Philippine Equity Research Focus Items Issue Highlight Page US rallies/psei rotates DOW PSEi MSCI Phils EPHE Issue Previous Current Change YTD % PHI

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1 Issue Previous Current Change % YTD % Philippines 7,716 7,674 (41.82) (0.54) 6.14 Peso-$ (1.30) MSCI Phils PLDT US (1.260) (1.79) 9.31 DJIA 17,673 17, SP500 2,042 2, Nasdaq 4,717 4, England 6,860 6, Nikkei 17,679 17,505 (174.12) (0.98) 0.31 Hong Kong 24,680 24, China 3,174 3,137 (37.60) (1.18) (3.03) US 30yr Bond (1.58) (0.99) Yr Yield (16.36) Dollar Indx (0.57) (0.60) 3.38 Gold 1, , (4.40) (0.35) 6.91 Oil (5.19) GTX 3, , (4.08) Authored by: Juanis G. Barredo VP; Chief Technical Analyst COL Financial Group Inc. (632) Juanis.barredo@colfinancial.com 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 security. Philippine Equity Research Feb 6, 2015 Focus Items Issue Highlight Page US rallies/psei rotates Watch momentum 2-3 DOW Range trade (watch resistance) 4 PSEi Hold; watch stops 5 MSCI Phils EPHE Hold; watch stops 6 PHI Hold; watch /target next resistance 7 DAY S HIGLIGHTS US markets climb and test resistance; Europe was mixed Asia was mostly lower with but a few advancing indices The US Dollar index slipped as did US Bonds; Oil jumps 4.5% The Philippines PSEi softened by 41-pts and show some momentum loss Trend Watcher: Consolidations and Up Trends Notes: US indices push at resistance; PSEi show some momentum lapse leading into rotation and choppy action US markets did well lat night pushing up over 1% and now engaging resistance in a tight battle. A further push upwards is necessary to drive more impact into the resistance attempt and convince more towards the possibility of finally ending its consolidation swing in favor of a continued advance. A pullback in US bonds does lend to this idea as well as we see some shift back into equities. However part of the US rally was triggered by Oil companies recovering due to the rebound in Oil prices. This may play out mixed reads for the Philippines as the extension we saw in advances were keyed in by lower oil prices. Thus with Oil recovering, it may drive some varied swings here as well. The index is showing some momentum lapse which could likely coerce rotational swings and force us to rely upon momentum reads to sift through stock picks in our market.

2 US markets knock on resistance; Dollar slips Oil rallies US markets pushed up with the Dow breaking one of its earlier highs (but still in consolidation) while the SP500 and Nasdaq have rallied back to a crucial resistance This situates the market well for a solid attempt to break free but the decision will have to be prompted by an actual breakout as their market shows no momentum build up yet and has been thwarted twice at this critical price spot... Keep you fingers crossed As a bonus indicator we do see the US 10- yr Bond wavering into corrective swing (shown by a MACD cross down, trendline break and bearish divergence into its RSI) which could push the idea that investors are shifting back to take more risk and move further into stocks Other noteworthy issues to consider is that the Dollar index has indeed proceeded with its corrective drive and now slips below its 16-day MA support perhaps looking next at Finally Oil prices (+$2.2) continued on with its recent volatility and jumped up 4.5% to close at $50.92 this may also render some weight on local issues driving earlier benefit to its recent fall Tech Spotlight --- Page 2 US rallies/psei Rotates: Watch momentum

3 Philippines shows rotation signs - drives the need to watch momentum With the Index losing some upward steam, it seems that movement into the local market seems to be shifting into rotation This prods forth reactions from early movers and counter rallies from late comers or from those just finishing some pattern build ups Traders may have to rely or stick with issues showing stronger MACD formations to benefit from momentum runs while keeping on guard against those showing weak momentum reads Strong MACD reads are shown when MACD and signal lines are upward pointing and staying wide (with histogram bars also showing wide upward spreads) Frail or vulnerable MACD reads are shown when the spreads of MACD and signal lines are curving down or narrowing Weaker readings in MACD are shown when MACD and signal lines are crossing down (and with histogram bars declining or dropping into the negative) MACD Signal Tech Spotlight --- Page 3 US rallies/psei Rotates: Watch momentum Histogram Strong Vulnerable Weak

4 US: Dow Jones Tech Spotlight --- Page 4 Recommendation: Range trade (watch resistance) Support: 17,067-16,856 Resistance: 17,923-18,103 The Dow pushed up 211-pts breaking off from its reactive channel but still plagued by two resistance spots nearby The index proceeds to consolidate but now shows better impetus to move on A range trade is maintained given the proceeding pattern and would either offer a trading buy into a support bounce or if prices can push over 17,923-18,103 The reason for the non-aggressive stance is because the Nasdaq and SP500 have now closed in on resistance and have not yet broken (see page 2) Thus one more step over next resistance would add better traction into the effort to move forward MACD reads have improved but is still below zero a further resistance break should overturn this for the better

5 Philippines: PSEi Tech Spotlight --- Page 5 Recommendation: Hold (watch stops) Support: 7,567-7,400 Resistance: 7,700 7,800 / 8,000 The PSEi clipped off 41-pts but maintains its advance, however is dealing with some loss in upward momentum As such it badly needs to respond positively to the upward action from the US for fear that too long a momentum lapse could trigger wider pullbacks Short term support is hoisted to 7,567 followed by 7,400 Its MACD still shows a recovery wave and despite the stretch, still observes a Hold with the plan of raising stops to short term support But momentum seems to petering off and with prices close to overbought areas may proceed to also show volatility and drive issue rotation The index may later step up its target drive looking at 8,000 as a cast into the next 6-months

6 Tech Spotlight --- Page 6 US ishares MSCI Philippines: EPHE Recommendation: Hold (watch stops) Support: / Resistance: The MSCI Philippines rose 0.27-pts (+0.66%) and maintains its upward course However near overbought levels and slowing momentum may proceed to show turbulence and should draw out some carefulness this may ask for some position pruning especially if the rally extends a little more or if stops break But as MACD reads still show rally spirit and support stops have not been broken a Hold does remains can now be used to host its protective short term stop Our target next target estimate of was almost hit the other day (with its intraday high of 41.40); after this and perhaps into a later swing, a possible push to may be enacted

7 PLDT-US (PHI) Tech Spotlight --- Page 7 Recommendation: Hold (watch / target next resistance) Support: Resistance: PLDT-US lost $1.26 (-1.79%) clipping back a significant amount of its previous days gains The breach over most of its averages provided should provide momentum to close in on its next target zone of MACD readings still show the rally swing proceeding but it could be that because overbought levels (RSI at 74%) were reached that a temporary reaction was necessary Adjust stop to its recent resistance break zone of then trail on its 16-day MA (currently at 67.33) when this is higher Price parity of PHI to TEL stands at ($69.18*44.14 = P3,053)