The Philippine Stock Exchange Index (PSEi) seemed to have some kind of glitch that caused the index to fall to as low as 3990 but rose again to close at 4304.  Regardless, the index remains to be moving sideways to keep itself above the moving averages that we’re tracking.

The 100-day moving average is serving as our first support at 4263, followed by the 50 & 200MA at 4225.  When these moving averages are broken on the way down, then we have a lot to be fearful of.  It could complete the dreaded right shoulder that we were mentioning.  The MACD has also been weakening as of late but on the bigger picture, it has already shown us a bearish divergence since September 2010.

We shouldn’t ignore these signs.  As much as we would all like the market to be bullish once again, we can’t help but notice the indicators telling us otherwise.  It’s better to be prepared for the eventuality rather than be sorry for it when it finally happens.  Be vigilant in your trades.

Recommendation: Take profits
Support: 4263

The Philippine Stock Exchange Index (PSEi) has continued staying above the moving averages but hasn’t really made any headway to clue us in on whether the market is going to be bullish or not, at least for the next quarter.

The moving averages continue to show us a confirmation that the index is still moving sideways.  For the moment, what we still see is that the right shoulder of the PSEi is still being formed.  The critical level still remains to be in the 3700 area.  The MACD is showing us that the correction has ended somewhat as the fast line has already stopped declining and has now gone sideways.

Until we see the index continue rising and taking out the all time high by climbing higher than that level and continuing, we have to remain cautious as we still see the bearish head & shoulders being formed.  So if there are still some profits to be made, take them.  Not even the Santa Claus rally or January effect could guarantee that the eventual breakdown in the PSEi won’t happen.

Recommendation: Take profits
Support: 4273

The Philippine Stock Exchange Index (PSEi) is performing better than expected as it has managed to stay above the moving averages.

Unlike the DJIA where it dropped big and recovered almost immediately most of what it lost, the PSEi has been steady.  We earlier noted that the index was going to range trade for a while between the 100 & 200-day moving averages.  With the help of the rise of the DJIA by almost 500 points in one trading session, the PSEi was able to put itself just above the 100MA at 4276 by ending the week at 4290.  Since this move wasn’t as significant as the movement in the DJIA, the reflection of this move wasn’t too magnified in the reaction of the MACD.  However, this still remains to be positive and it could be just a matter of time before the MACD will follow suit.

If the PSEi is able to keep itself above the moving averages and go near the 4500 level, there may still be a chance that we could see the index break the all time high once again and establish a new trend.  But until that happens, we should still be vigilant and cautious about our trades.

Recommendation: Buy selectively
Support: 4276

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

The Philippine Stock Exchange Index (PSEi) is still staying above all the moving averages to close the week at 4302 yet this doesn’t mean that we should be bullish after wading through a choppy market.

The moving averages continue to oscillate within each other, only confirming what we already know; that the index is still forming a pattern.  The setup of the moving averages isn’t even bullish yet therefore we really have to be careful with what we are doing in the market.  The MACD has shown us that the fast line has lost some of its momentum to bring it closer to the slow line, therefore indicating that it is now close to correcting.

We are getting mixed signals every week from the indicators.  The safest thing to do is to take your profits when you can because now is not the time to go long yet.  We still need the index to break the all time high of 4563 and continue going higher otherwise we could just see another kind of bearish pattern that could form.

Recommendation: Take profits
Support: 4283

The Philippine Stock Exchange Index (PSEi) continues to stay above the moving averages to keep the whole market afloat and give traders a glimmer of hope.  However, that doesn’t mean that we’re out of the woods yet.

As we mentioned, the index is keeping itself above the moving averages to keep things bullish.  However, we need to see more upward momentum for the index to be convinced that things are turning around instead of it forming a reversal pattern.  The MACD continues to gain upward momentum but has slowed down a bit this week.  Yet, it hasn’t shown any signs of turning bearish.  These indicators are temporarily giving us some hope for the near future.

Since the DJIA has been going through some sideways movement, we should also expect that the PSEi could follow suit up to some degree.

Recommendation: Buy selectively
Support: 4276

The Philippine Stock Exchange Index (PSEi) is looking eerily similar to what the DJIA is going through at the moment; which is that it is forming its own bearish head & shoulders pattern.

Earlier, we saw our index gap up by 60 to 70 points but what concerned us was that it wasn’t able to close at the high but rather lower than what the opening was and it was also near the low of the day, indicating that there was going to be a correction coming.  True enough; the index followed what happened to the DJIA by falling around 70 points to cover the gap.  It not only fell below the 100-day moving average but it had another round of selling before recovering a bit of what it lost by closing the week at 4271, practically where the 100MA is right now.  The bullish momentum in the MACD was cut a bit short with this recent correction but not enough to suggest that a new round of red days will be coming.

As we mentioned earlier, the PSEi is looking very similar to what the DJIA shows right now.  The index is also trying to form its own right shoulder.  It ‘s still too early to tell if the peak of the right shoulder has already been reached and will now go sideways, or if there is still some more potential for it to move higher.  For this we need to observe further how the index will perform.  Should the PSEi complete the right shoulder, we should note that the critical level of the index right now would be at 3700.  When that breaks, we could see our PSEi fall to around 3012.  But as of now, we should trade cautiously due to the indecisiveness of the market but that’s not to say that there aren’t any short term opportunities waiting.

Recommendation: Buy selectively
Support: 4180

The Philippine Stock Exchange Index (PSEi) got a boost with the DJIA rising more than 300 points due to the bailout of Greece as it gapped up on heavy volume to close the week at 4333.  Although this is good, there are still some things that concern us about the index.

The good thing that we got was that the index is now above all the moving averages making it more bullish.  We can now treat the 100-day moving average at 4270 as our initial support.  We are now looking at our primary trendline to act as our initial resistance at 4397.  The MACD is also very bullish at this point as its momentum was able to carry it above the zero line and there is no sign of it letting up.

After the good part, we now talk about what concerns us about the index.  The gap up by the index last Friday, although it had very good volume with it, is not as bullish as it seems as it seemed undecided if it wanted to move higher or not.  With the movement of some of the big index issues giving us a hint of correction soon, we could probably expect the same in this shortened week.  This means, that the index would probably try to close the gap up to 4273.  In order for the index to fall by 60 points to reach this level, the major index issues would need to fall substantially too.  We need the index to surpass the all time high at 4563 and continue going higher to erase any bearish sentiment, otherwise, it’s time for us to take profits again.

Recommendation: Sell on rally
Resistance: 4397

The Philippine Stock Exchange Index (PSEi) had found a temporary resistance but it hasn’t strayed too far from that area.  The problem is we don’t know how long this will last.

The index rallied from the low of 3715 to go back to the 4100 level in a quick span of time.  It has now entered an area where we could see that the PSEi will be range trading for a while as it has hit the 50-day moving average three times, proving that this is now the current resistance.  It has also used the 200MA as its current support at 4159.  This range is tightening and we expect the index to make up its mind soon as to what the next direction will be.  The MACD continues to rise giving us a semblance of bullishness in the market, even if it’s only temporary.

It’s good that the PSEi is trying to find its footing in a shaky market but when we view the bigger picture, we can’t help but take notice that the recent rally makes it look like the right shoulder is clearly being formed.  To take away this probable bearishness, the index needs to surpass the all time high of 4563 and continue rising significantly.  Unless this happens, then we should expect the inevitable bear market to happen soon after the right shoulder has been formed.

Recommendation: Take profits
Resistance: 4194

Title: Basic Technical Analysis Seminar
Location: Makati
Description: Day 5
Date: 2011-12-06