Bonner Dytoc
Saturday, November 26, 2011 14:46
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The Philippine Stock Exchange Index (PSEi) is going through the same thing that the DJIA is going through but it’s not as bad.

We mentioned before that the index was maintaining being above the moving averages to keep itself look bullish.  By the end of last week’s close at 4251, it has already dipped back below the 100-day moving average at 4282.  The 200 & 50MA are what will support the index when the time comes.  This would only confirm the sideways movement but at best, we can only see the PSEi to range trade between 4191 and 4282.  The MACD has also started its correction mode as the fast line has already dipped below the slow line but it’s staying above the zero line.

With the way the index is now behaving, we should be careful in going long at this point.  What we hoped to happen to make our market bullish once again did not materialize.  The PSEi didn’t take out the all time high and continue going higher.  So we should now expect that the index would continue for the next few months to complete the right shoulder.  When that happens, we should expect that it will test the neckline, currently at 3710.  When the neckline breaks, we see a probable downside of 18% which could bring the index back to the 3000 level.

Recommendation: Take profits
Support: 4191

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