StockWatch (May 31- June 4, 2010): PSEi

PSEi (Chart: Daily Resistance: 3343 Support: 3095)

Looks like the battle between the bulls and the bears is still very much evident on the index. As we can see the index bounced from the low of 3093 to close with a large spread last Friday. However, again the resistance line from June 2008 is still blocking the index’s progress. We may be seeing another short upward move with the MACD crossing just a little above the signal line and then move downward again.

There is opportunity in the short upward movements of the index, but as can be seen in the chart, there a very obvious bearish divergence and it would just be a matter of time before the index moves further south, so be very cautious in trading a you might end up getting a stock at the top.

The triple top displayed in the chart did not materialize because of the recent short rally, but in the coming week’s trading, there is still another possibility of a triple top formation with the top forming again near the resistance line from June 2008. You may also view the recent formation as a sideways channel with the support near 3070. A break below this line might take the index down to below 2800.