Phisix Monthly Chart

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The Phisix monthly chart - updated 8/4/2008

Bullish Hammer Pattern May Indicate a Possible Rally

charts are courtesy of Metastock

The PSEi has formed a Bullish Hammer pattern last month and could indicate that the market may start to rally from here. Last month was the very first time in the last nine months that the market has actually showed some signs of life. Although this possible rally is not confirmed by any means, a Bullish Hammer pattern, which occurred right at the market's 50% Fibonacci Retracement, is certainly quite encouraging. While the market is certainly trending down already in the medium-term already, I wouldn't be surprised to see it rally all the way up to its previous support line at around the 2900 to 3000 levels from here. In 1997, when the market started to trend down because of the Asian Financial Crisis, the market dropped down for 12 straight months in a row. It was able to rally for the next three months before it began to resume its downtrend. Can history repeat itself this time around? Since the market has been trending down for 9 months in a row now, would it be too much to ask if the market were to rally in the next two or three more months? Cyclically, I think the market is due for this rally. Can this actually be the start of the next leg of the bull market since prices have bounced off the 50% Fibonacci Retracement line? Sure, but that may be premature to say at this point. For now, the main objective of the market is to simply confirm this rally first by continuing to rally this coming August. If it can do that, then, we may even continue to rally all the way up to October or even November. Remember, August is ghost month period and is usually one of the most bearish months in the calendar. If the market fails to drop this coming month, then, we will most certainly no longer drop in September. To be bullish in this market again in the long-term, prices must first take out 3000 to the upside. Any rally that ends any lower than 3000 will indicate that the downtrend has yet to really end.