Philippine Equity Research

Mar 30, 2016

Focus Items

Issue
Philippines
Peso-$
MSCI Phils
PLDT US
DJIA
SP500
Nasdaq
England
Nikkei
Hong Kong
China
US 30yr Bond
10-Yr Yield
Dollar Indx
Gold
Oil
GTX

Previous Current
7,335
7,274
46.34
46.355
36.21
36.75
42.02
42.95
17,535
17,633
2,037
2,055
4,767
4,847
6,106
6,106
17,134
17,104
20,346
20,366
2,958
2,920
162.83
163.76
18.7
18.14
95.94
95.15
1,221.80
1,242.50
39.3
38.49
2,145.31
2,121.55

Change
(60.12)
0.015
0.54
0.930
97.72
17.96
79.83
(0.58)
(30.84)
20.69
(37.99)
0.93
(0.560)
(0.79)
20.70
(0.81)
(23.76)

%
(0.82)
0.03
1.49
2.21
0.56
0.88
1.67
(0.01)
(0.18)
0.10
(1.28)
0.57
(2.99)
(0.82)
1.69
(2.06)
(1.11)

YTD %
4.64
3.66
8.92
2.92
1.19
0.54
(3.21)
(2.19)
(10.14)
(7.06)
(17.50)
7.19
(20.05)
(3.65)
17.16
3.83
(2.26)

Authored by:
Juanis G. Barredo
VP; Chief Technical Analyst
COL Financial Group Inc.
Juanis.barredo@colfinancial.com
Disclaimer: All opinions and estimates constitute the judgment of COLs Equity Research Dept as of the
date of the report and are subject to change without notice. The report is for informational purposes only
and is not intended as an offer or solicitation for purchase or sale of a security.

Issue
A retest of resistance?
DOW
PSEi
MSCI Phils EPHE
PHI

Highlight
Keep close watch of things
Range trade watch for resistance
Range trade (take some profits into res)
Range trade (take some profits into res)
Sell into rallies to resistance

Page
2-3
4
5
6
7

DAYS HIGLIGHTS
US markets were up as Fed stays cautious; Europe was also up
Asia was mixed; China slides again on fear of property curbs
The Dollar fell hard along with Bond Yields; Bonds, Gold and the
Euro climb Oil still slippery
The Philippines PSEi was lower 60-pts still showing mixed
action and rotation to some small caps
Trend Watcher: Consolidations
Notes: US markets climb a drive and draw?
The US Federal Reserve offered to stay cautious in raising rates as
economic signals were not yet too suggestive of having to be to
aggressive on rates. US stocks and Bonds rallied to this tone but
put pressure into the Bond Yields (a precursor to i-rates) and the
US Dollar (which fell hard last night). This activity resulted into
the Euro climbing and could also put recoveries into other Asian
currencies as well. Although this may not be good for Japanese
stocks (who likes a weaker Yen), it could lend some helping hand
into some Asian markets. But again we should keep watch of
certain technical lapses into the US, European and perhaps some
Asian markets whose recent rallies have now reached
overbought zones, major resistance points and are accompanied
by vulnerable MACD formations. Manage positions gradually
down (for mainline issues) then wait for better setups.

Tech Spotlight

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A retest of resistance? Keep close watch of things

Dollar falls as Yields fall; the Euro, US bonds and
Gold climb, Oil still slippery:
Last night US index action motioned to climb,
seemingly reawakening it rally spirit
But overbought levels and a MACD slowdown
suggests we keep a wary eye on things as these
typical slowdown maneuvers by the MACD
commonly result in wider/longer corrective shifts
Moreover we saw some corrective activity
rekindle into the US Dollar and on Bond Yields
suggesting that there may be no hurry to raise
rates (and as hinted by Fed Chair Yellen last night)
In converse Bonds jumped, the Euro Jumped and
Gold rebounded from within a consolidation
range though Oil was not positively responsive,
and in fact slid by over 2%
As much as US stocks rallied to the note that
the Fed may be more cautious in raising rates a
look into why Yellen offered such restraint may be
just as important
It suggests growth and inflation may not be too
strong to worry about and if so can it justify
prices rallying as such a pace
Well given the US overstretched situation and
flailing MACD reads, along with Bonds taking in
pick up action (possibly siphoning interest from
equities), it would be strategic to be alert of rally
weak spots, short term toppish signals, and
advanced signs of fragility and manage positions
accordingly in preparation for possible reactive
drives and increasing volatility

