TechSpotlight Mar 30, 2016

8/18/2019 TechSpotlight Mar 30, 2016

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Authored by:Juanis G. BarredoVP; Chief Technical AnalystCOL Financial Group [email protected]

Philippine Equity ResearchMar 30, 2016

Disclaimer: All opinions and estimates constitute the judgment of COL’

s Equity Research Dept as of thedate of the report and are subject to change without notice. The report is for informational purposes onlyand is not intended as an offer or solicitation for purchase or sale of a security.

DAY’S 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: ConsolidationsNotes: US markets climb… a drive and draw? The US Federal Reserve offered to stay cautious in raising rates aseconomic signals were not yet too suggestive of having to be toaggressive on rates. US stocks and Bonds rallied to this tone butput pressure into the Bond Yields (a precursor to i-rates) and theUS Dollar (which fell hard last night). This activity resulted intothe Euro climbing and could also put recoveries into other Asiancurrencies as well. Although this may not be good for Japanesestocks (who likes a weaker Yen), it could lend some helping handinto some Asian markets. But again we should keep watch ofcertain technical lapses into the US, European and perhaps someAsian markets whose recent rallies have now reachedoverbought zones, major resistance points and are accompaniedby vulnerable MACD formations. Manage positions graduallydown (for mainline issues) then wait for better setups.

Focus ItemsIssue Highlight Page

A retest of resistance? Keep close watch of things… 2-3DOW Range trade watch for resistance 4

PSEi Range trade (take some profits into res) 5MSCI Phils ‘EPHE’ Range trade (take some profits into res) 6PHI Sell into rallies to resistance 7Issue Previous Current Change % YTD %

Philippines 7,335 7,274 (60.12) (0.82) 4.64Peso-$ 46.34 46.355 0.015 0.03 3.66MSCI Phils 36.21 36.75 0.54 1.49 8.92PLDT US 42.02 42.95 0.930 2.21 2.92DJIA 17,535 17,633 97.72 0.56 1.19SP500 2,037 2,055 17.96 0.88 0.54Nasdaq 4,767 4,847 79.83 1.67 (3.21)England 6,106 6,106 (0.58) (0.01) (2.19)Nikkei 17,134 17,104 (30.84) (0.18) (10.14)Hong Kong 20,346 20,366 20.69 0.10 (7.06)China 2,958 2,920 (37.99) (1.28) (17.50)US 30yr Bond 162.83 163.76 0.93 0.57 7.1910-Yr Yield 18.7 18.14 (0.560) (2.99) (20.05)Dollar Indx 95.94 95.15 (0.79) (0.82) (3.65)

Gold 1,221.80 1,242.50 20.70 1.69 17.16Oil 39.3 38.49 (0.81) (2.06) 3.83GTX 2,145.31 2,121.55 (23.76) (1.11) (2.26)

mailto:[email protected]:[email protected]


2/7

A retest of resistance? Keep close watch of things… Tech Spotlight --- Page 2

Dollar falls as Yields fall; the Euro, US bonds andGold climb, Oil still slippery:•

Last night US index action motioned to climb,seemingly reawakening it rally spirit… • But overbought levels and a MACD slowdownsuggests we keep a wary eye on things as thesetypical ‘slowdown’ maneuvers by the MACDcommonly result in wider/longer corrective shifts• Moreover we saw some corrective activityrekindle 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 andGold rebounded from within a consolidationrange – though Oil was not positively responsive,and in fact slid by over 2%• As much as US stocks rallied to the note ‘thatthe Fed may be more cautious in raising rates’ – alook into why Yellen offered such restraint may be just as important

• It suggests growth and inflation may not be toostrong to worry about – and if so can it justifyprices rallying as such a pace• Well given the US overstretched situation andflailing MACD reads, along with Bonds taking inpick up action (possibly siphoning interest fromequities), it would be strategic to be alert of rallyweak spots, short term toppish signals, andadvanced signs of fragility and manage positionsaccordingly in preparation for possible reactivedrives and increasing volatility


3/7

A retest of resistance? Keep close watch of things… Tech Spotlight --- Page 3

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 haveto be watchful for a short term top• Tops, usually, like bottoms form a two stage process as aadvance slowly turns sideways then possibly down – as suchtwo highs are commonly produced• The second high of which can normally give you a goodgauge how the reaction will unfold – a higher 2 nd highusually shows strength and durability while a lower-highshows sellers have prepared to motion aggressively and

could waylay prices more as a consequence• Moreover if prices break through the 1 st higher, it couldextended the rally motions a li ttle while longer – this mayalso provide a little more trading window and cold allow foran extended overbought period for a little while longer• Protective stops to manage through rally extensions can beplaces on the zone exhibited by previous highs (Stop)• In a weaker scenario a 2 nd top is usually drafted with asimilar or lower-high and this airs out the growing intensityof the seller… and as such would carry off a heavier pullbackin its correction• Protective stops can be placed at recent lows as a break ofthis should confirm the susceptibility of support• Thus if such reversal formations do show, it may be a goodidea to lighten down on positions in preparation of a widercorrective event

Possible Topping Gestures

(From a strong recovery)

(Less forceful varieties)

Stop

Stop Stop


4/7

US: Dow JonesTech Spotlight --- Page 4

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 (asshown 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 potentialeffects of overbought levels which could foster growingchoppiness and profit taking soon

• R1 and R2 areas (17,670-17,860) may be good zones to takesome profits into but hold a good size of positions to ridethe rebound up to targets or until your protective stop atthe 16-day MA (17,345) is broken


5/7

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 majorresistance 7,400

• Overbought reactions usually stop advances for a few daysthen attempt to retest resistance – a failure to durablybreak over resistance would commonly drive a short term

top (this is why major highs and lows are usually carriedout 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 somegradual profit taking… this should provide the advantage ofhaving some cash to buy back in case of wider reactions

• Given the prevailing high momentum, the chance for atrend extension is possible looking for its next resistancezones of 7,400-7,697 – though some choppy swings mayyet be expected as it the case of double tops (see page 3)

• So the option to hold core positions is maintained so longas its protective stop at the 16-day MA (7,145) has notbeen broken

Tech Spotlight --- Page 5


6/7

US iShares MSCI Philippines: EPHERecommendation: 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, itstill faces corrective risk despite last nights rally

• Resistance is estimated to be between $37.03-$37.14 andthen $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 correctivesway which could ask for some gradual profit taking asprices now rebound again

• The option to hold is maintained so long as its protectivestop at the 16-day MA (35.60) is not broken



7/7

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 arecovery rally after coming from oversold levels

• As PHI remains into a corrective trend a sell into ralliestowards resistance is still indicated

• Its MACD however still shows lingering rally power and afteroverbearing $42, it could put its eyes on the next resistancezones of $44.77-$46.78

• Price parity of PHI to TEL stands at ($42.95*46.355= P1,990)


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TechSpotlight Mar 30, 2016