PSEi Update: Resistance Sell Off - Marvin Germo

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PSEi Update: Resistance Sell Off

By: Marvin Germo | January 27, 2014

The market was aggressively up last week for five straight days then it dropped significantly today by more than 109 points (1.77%) with 6.7 Billion worth of Pesos traded.  The thing is news and sentiment would show us that the market went up and dropped significantly because of the currency movement in other emerging markets.  As uncertainty unfolds on those areas, funds would want to sell and be liquid.  This was evident today as most of Asia, particularly the Asean region was down.

PSEi January 27 2014 region

However when you look at the charts, it will show you that a selldown was a possibly as the market have hit two major resistances.  One was the resistance brought about the downtrend and the 100 day moving average.  This showed strong selling power from investors.  As investors sell, prices move down.  This is normal and part of how markets move.

PSEI Jan 28 1 trendline

The question is how low it could possibly go?  Or what would it take if it would still go up?

If we would zoom in with the charts, we could see that the market is still in a short term uptrend.  The short term uptrend though also hit a short term resistance which further validates the correction we have experienced today. What we have right here is long term and short term investors converging and selling.  It just so happened that it came in at the same time with all the other issues that happened abroad.

PSEI Jan 28 Uptrend

This may be just be a short term down market if we see the PSEi bounce off tomorrow or we see the market range and hold the 6,000 level and go beyond the 6,213 price mark.  If 6,000 is broken downward the market may go to as low as 5,842.

Indicators such as MACD are still showing that market is bullish.

As what I always say, plan your trade and trade your plan.  My desire is this analysis would help you further as you trade the PSE.  I hope that  stocks be a channel for you to make your money work hard for you and that it would be part of your journey toward financial freedom.

I dream to see 5 Million Filipino investors by 2020 and I’m glad that you are part of this!


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*charts by chart nexus
*market shot taken from bloomberg TV