Philippine Stocks Exchange index PSEi (Philippine Composite index PCOM) End of Year 2019

Disclaimer: Analysis is made by a novice in trading stocks. Thus, the information you read here is not an investment advise. Practice due diligence and always trade at your own risk.

Figure 1: Daily candles for PSEi

Daily timeframe shows that the kumo (cloud) rejected the price action. Meaning, a further decline is more probable than the upside. Critical points below are the Kijun-sen (base line) and the Tenkan-sen (conversion line) recently at 7800. A breakdown at this price is something unsightly for the bulls – lightening or exiting positions may be a good idea. To add, the Chikou span (lagging line) is below the previous price action and the future is bearish. For the index to be worth trading, at least for buy positions, TK cross and kumo breakout should materialize, chikou span should cross above the price action, and a kumo twist towards the bull should occur. If some of these happen, entering or adding up to your positions should be considered, provided that your system agrees.

Figure 2: Weekly candles for PSEi

On weekly, price action is still above kumo, but shows the struggle to bounce back to 8000. Tenkan-sen and Kijun-sen are acting as resistance on 7800 and 7900 barring the price action to rise up. Chikou span and the recent kumo twist towards bearish is also a bad sign for the bulls. Below the price action, kumo breakdown is the critical event to watch out for or the price range 7500-7600. A breakdown may lead to further decline as it was the case last June 2018.

Figure 3: Monthly candles for PSEi

On monthly time-frame, the last time the price action went below the cloud was 2009. Ever since, there were rallies and pullbacks. But this year, 2019, the price action has been playing around the high prices of 2015 and 2016 signifying that the index is weakening. Tenkan-sen and Kijun-sen act as resistances around 7900 and has been rejecting the price during the Q4 of 2019. Thus, these resistances should be broken to have bullish stance. Otherwise, we should watch out for a kumo breakdown, which is around 7000. Price may continue to 6500 as the bears wished.

Conclusion: Staying on cash is also a position, they say. But, as long as the critical points are not met, entering a buy position is not bad. For pooled fund, redeem on profit or before the loss gets uncomfortable. For specific stocks, you may want to check the consumer stocks as some of them tend to rise after December – it could be as short as one week rally to as long as a couple of months.