Philippine Market:
Technical Update
Presented by:
Juan G. Barredo
Chief Technical Analyst
COL Financial Group Inc
www.colfinancial.com 1
OVERVIEW
• PSEi still into a corrective wave after breaking its 17-month up
trendline
• A likely test of major support 7,272-7,239 is upcoming
• Technical weakness prevails and may convey a high chance of a
support breach
• Expect some headwinds:
– Watchful of the SP500’s sideways grind which nears support
– China market flip-flops, more turbulence seen
– Currency devaluation forces more volatility
– Recent Dollar advance still weighs on some currencies &
commodities
• Motion into defensive buying and wait for better demand
setups… as a possible reaction to 7,050-6,950 looms
www.colfinancial.com 2
PHILIPPINES: May need more corrective action
PSEi may look for a major reset to its Long Term Up Trendline
PSEi (7-yr view) Long Term View:
• Our earlier 6-month target of
8,000-8,200 was hit (8,136 high)
• Overbought levels prompted a
Reset? correction, to which a ‘Reset’
swing was necessary
Reset
• Trendline support is currently at
7,050
Reset
www.colfinancial.com 3
PHILIPPINES: May need more corrective action
PSEi slides below its 17-month Up Trendline, reactive trend proceeds
PSEi (2-yr view)
Medium Term View:
• Corrective wave widened and
broke below its 17-month up
trendline (7,750)
• It presently drives a short to
medium term corrective phase
• Support is at 7,272-7,225
• After this next support is placed at
7,050 – 6,950
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PHILIPPINES: May need more corrective action
Lodged between 7,665 and 7,272 – prices need to hold over support
PSEi (8-month view)
Scenario # 1 Support Holds
Scenario # 2 Support Fails
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PHILIPPINES: May need more corrective action
If prices break 7,272-7,239,a “C” wave extension will ensue
PSEi (6-months)
Elliot's Corrective Waves
(A-B-C)
(A)
(B) (C)
MSCI Phils “EPHE” (6-months)
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PHILIPPINES: May need more corrective action
Lodged between 7,665 and 7,272 – it needs a show of strength now
in order to avert casting a third attempt at its recent lows
PSEi (2010-2011) vs (2015)
(A) (B)
2010-2011
(C) (History Sample)
Major Support Test 2015
(Present)
www.colfinancial.com 7
INDUSTRY SECTORS: Holdings & Property hold out better
Holdings Property Services
Commercials Financials Mining/Oil
Weakness still seen across sectors, but some oversold reads do show which may offer temporary/selective rallies soon
www.colfinancial.com 8
PHILIPPINES: Heavy load to carry
COL’s Technical Guide shows 82.04% of its monitored stocks to be
under short term down trends; Net Foreign outflows still a concern
Short Term Trends* # of Issues % of Whole
UP 14 8.38%
DOWN 137 82.04%
SIDEWAYS 16 9.58%
Total 167 100% * as of 8/17/2015
20
16.5
Net Foreign Flows (PHP Billions)
15
9.5 2015 Net Inflows of P4.6-B**
10 7.3
4.3
5 3.064.2
0.92 1.6 2.3 0.555
0.478 0.61 0.086 0.266
0
-1.085 -0.282 -0.993 -2.1 -0.745 -0.613
-5 -2.5 -3.2-2.6-2.6 -2.51 -2.02-3.5
-4.4 -3.6 -4.9
-3.7
-5.66
-10
1/9/2015
1/16/2015
1/23/2015
1/30/2015
2/6/2015
2/13/2015
2/20/2015
2/27/2015
3/6/2015
3/13/2015
3/20/2015
3/27/2015
4/3/2015
4/10/2015
4/17/2015
4/24/2015
4/31/2015
5/8/2015
5/15/2015
5/22/2015
5/29/2015
6/5/2015
6/11/2015
6/19/2015
6/26/2015
7/3/2015
7/10/2015
7/17/2015
7/24/2015
7/31/2015
8/7/2015
8/14/2015
* as of 8/14/2015
www.colfinancial.com 9
PHILIPPINES: Index 30 Review
Issues outlined in red show very poor technical standing
Sup1 Sup2 Res1 Res 2 Sup1 Sup2 Res1 Res 2 Sup1 Sup2 Res1 Res 2
893 871 930 947.5 2700 2570 2760 2823 37.2 35.7 39.3 41.36
Sup1 Sup2 Res1 Res 2 Sup1 Sup2 Res1 Res 2 Sup1 Sup2 Res1 Res 2
180 166 204 211.5 745 700 800 823.5 89 85 96.50 100
www.colfinancial.com 10
PHILIPPINES: Index 30 Review
Issues outlined in red show very poor technical standing
Sup1 Sup2 Res1 Res 2 Sup1 Sup2 Res1 Res 2 Sup1 Sup2 Res1 Res 2
65 61.5 73 75.75 98.20 91.8 105 111.4 19.9 18.5 21.3 22.5
Sup1 Sup2 Res1 Res 2 Sup1 Sup2 Res1 Res 2 Sup1 Sup2 Res1 Res 2
56 53 59 61.65 82 77.2 87 90 100 95 106 112.1
www.colfinancial.com 11
PHILIPPINES: Index 30 Review
Issues outlined in red show very poor technical standing
Sup1 Sup2 Res1 Res 2 Sup1 Sup2 Res1 Res 2 Sup1 Sup2 Res1 Res 2
1287 1215 1343 1455 21.5 19.4 23 24 186 180 195.9 200
Sup1 Sup2 Res1 Res 2 Sup1 Sup2 Res1 Res 2 Sup1 Sup2 Res1 Res 2
2353 2218 2706 2800 42 40.8 45 46.75 4.7 4.2 4.96 5.34
www.colfinancial.com 12
PHILIPPINES: Index 30 Review
Issues outlined in red show very poor technical standing
Sup1 Sup2 Res1 Res 2 Sup1 Sup2 Res1 Res 2 Sup1 Sup2 Res1 Res 2