Page 2

Tech Spotlight

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Page 3

A retest of resistance? Keep close watch of things

Be watchful for possible Short Term Topping Formations
With the index at resistance and dealing with an
overbought situation and a weakening MACD, we may have
to be watchful for a short term top
Tops, usually, like bottoms form a two stage process as a
advance slowly turns sideways then possibly down as such
two highs are commonly produced
The second high of which can normally give you a good
gauge how the reaction will unfold a higher 2nd high
usually shows strength and durability while a lower-high
shows sellers have prepared to motion aggressively and
could waylay prices more as a consequence
Moreover if prices break through the 1st higher, it could
extended the rally motions a little while longer this may
also provide a little more trading window and cold allow for
an extended overbought period for a little while longer
Protective stops to manage through rally extensions can be
places on the zone exhibited by previous highs (Stop)
In a weaker scenario a 2nd top is usually drafted with a
similar or lower-high and this airs out the growing intensity
of the seller and as such would carry off a heavier pullback
in its correction
Protective stops can be placed at recent lows as a break of
this should confirm the susceptibility of support
Thus if such reversal formations do show, it may be a good
idea to lighten down on positions in preparation of a wider
corrective event

Possible Topping Gestures

Stop

(From a strong recovery)

Stop

(Less forceful varieties)

Stop

Tech Spotlight

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Page 4

US: Dow Jones

Recommendation: Range trade watch for resistance
Support: 17,345 16,928 Resistance: 17,670-17,860
The Dow Jones rallied 97-pts and again nears major
resistance
The index has also been dealing with recent overbought
levels and is encountering a lapse in upward momentum (as
shown in its MACD)
But so far a Hold over its channel range trade sits as we are
still watchful of next resistance (R1 & R2) and the potential
effects of overbought levels which could foster growing
choppiness and profit taking soon
R1 and R2 areas (17,670-17,860) may be good zones to take
some profits into but hold a good size of positions to ride
the rebound up to targets or until your protective stop at
the 16-day MA (17,345) is broken

Tech Spotlight

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Page 5

Philippines: PSEi
Recommendation: Range trade (take some profits into res)
Support: 7,145 6,953 Resistance: 7,400-7,697
The PSEi was down 60-pts and has corrected 3 of the last 4
days after recently hitting overbought levels and major
resistance 7,400
Overbought reactions usually stop advances for a few days
then attempt to retest resistance a failure to durably
break over resistance would commonly drive a short term
top (this is why major highs and lows are usually carried
out by double tops and double bottoms)
MACD readings still show the rally in place which could
warrant a hold, but its stretchiness does ask for some
gradual profit taking this should provide the advantage of
having some cash to buy back in case of wider reactions
Given the prevailing high momentum, the chance for a
trend extension is possible looking for its next resistance
zones of 7,400-7,697 though some choppy swings may
yet be expected as it the case of double tops (see page 3)
So the option to hold core positions is maintained so long
as its protective stop at the 16-day MA (7,145) has not
been broken

Tech Spotlight

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Page 6

US iShares MSCI Philippines: EPHE

Recommendation: Range trade (take some profits into res)
Support: 35.60- 34.31 Resistance: 37.03-37.14 /39.13
EPHE bounced by $0.54 after several days of a reaction
As recent overbought readings have been triggered and
recent reactions have weakened upward momentum, it
still faces corrective risk despite last nights rally
Resistance is estimated to be between $37.03-$37.14 and
then $39.13 (these proximal areas may be good zones to
take some profits into)
MACD readings still show the rally in place, but a curve
down does show a possible intensification of the corrective
sway which could ask for some gradual profit taking as
prices now rebound again
The option to hold is maintained so long as its protective
stop at the 16-day MA (35.60) is not broken

Tech Spotlight

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Page 7

PLDT-US (PHI)
Recommendation: Sell into rallies to resistance
Support: 39.69 -35.14 Resistance: 44.77 46.78/ 49.00
PLDT-US rallied $0.93 (+2.2%) pushing above next resistance
and now aiming at its next supply zones
PLDT remains into a down trend but has dribbled into a
recovery rally after coming from oversold levels
As PHI remains into a corrective trend a sell into rallies
towards resistance is still indicated
Its MACD however still shows lingering rally power and after
overbearing $42, it could put its eyes on the next resistance
zones of $44.77-$46.78
Price parity of PHI to TEL stands at ($42.95*46.355= P1,990)