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The Phisix daily chart

updated every Mondays, last update - 8/25/2008

Testing its Support Near 2600

charts are courtesy of Metastock

Legend: blue lines - range for Tsupiteros

            dotted blue lines - range for Position Traders

            red lines - important trend lines

The PSEi continued to drop lower last Friday, as expected, and is now nearing its support at 2600. The big question is, will the market be able to hold above its support at 2600 and rebound back to its previous high at 2778, if not higher? Or, will the market break below its support at 2600 and continue to drop further? That certainly is quite a riddle at this point. Notice that value turnover has significantly decreased in the last couple of days and especially last Friday. In my opinion, this is a good sign for the bulls. While we want to see value turnover increase when prices are moving higher, we wouldn’t mind value turnover decreasing when prices are dropping. Decreasing value turnover may indicate a lack of conviction on the part of the sellers in the market. All we need now is a trigger to reverse the market’s momentum from down to up. If the market is able to hold above current levels and break above its short-term resistance at 2675 on convincing value turnover, that scenario may set-up a buy signal, which could bring the market back to its previous high at 2778, if not form a higher high and bring the market towards the 3000 level already. But let’s not get too ahead of ourselves just yet. The first order of the day is to stabilize this short-term downtrend first. If prices are able to do that and the sellers feel that the market will not drop below 2600, then, the buyers may become aggressive once again. For the meantime, I would suggest to suggest relax and watch the behavior of the market near 2600. By the way, on another bullish but peculiar note, while Oil climbed by more than $5.00 last Thursday night, it surprises me that the Dow still managed to register a gain. If the market could no longer drop despite Oil prices climbing, maybe, equities have already discounted the worst. It’s too early to say though at this point. Tsupiteros as well as Position-traders are now recommended to be on your toes and get ready to buy if trend in the short-term reverses from down to up. A convincing breakout above 2675 on more than P3B value turnover should cause the pull of the trigger.  

Notes:

Short-term Traders/Tsupiteros vs. Medium-term/Position Traders: Recommendation for short-term traders or Tsupiteros are meant to be used by traders whose holding period are limited to one day to two weeks. Medium-term or position traders are meant to be used by traders whose holding period are two weeks to three months. Long-term investors whose holding period is more than three months should not follow these recommendations.