Philippine Equity Research

Jan 17, 2018

Focus Items
Issue Highlight Page
US Pauses Asia still up, but choppiness seen ahead 2
DOW Hold core 3
PSEi Hold core; watch support stops 4
MSCI Phils ‘EPHE’ Hold core; watch support stops 5
Issue Previous Current Change % YTD % PHI Sell (pref into rallies) 6
Philippines 8,858 8,865 7.41 0.08 3.58
Peso-$ 50.37 50.49 0.120 0.24 1.12
DAY’S HIGLIGHTS
MSCI Phils 39.61 39.21 (0.40) (1.01) 1.00 • US markets were little lower; Europe was higher
PLDT US 28.47 28.61 0.140 0.49 (4.89) • Asia was mixed; China and Hong Kong resound upwards
DJIA 25,803 25,793 (10.33) (0.04) 4.34 • The US Dollar slides again, while US bond Yields ease slightly;
SP500 2,786 2,776 (9.82) (0.35) 3.85 Gold picked up slightly while Oil pulled back
Nasdaq 7,261 7,224 (37.37) (0.51) 4.64 • The PSEi climbed 7-pts; the Peso-$ was last at 50.49
England 7,769 7,756 (13.21) (0.17) 0.89
Nikkei 23,715 23,952 236.93 1.00 5.21 PSEi Trend Watcher: UP Trend
Hong Kong 31,339 31,905 565.88 1.81 6.64 Notes: PSEi and Dow back off from intraday highs
China 3,410 3,437 26.10 0.77 3.91
A strong beginning in the Philippine and US markets ended in a
US 30yr Bond 149.46 149.77 0.31 0.21 (1.43) lukewarm close as sellers took advantage of intraday strength. We
10-Yr Yield 2.552 2.544 (0.008) (0.31) 5.78 may have to expect more of this type of volatility as markets have
Dollar Indx 90.74 90.15 (0.59) (0.65) (1.83) come from overbought conditions and could be top heavy.
Gold 1,334.90 1,337.10 2.20 0.16 2.12 Markets however are taking advantage of continuing inflows
Oil 64.3 63.73 (0.57) (0.89) 5.48 which have kept market direction upwards and quite restrained
CRB Index 196.06 195.11 (0.95) (0.48) 0.64 from driving any lasting reactions… at least so far, as bullish
prospects from tax reforms and possible infra spending keep
Authored by:
investors mesmerized. But this extension will eventually have to
Juanis G. Barredo
give in to corrective motions which is a consequence to such price
VP; Chief Technical Analyst
inflatedness. Strong advances will introduce greater volatility first
COL Financial Group Inc.
before seeing lasting reactions stick. This along with support
Juanis.barredo@colfinancial.com
breaches from very short term moving averages or up trendlines
Disclaimer: All opinions and estimates constitute the judgment of COL’s Equity Research Dept as of the
can be used as warnings of corrective fact. So keep abreast with
date of the report and are subject to change without notice. The report is for informational purposes only their tellings and act accordingly when it is timely.
and is not intended as an offer or solicitation for purchase or sale of a security.
 Tech Spotlight --- Page 2
US Pauses: Asia still up, but choppiness seen ahead
US Stocks take a pause; Dollar still falls
• Looking into US markets, we saw
something similar to what happened to the
PSEi action yesterday – a push then fade
• US markets opened strong then spent the
rest of the day whipping back
• Although this may look daunting, a one day
hiccup does not yet make a trend and this
could just be a momentary pause
• If you look as similar pause days shown in
Hong Kong and China two days ago, it did
result in further advances; Japan paused or
slightly reacted for 2-3 days then rallied
• So unless support cracks are seen, the
possibility of advances moving on is still
good
• But it does not mean that we drop our
guard down – the introduction of volatility in
an advance may eventually take its toll on
upward momentum (which eventually will
cause corrective ripples to fan out)
• Use support stops to handle any risk –
placed usually at key averages or short term
reaction lows
• The US Dollar fell once again an further
imbeds its decline – oversold levels have
been reached
• US Bond Yields did pull back slightly but still
show a rising channel and this could still
keep traders on their toes (a sudden rise
here may drive some fears in markets)
 Tech Spotlight --- Page 3

US: Dow Jones

Recommendation: Hold core
Support: 25,121 - 24,702 Resistance: 25,924 - ???
• The Dow slid 10-pts (-0.04%) but remains into its high
stretch advance
• Very overbought reads are clear in both daily and weekly
charts with RSI values over 86%
• Price spreads to short term averages have also drawn too
wide and may really need to reduce such extendedness
through short term pullbacks (corrections)
• Trading positions may again be pruned for the Dow; core
positions may be held for as long as support is not broken –
short term support stops at around 25,121 is suggested
• Resistance is adjusted up to 25,924
 Tech Spotlight --- Page 4

Philippines: PSEi
Recommendation: Hold core; watch support stops
Support: 8,687 - 8,485 Resistance: 9,000 - 9,130 / 9,220
• The PSEi climbed 7-pts and whipped back after an intraday
advance of 111-pts
• The index is still in an advance but recent overbought
levels and a slight slowdown in momentum may soon
drawn in some corrective motions
• We earlier asked to take some trading profits, while core
positions may be held so long as support structures hold
• Support can be trailed upon the its 16-day MA (currently at
8,687) then its 32-day MA at 8,485
• Earlier resistance targets have been overrun; next
estimates have been adjusted to 9,000-9,130 then 9,220
 Tech Spotlight --- Page 5

US iShares MSCI Philippines: EPHE

Recommendation: Hold core; watch support stop
Support: 39.13 - 38.08 Resistance: 39.98 / 42.00 - 42.25
• EPHE fell $0.40 (-1.01%) and has slid off its aggressive up
trendline
• An almost vertical swing which cast it earlier to overbought
(OB) levels (with an RSI of 77%) has introduced some profit
taking and choppiness
• Its up trend holds but prices may soon need to adjust
closer to next support sites – we earlier asked to take some
trading profits, core positions may be held so long as
support structures are not broken
• Next support is adjusted to $39.13 then $38.08
• Resistance is seen at $39.98 (hit) followed by 42.00-42.25
 Tech Spotlight --- Page 6

PLDT-US (PHI)
Recommendation: Sell (pref into rallies)
Support: 27.82 / 6.70 – 25.90 Resistance: 31.48 – 33.40
• PLDT-US inched up $0.14 (+0.49%) and tries to hold over its
recent low; the down trend proceeds however
• The rebound may allow its decline to pause momentarily
and try to coast sideways in consolidation
• A fresh break of support ($29.15) and its Dec lows ($28.09)
has cast it back into a down trend
• Next estimated support after $27.82 is seen closer to
$26.70 then $25.90
• A new basing attempt will have to be crafted in order for a
cessation of the decline to show