ACCORD CAPITAL EQUITIES CORPORATION
GF EC-058B East Tower, PSE Center, Exchange Road, Ortigas Center, Pasig City, PHILIPPINES 1605 (632)687-5071 (trunk)
WEEKLY OUTLOOK_ XXX_July 25-29_TD 143-147
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OVERVIEW & REVIEW:
BUOYED up by the positive turn in the European debt crisis, localinvestors found renewed optimism pushing the index tosuccessively set, then reset, record highs through Wednesdaybefore the bears took control of the last two sessions. The PSEIaccumulated gains of as much as 48.3 points (1.28%) thru mid-week to an all-time intra-day high of 4,515.77, before giving upnearly 60% or 28.68 points of such gains to close out the week at4,478.36, just 0.44% over the prior five-day advance. Thisstretches the measure's run to five (5) weeks following the4,153.11 close in the week-ending June 17. The year-to-datestands at a comfortable +6.6%.As shown in the accompanying chart, the bullish headingactually began a month ago when the index fell to an intra-daylow of 4,123.70 before a mild rally ensued to close the June 14session at 4,140.27. Since then, it had been uphill, eventually pushing the index past the upper end of a 2.5 month trading band, enroute to the earlier mentioned consecutive re-writing of index level history. The bullish trend is highlighted by the rising bottoms andpeaks with the latter drawing a steeper slope of +13 versus the former's +10. At this pace, we may expect an index range of between4,380 and 4,580 this week. A possible break of the 4,600-line in the next 10-15 days (2 to 3 weeks) is likely.A quick glance at four (4) commonly tracked technical indicatorsposits the possibility of a sustained drop in the early part of theweek, as the market eases of overbought territories.Nevertheless, we note that since the surge in the last two weekswere principally driven by aggressive trading in third-line,speculative counters on the back of rumored acquisitions,projects, backdoor listings and/or capital infusion by foreignentities, we may see a discernible shift towards second-line andtop-line issues, preparatory to the earnings reporting season. Infact, in the two days that closed the week, this was a bit evident.We expect this trend to become more dominant in the weeksahead.RSI(14) – top chart -- has consistently topped at just below theoverbought 70-line since the first week of May. Over the recentweeks, the pick up point has, alternatively, been defined at the55-58 range. RSI(14) stood at 64 after Friday's trades leavingsome room for a further slide, which in turn opens up the idealbuying window.STO(14,3,3)-- 2
from top -- drew a negative crossover of thetrigger line, an early indication of a slide. This happened after Thursday's slide to 4,480 and extended to Friday's drop. The measure isstill in overbought region with a 92.15 reading. Again, this supports the earlier proposition of an early weakness in the market as“excesses” of the previous run is shed.MACD(12,29,6) -- 2
from bottom -- adds another hint of such weakness, at least at the beginning of the week. The line is almost flatwith a slight negative bias. Nevertheless, the signal line remains healthy, sustaining an uptrend that started during the final week of lastmonth, four (4) days before the index broke above the 2.5 month consolidation band. That day also marked a positive cross-over of thesignal line, with the indicator emerging into positive territory. The bottom chart shows the Accumulation-Distribution Line which obviously suggests the bull are winning out. Value flow has beenconsistently greater on the upside for this lines to drawn as it is. The slight drop at the tail-end, coinciding with the last two sessions of last week, has not been sufficient to suggest a potential break of the present trend which indicates an accumulative bias.Over-all, these indicators tell us that the market remains a good buy over the medium and long-term. The negatives are kept at theshort-term, given that the market had made significant advances without a major correction. In the same breath, such anticipatedweakness should not be a cause of worry for investors, but rather be an opportunity to selectively pick up stocks and redefine theirportfolio from the recent speculative binge to more fundamentally sound counters.
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