Phisix Daily Chart

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The Phisix daily chart

updated every Fridays, last update - 8/31/2010

DBP-Daiwa Spoils the Party but Uptrend Still Intact

charts are courtesy of Metastock

Legend: blue lines - range for Tsupiteros

dotted blue lines - range for Position Traders

red lines - important trend lines

Short-term Traders/Tsupiteros:	Medium-term/Position Traders:
Support - 3530	Support - 3350 / 3500
Resistance - 3640 to 3650	Resistance - 3750
Trend - Up	Trend - Up
Recommendation - Buy as long as 3530 holds	Recommendation - Hold as long as 3425 holds

The PSE failed to follow-thru on its gains and has mysteriously dropped back down. Although the Dow was down by 74 points, the drop wasn’t big enough to justify such a big decline in the PSEi, especially given that our market has been relatively stronger than the US markets. Furthermore, the 2^nd quarter GDP report for the Philippines came out a lot stronger than what everyone was expected. So, what triggered the sell-off? A fund seems to have decided to get out of market via DBP-Daiwa Securities. If I’m not mistaken, DBP-Daiwa sold more than P300 million worth of stocks today. That amount, which was almost 10% of the entire value turnover of the whole market, was enough to rattle the whole PSE for one day. The question now is, does he still have more shares to sell? Although this fund liquidation may affect our market for a couple of days at worst, I doubt if he can change the general trend of the market. Technically speaking, the market is still very much trending up and today’s sell-off may simply be a slight obstacle before the uptrend of the market resumes. In the short-term, I would continue to stay bullish, that is, as long as prices continue to hold above the 3530 level. Tsupiteros, who currently have positions right now, are recommended to just hold and use a break below the 3530 level as your mental stop. Those who would like to buy may want to buy if prices break above the 3600 level. Position-traders, on the other hand, are still recommended to just hold and use a break below the 3500 level as your mental stop. By the way, despite this fund liquidation of DBP-Daiwa, foreign funds were still net buyers today by P386 million.

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.