StockWatch (May 11-15, 2009): PSEi

PSEi (Chart: Daily Resistance: 2270 Support: 2060)

The index’s movement last week was very impressive. I was expecting that the trading last week would follow the same trend where a sell down would happen at the start of the week and recoup on the last trading days of the week. This time the index moved higher for the whole week and just fell short of moving past the 260 day MA (green line).

Next week’s action is anybody’s guess. The RSI is again overbought and currently the 260 day MA is acting as resistance for the index. I’m not sure if the bullishness can extend further next week, but I’d be cautious in trading just incase the recent bullishness does not follow through.

Also 2 gaps has already formed since the start of the rally, so I’d be on the look out for a possible island reversal.

I’m still skeptical on the recent bullishness, probably because I was fixated on the negative divergence between the RSI and the Index. But the chart is showing a different story now, so let’s see where this would take us for the following weeks.