6.06 5.40 7.07 7.50 27.8 26.66 30 31.8 4.12 4 4.65 5
Sup1 Sup2 Res1 Res 2 Sup1 Sup2 Res1 Res 2 Sup1 Sup2 Res1 Res 2
11.7 11 13 14 282 270 297 310 14.27 12.56 15.12 16
www.colfinancial.com 13
PHILIPPINES: Index 30 Review
Issues outlined in red show very poor technical standing
Sup1 Sup2 Res1 Res 2 Sup1 Sup2 Res1 Res 2 Sup1 Sup2 Res1 Res 2
113.9 110.5 132.4 140 24.3 22 26 28 6.7 6 8.48 10
Sup1 Sup2 Res1 Res 2 Sup1 Sup2 Res1 Res 2 Sup1 Sup2 Res1 Res 2
55 40 57.7 60.5 9 8.5 10 10.5 7.32 6.7 9 10
www.colfinancial.com 14
PHILIPPINES: Undergoing a Reset
• The PSEi currently drives a major support challenge and
needs to hold here or facilitate a “C” wave swing
• A successful show of support from a retest of the 7,272 area
can set off a wider comeback
-This can effect a counter rally that could target close to 7,820-7,900
• However heavy load is presented (as many listed companies
show ongoing down trends) which could force the PSEi
support to break
• It may force on an extension of the corrective swing looking
at 7,050 – 6,950
-A counter rally from here may target close to 7,460-7,600
• Buying actions should be protracted into the next two & a
half months as corrections need time to flesh out
www.colfinancial.com 15
Possible
Headwinds
www.colfinancial.com 16
External Factors: The US
The SP500 shifts sideways and is now pressed on to a decision by
its up trendline
SP500
Review:
• Still into a major advance
• Short term side swing ranges
from 2,134 and 2,050
• Trendline reached = may need
to make a major decision soon
and as such provides some risk
of a possible support break
• Sp500 and Nasdaq are stronger
options than the Dow Jones
(which sports a short term
reactive channel)
www.colfinancial.com 17
External Factors: China
Shanghai index still show tenderness & volatility despite rescue
attempts by all the kings horses and all the kings men
China’s Shanghai Index Review:
• A major correction proceeds
(despite the recent rally)
• Recent support was seen
between its Fibonacci zones of
3,615-3,246
• Govt intervention will continue
to generate wide volatility
• Momentum readings still
forewarn of downward
extensions – may even retest
recent lows if not slightly more
(3,415-3,246)
www.colfinancial.com 18
External Factors: The US Dollar
Dollar keeps upward bias… but new range may be expected
US Dollar Index
Review:
• Up Trend intact (small range)
• 2nd Qtr rush bared overbought
levels that needed a correction
(Fibonacci 38.2%)
• Now ranged within 98.50 – 94.00
and may stay ranged despite
Yuan Devaluation
• Hold stipulated but watch stops:
– Short term stop at 96.00
– Medium term stop at 94.00-93.15
www.colfinancial.com 19
External Factors: Yuan Devalues
Chinese Yuan (6.39) breaks over its 6.28 resistance after almost a
two year consolidation
China’s Yuan
Review:
• Sharp devaluation with holding
power at present levels = strong
momentum
• But price is now overbought and
may need a brief pattern or
reaction to fix
• Eyes on Target:
• Measured range of 6.49
(6.28-6.07 = 0.21 + 6.28 = 6.49)
www.colfinancial.com 20
External Factors: Peso Devalues
Philippine Peso (P46.35)breaks over its P45.00 resistance after a
lengthy consolidation
Philippine Peso
Review:
• Devaluation trend resurfaces
but prices have reached near
overbought levels that may park
prices momentarily
• Targets:
• Channel high 46.20 (hit)
• Measured range of 47.18
(45.40-43.22 = 2.18 + 45.00 = 47.18)
• Short term:
– Take some profits close to 47-47.18
– Buy Dollar into reactions
(support is closer to 46 to 45.84)
www.colfinancial.com 21
External Factors: Impact of Commods
Oil & Metal prices crushed by the Dollar’s rally / China’s slow down;
weekly oversold levels flag possible short term rallies
Oil Gold Copper
Note: Certain stocks may show sensitivity to these fallouts
SUMMARY:
• After its recent reaction, the PSEi still tries to establish a foothold
– If 7,272 holds, possible counter rally into a wide pattern (rest of 2015)
– If it breaks, C-wave reaction may extend to 7,050- 6,950
• Watch out for possible undercurrents:
– US Markets near support & impending Rate hike
– China’s slippery slope & Yuan extended devaluation
– Continuing volatility in currencies and commodities
• Take into defensive buying
– Buy gradually after pullbacks towards next support zones
– Avoid buying into technical rallies – use these moments to lighten and
raise some cash until we pull out of down trends
– Allow about 2 months of corrective adjustments/consolidation time may
be necessary to fully ‘reset’ to major support & to scope up better buys
www.colfinancial.com 23
Thank You!
JUAN G. BARREDO
CHIEF TECHNICAL ANALYST
COL FINANCIAL GROUP INC
[email protected]
