Status of the Philippine Stock Exchange Index
The market breadth of the Philippine Stock Exchange Index (PSEi) as of 1:40PM of May 15, 2019 is bearish. The gainers-to-losers ratio is 1:3.61.
If the gainers-to-losers ratio is higher than 1:3, it’s a confirmed bearish PSEi for me.
PSEi has slumped below the previous support at 7630. This area at 7630 now acts as PSEi’s immediate resistance. Support is near 7347.
This resistance at 7630 is almost in confluence with the 61.8% of the Fibonacci retracement. The bearish sentiment is more likely to continue until PSEi recovers above the 7630 level.
What influences this bearishness of PSEi?
- US-China trade-war
- Philippine Election
Foreign investors are the major movers today. Nearly 70% of today’s total turnover value is attributed to foreign accounts.
Would you like to know the trend of PSEi every May elections?
I’ve gathered data and checked if PSEi always ends in the green or red zone by the end of every election in May. It turned out that there’s no consistent trend.
Was I able to prepare my clients ahead of this?
I did. Since the second week of April, I’ve downgraded my short-term rating for over 50% of the index stocks from bullish to bearish. As of last week (before the election day), I’ve already downgraded the short-term rating of 80% of index stocks to bearish. Go to the Facebook Page of Equilyst Analytics to see proof.
Let me just make it clear, though, that it’s hard to quantify the percentage of impact of the election in the bearishness of the PSEi.
Note that even before the election in the Philippines, there has already been an international trade-related policy-driven issue between the US and China that has been affecting our local bourse. After all, our relatively small, foreign investor-driven bellwether index is known for piggy-backing the sentiment in the US stock market.
What does my bearish rating for 80% of the index stocks mean?
Does it mean 25 out of 30 bluechip stocks have turned into bad apples for me?
No. That’s not necessarily what my short-term rating downgrade means.
When I downgrade the rating of an index stock from bullish to bearish, it’s my way of saying, “Don’t buy this stock yet. Don’t top-up just yet. The downtrend momentum is still strong. The price is still more likely to continue to go down. So do not hurry so you can do better than peso-cost averagers and mutual funders.”
These reminders are written in my Quick Start Guide that is exclusively available for Equilyst Analytics subscribers. There’s no way that you will get lost unless you’re lazy to read. Besides, if there’s anything that’s not quite clear to any subscriber, there’s a Private Clients Forum where they can post and ask me directly.
Do not hurry in buying the dips yet. Wait for the decided sellers to exhaust themselves. Let them throw up as much as they want. There’s a way to find out if they’ve thrown up what they wanted to throw up anyway.
Look for these signs.
- the current candlestick is green
- the current price is above the volume weighted average price
- the current volume bar is green and is higher than 50% of the stock’s 10-day volume average
- the most traded and voluminous range is closer to the intraday high than the intraday low
If you attended one of my advanced seminars, you should be familiar already on these signs. Check out the handouts I sent you. I included flow charts so you can easily remember the process of checking. There are other ways on how to identify confirmed signs of a reversal also. They’re all in the handouts I sent you. Know that the strategies I taught you cannot be searched on YouTube or Google. They’re my proprietary methods.
I would also suggest that you read the details of my Smart Index Investing Strategy to get a view of the full picture.
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I hope this helps. If it does, please let me know in the comments Thank you!