Presented by: Juan G. Barredo Chief Technical Analyst COL Financial 2013: 1 ST HALF TECHNICAL OUTLOOK

Transcription

1 Presented by: Juan G. Barredo Chief Technical Analyst COL Financial 2013: 1 ST HALF TECHNICAL OUTLOOK

2 MARKET OVERVIEW Global markets have continued to reflect positive trend swings There is however the lingering problem of being overbought - expanding the threat level of corrective risk if not greater volatility But as short term up trends still tow the line, up trending strategies remain so long as key support stops are not broken

3 GLOBAL REVIEW

4 US: RANGE BOUND CHANNEL CONTINUES US SP500 US SP500 continues with its channeled advance but nears its major resistance; decision up ahead SP500 Review Is proceeding to trade within an advancing channel as upward momentum still exists Sup: 1,460 1,400 Res: 1,550 1,600 The upwards cascade may drive a trading range between 1,550-1,600 and 1,460-1,400 However overbought levels are near and major highs last seen in 2007 & 2000 (at 1,576) may present some short term problems

5 US: STOCKS AND BONDS 10-Yr Bond US Bonds are reacting from long term trend highs; could this motivate the SP500 above major tops SP500 Fed Bond Buying Program (QE1, QE2, QE3)

6 CROWD SENTIMENT VIX confirms incidence of Over Bullish sentiment and Over Complacency = prologues to temporary tops VOLATILITY INDEX (VIX)

7 OBSERVATIONS The SP500 is nearing a major decision point With Overbought threats and major Resistance nearby - it does call for greater degree of caution and readiness (just in case short term support structures break) If major resistance can break, coupled with more reactive substance in bonds, it could effect an extension of the equity advance

8 EUROPE & CHINA: RESISTANCE UP AHEAD Europe and China proceed to rebound but may face a heavy obstacle into their range highs Dow Jones EUROPE INDEX CHINA

9 INTEREST RATES: PROCEED TO REMAIN LOW Continuing Down Trend in I-rates = Stimulating Flows

10 INTEREST RATES: A BOTTOM CAN BE BULLISH Even if rates pick up, it will only jolt the market temporarily

11 CURRENCIES: EURO & DOLLAR AT MIDPOINTS A Recent overbought Euro corrects within a wide band; while the side-pinned US Dollar tries to stage a foothold in support EURO INDEX US DOLLAR INDEX

12 COMMODITIES: METALS SHOW VARIANCE Industrial Metals show strength in line with the global recovery; Precious Metals sag for now COPPER GOLD SILVER Sup: Res: Sup: 1,600-1,571 Res: 1,700-1,785 Sup: Res:

13 COMMODITIES: ENERGY PRICES RANGED Oil tests first resistance at $99 then $105; US Gas tests major highs; Natural Gas reacts off its rally OIL US GASOLINE NATURAL GAS Sup: Res: Sup: Res: Sup: Res:

14 OBSERVATIONS Headwinds may exist if major resistance calls upon a pullback in Europe and China Although the Low I-Rate environment should keep money flows open for the longer term for equities This longer term bullish view is favored by the continuing recovery in Industrial metals The Euro & Dollar may be treading on a short term inflection point with a 60% chance of a resistance break scenario into the greenback as suggested by the pullback in precious metals (this could present a short term threat to US Equities)

15 PHILIPPINE MARKET REVIEW

16 PHILIPPINES: STRONGER PERFORMANCE PHILIPPINES - PSEI PSEi continues its bullish run with high momentum overshadowing high RSI (Overbought) levels PSEi Period RSI* ADX** Daily Weekly Monthly *RSI levels above 70 are considered Overbought; 80+ are more extreme zones that can trigger reactions ** ADX levels (taken from DMI indicator) greater than 30+ indicate high momentum trends that can nurture extended overbought levels

17 FOCUS PHILIPPINES: PSEi shows an aggressive channel & stands above short term support; these support zones should hold stops PHILIPPINES - PSEI PSEi Aggressive swing induces the use of sharper averages for support stops Watch short term support placed by its 8-day (6,478) or 16-day (6,385) Moving Averages Short term resistance estimated at 6,650 then the psychological 7,000 Wider corrections may target the 32 to 65-day Mov Averages

