PSEi (Chart: Daily Resistance: 5040/5090 Support: 4960)
The index is still following the upward channel that was established since Jan of this year. The good thing is that the market is a little bit predictable because it is following a channel pattern. But the bad news is that the index is still creating more negative divergence as the index creates new highs.
The new negative divergence is again visible in RSI, MACD and Stochastics, with the index moving higher, but those indicators are moving lower.
Aside from the negative divergence, it seems also that there is relatively lesser value turnover compared to value turnovers for the past month, which means lesser money is being played in the market.
Looking at the weekly chart, we can see that there is now a hanging man formation. A hanging man formation is a bearish indicator and is usually seen on upward trends. This usually marks the top of the trend. However, a hanging man still needs to be validated by further indicators.
For next week, for the risk averse, I would suggest that you stay on the sidelines for now. There are lots of negative indicators being displayed in the chart and if you are not quick enough to react, this may cost you. For those who still would want to ride the market, I would suggest that you religiously observe the current resistance and support levels of the upward channel.
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