The Philippine Stock Exchange Index (PSEi) closed at 7,730.45 as of December 17, 2019, Tuesday. On the Daily Chart, the immediate support is near 7,468 while the immediate resistance is near 8,360. Between these immediate support and resistance levels is a mid-term resistance at 7,884.
The PSEi has been having a hard time breaking out above 7,884 since the last week of November 2019. The most recent breakout attempts were last December 13 and 16, but all attempts led to a disappointment.
I do not see serious volume-related issues on the PSEi in the last quarter of 2019. All of its daily volume bars are higher than the 50 percent of the local bourse’s 10-day volume average.
Just like 2018, foreign investors are still net sellers year-to-date.
From January 2019 to November 2019, 7 of the 11 months ended in a Net Foreign Selling status.
The local bourse was consistent in registering Net Foreign Buying months in the first 5 months of 2019.
Even though foreign investors were bullish from January 2019 to May 2019, the P6.375 Net Foreign Selling in June 2019 wiped out the Net Foreign Buying of the prior months in the same year.
Of the 49 trading weeks since the first week of January 2019 until the second week of December this year, 28 of which are all Net Foreign Selling weeks.
If you’re going to judge the chart from January to December year-to-date, you will see a sideways-moving index.
If you will judge it from 2018 to the present day, you’ll see an index that’s still inside the downtrend channel.
If you will stretch your chart all the way to the oldest date your charting tool can give you (in my case, I can see data until 1987), you’ll see that the PSE Index is still moving inside the uptrend channel.
This is why the range of data that you’re reading is important when assessing the status of the index or individual stocks.
The PSE Index is bearish in the short-term but remains bullish in the long-term.
Do all of these suggest that you should stop investing in the Philippine stock market in the short-term?
No. The local main index is bearish but it doesn’t mean every single stock is bearish.
This is the reason why I have this stock-picking technique.
I don’t buy the entire index but individual stocks with a confirmed buy signal based on my Evergreen Strategy.
I do a test-buy within the dominant range of the stock (price range that got the biggest volume and the highest number of trades).
Once my buy order is executed, I calculate my trailing stop with regard to the percentage of risk that I can only handle.
I will only top up if and when there’s a confirmed buy signal again. When there’s one, I top up within the dominant range only and not at any random price on the ASK column.
If the price is trending down, I will assess if I need to reduce the percentage of risk of my trailing stop or completely pre-empt my trailing stop.
I am not going to average down when the price is more than likely to continue even if my trailing stop is still intact. Again, entering a new position or topping up only makes sense to me when my 10SMACD combo and Momentum Power Indicator are both bullish.
I will hold my position as long as my trailing stop is intact.
Apparently, local traders and investors are already in a vacation-mode for the Christmas season.
The chance of seeing the PSE Index above 7,900 is very slim as of the time of writing this analysis.
The chance of retesting the support near 7,400 to 7,500 is high.
As of 1:51PM GMT+8 on December 18, 2019, the PSE Index has only registered a flimsy turnover value of P2.63 billion. Of that total turnover value, 60 percent came from the foreign investors.
For now, you’re better off mirroring the strategy that I’ve mentioned above.
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Note: This is Mr. Jaycee De Guzman’s “The Evergreen Strategy in Trading and Investing in the Philippine Stock Market”.
✅ Lesson 1: how to find the stocks that you should add in your watchlist
✅ Lesson 2: how to check if the current trend is more than likely to continue
✅ Lesson 3: how to know the true market sentiment
✅ Lesson 4: how to identify a confirmed buy signal
✅ Lesson 5: how to identify the best price range to trade
✅ Lesson 6: how to sell more logically and less emotionally
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