18 IF HISTORY CAN TELL SP500 ( ) Bottom Adjustments necessary to reorient the confines of the upward band PSEi Today Bottom

19 PHILIPPINE PESO: POWERING ON Peso breached the P41.00 level and may scope the lower end of its channels at P P39.40 PHILIPPINES - PESO Sup: Res: PESO Proceeds to Trend down (stronger Peso versus Dollar) Channel pattern proceeds but could be occasionally tempered by a temporary rebound in the Dollar Rallies to short or medium term resistance make good selling (Dollar) spots

20 OBSERVATIONS PSEi continues with its Up Trend and has shown no support lapse as of yet The Peso strength mirrors (and confirms) the country's progressive path We may be coming towards a short term bump ( chance of rain ) as major resistance zones from a number of markets & Overbought levels may need to draw out some reactive fixing Until such time however (signed on by key breaks into short term averages), aggressive trade tactics are still warranted protected by short term stop assignments

21 NOTES ABOUT POTENTIAL REACTIONS: Profit taking does not automatically translate to mean distribution People may only be safeguarding gains and are not necessarily becoming bearish Key moving averages (i.e. 32 & 65-day MA) are all secure price reactions above these averages are only corrections and are not major fallouts nor down trends These merits should keep buy back options open especially on rebounds from pullbacks to short term averages

22 TRADING STRATEGY Trade Aggressive Markets with Aggressive Means Rules of the Aggressive Trade (1)Identify strong durable picks High ADX >30 Rebounds from Prices supported above 16-day or 32-day Moving Averages (MAs) Positive MACD values Preferably with RSI below 80% Buy Window

23 TRADING STRATEGY Trade Aggressive Markets with Aggressive Means Buy Window Buy Window

24 TRADING STRATEGY Trade Aggressive Markets with Aggressive Means Rules of the Aggressive Trade (2)Always utilize protective stops Adjust profit take stops preferably to 8, 16, or 32- day MAs (depending on the acceleration seen) Qualify your buy-backs your issue must show your aggressive parameters again if not look for another option Stop Triggered No Buy-Back Poor ADX

25 TECH MAP IDEAS Legend: Up trends: These issues show continuing if not strong up trends much of which seem to be technically stable and open to trading buys if risk-reward measures are appealing. Up trends needy of reactions or are reacting: These issues show continuing up trends but a recent up stretch could show (or is now showing) vulnerability to some profit taking and reactive adjustments. Wait for a pullback to short term support or a rally from it to cast fresh buy trades. Consolidations (Sideward trends): These issues are running through consolidation phases await key range breaks for new trend action. Stay sidelined for now but keep watch of these (*) potential range breaks (up or down). Down trends needy of rallies or are rallying: These issues show continuing declines but a recent fall off could inspire (or is engendering) a temporary rebound wave. Lighten or sell into rebounds to resistance for now. Down trends: These issues show continuing if not strong down trends much of which seem to be technically stable. Stay out for now until a better demand pattern appears. GREEN RED BLACK -These issues improved their technical condition for the week (moving to the left of their column category on the Tech Map) -These issues regressed on their technical condition for the week (moving to the right of their column category on the Tech Map) -These issues carried the same technical condition for the week (standing on the same column category on the Tech Map)

26 SOME QUALIFIED PICKS Some Qualifiers from our Tech Map s Up Trends All Parameters Satisfied Missing Parameter *Data taken as of 2/18/2013 Disclaimer: All opinions and estimates constitute the judgment of COL s Equity Research Dept as of the date of the report and are subject to change without notice. The report is for informational purposes only and is not intended as an offer or solicitation for purchase or sale of a secur ity.

27 SUMMARY Philippine Up Trends proceed with support intact Overstretched conditions or/and possible short term resistance bumps may incite some profit taking incidents but these reactive bouts should not force on a major trend reversal As Macro trends do stay prospective - reactions to support will present better buy windows Aggressive markets will warrant Aggressive trades all justified by the use of protective stops and strong filtering mechanisms to curb any potential risk

28 JUAN G. BARREDO CHIEF TECHNICAL ANALYST It requires a great deal of boldness and a great deal of caution to make a great fortune, and when you have it, it requires ten times as much skill to keep it. Ralph Waldo Emerson Thank You!