Technically Speaking August 16, 2021

PHIL. STOCK EXCHANGE INDEX (PSEi) TECH SPEAK 1 TECH SPEAK 2

Market-on-close (MOC). It is an order Index Rebalancing. It is a periodical

PRICE – 6,320
type that is entered 15 minutes prior to
session close (market auction) with the
TREND – POSSIBLE REVERSAL intention of having one’s orders
matched during market run-off at the
TARGET – TO 6,700 final closing price.
TECHNICAL INDICATORS The auction process that can use the
day’s static low and high prices can
cause volatility and result to a
MACD
significantly different final price from
the last dealt price. Because of this,
SMA(50/200), PARABOLIC SAR, MOC’s potentially can create price
RSI, VOLUME distortion.
CHART 1
review of major benchmark indices that
involves the realigning of the
composition and weightings of its
assets. As there are various funds
around the world that follow or
replicate these indices, a slight change
in its component will cause funds to
amend their holdings; and thereby
impacting the price of the stock
involved. The MSCI index is a popular
example. Meanwhile, our very own
PSEi is used by a lot of our local funds.
This is reviewed semi-annually;
February and August.

6,700 level

BREACH
-3.4%
WoW

6,270

Short-Term Commentary – “Keeping an Eye”

After breaching the downtrend channel, we ended the previous week with a possible flag pattern; of which, we mentioned
that the mini consolidation that closed that week was likely to be a temporary pause before the market decides to trek back
towards the 6,700 level. True enough, the market started the week strong as the PSEi rose and closed at 6,667 by mid-
week. The short-term uptrend line was intact until it was breached on Thursday when the index closed at 6,557. Come
Friday, the local benchmark was holding well above 6,500 throughout the day until the market-on-close session (refer to
Tech Speak) dragged the market down as a result of massive selling; 3.4% lower Week-on-Week, and nearly erasing the
index’s Month-to-Date gains. One major reason: PSEi rebalancing (Tech Speak 2) which takes effect today.

Hence, we deem today as another crucial day for PSEi to make a comeback from last Friday’s close. In this case,
however, the PSEi has two (2) possible paths. First, it will retest its previous support at 6,270 before bouncing back. Or
second, it will simply ascend from previous session’s close. Either way, a rebound is likely to happen given the sharp and
distorted decline last week. Note also that the MACD’s attempt to recover back to the zero line is far from being done.

Whether or not this potential rise is truly a dead cat bounce, it is something that we will keep a cat’s eye on. Roar!

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