StockWatch (Sep 3-7, 2012): PSEi

PSEi (Chart: Daily      Resistance:5230/5280             Support: 5110/4880)

The index broke down from the symmetrical triangle 2 weeks ago, and its downward target level is near 4880 which is also the line of the 200 day moving average.  

So the question is, will the index plunge down to the 280 day moving average? 

Currently, thanks to the 100 day moving average, the index is still hanging on that line. We could see that even if the index moves lower than the 100 day moving average, it still manages to close near the 100 day MA.  So there are still a relatively stronger force in the market that is preventing the index from further breaking down.

Where the market will head to on the short term is something that could not be ascertained, as we have been moving sideways on the short term for the past 2 weeks. 

On the long term outlook, we have a strong downward trend given that the index broke down not just from the symmetrical triangle, but the 10 and 50 day moving average.  If the index breaks above the 10 day moving average (or the 50 day MA), this is not yet a sign of resumption of the upward movement because we still have the previous support turned resistance line blocking the index’s way.

On the top of the chart, you could see a blue and green line. The blue line represents the R-squared and the green line represents the linear regression slope.   The green line shows the trend, a positive (above zero green line) or negative trend (below zero). The blue line shows the strength of the current trend. 

The green line confirms that we are on a downward trend. The blue line tells the strength of the downward trend, and right now, it confirms that the downward trend is strong, which re-affirms the break down from the symmetrical triangle, 10 and 50 day MA. 

What is interesting though is that the green line seems to be arching its way upward, which means we are having some positive trend, the big BUT is that the blue line seems to be moving downward.  Putting those two lines together means, we may be having some positive upward movement, BUT, the movement might not be that strong. 

Do watch out for a bounce and retracing of the index back to the resistance line near 5230.   If the index is unable to move above the resistance line, it confirms what the green and blue line seems to be indicating.