As the market dropped consecutive days, some stocks have broken support levels, while others continued their down trend even futher. During this time the PSEI has been down 4.5% with a couple of stocks being sold down more than others.
Looking at the chart of the PSEI below, we can see that MACD have crossed down the zero line showing a relatively bearish sentiment for the market. This has not happened since October 2014 this year. Also this is the first time that the PSEI has dropped and touched the 200 day moving average. It hasn’t done that since late March this year.
Things could get even more interesting in the next few days. One thing is for sure, regardless of the conditions, your goal is to stick to your trading plan. Do not change plan because of panic, fear, or excitement. Emotions will make you lose big in the market.
Here are some possible scenarios on where the market could go:
If the Market bounces from the 7,000 price range?
We could see the PSEI go up possibly to either 7,150 or 7,190, where it could encounter a degree of selling. If it breaks past that, then it give sthe market a chance to go and attack the 7,354 level.
If the Market falls from the 7,000 price range?
We may possibly see the market drop to 6,800/6,900. This is where the next support could be seen. However if that price range does not hold, a possible drop could be at around 6,704 to 6,637.
Is the market already cheap or is it still expensive?
One thing to note is that despite the market dropping to some degree our P/E ratio is still pegged at 20.25x. Which compared to other markets in our region is still considered on the higher end. We have to remember that investors want to buy low or at a certain price range where they think it is cheap. What the market is saying now is, there might be a cheaper price range where investors
I hope these anlysis along with the charts help you find a reference point in your trades and that this would help you know when is the best time to come in and out when it comes to your investments. My greatest desire is to see you prosper and that you make your money work hard for you in the market. God bless you and have a great week ahead!
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*Charts via chart nexus
*pictures via google search