Riding the Bucking Bull

COL PRESENTS:
1st HALF 2012
TECHNICAL
MARKET
OUTLOOK

Presented by:
Juanis G. Barredo
VP and Chief Technical Analyst
CitisecOnline.com Inc
Market Overview

• Markets have generally moved higher

picking up in confidence
• Liquidity flows have enhanced upward
swings
• Philippines’ outperforms… but
extended swings may press for
temporary corrections
Market Overview

• Such corrections should not break

major up trends
• Aggressive trade tactics are in mode
and will keep activated so long as
momentum runs high
Uneven paths proceed
Global advances proceed… with
some breaking last years’ highs

PHILIPPINES US
Uneven paths proceed
With some still in the tow… as they
still try to recover to ’10-’11 highs

GERMANY BRAZIL
Uneven paths proceed
A few others in the back row…

CHINA

INDIA
Liquidity Flows… Interest Rates

Global Interest Rates Trend Down

Liquidity Flows… US Bonds

US Bonds falter  risk tolerance

increases = more funds flow

Range:
126-122 / 132-133
Liquidity Flows… US SP500

The SP500 flows upward strongly

aided by liquidity

Range:
1320-1280 / 1425-1550
Liquidity Flows… US Bonds vs SP500

Since 2000 = inverse relationship

10-Yr Bond

SP500
Liquidity Flows… Currencies

US Dollar rebounds & presses on the

Peso… but shows some strength

USD Range: 78-77 / 84 Peso Range: P42.00 / P44.00

Liquidity Flows… Currencies

Gold weakens as Inflation tames and

Dollar rebounds… Oil flows up

Gold Range: $1,550/$1,800 OIL Range: $92.50/$115-$125

Observations

• Global recovery trends see the ff:

• Low rates
• High Liquidity
• Tempered Inflation
• Supportive of medium to long term
growth for stocks
Further Observations

• Although Medium to Long term trends

bode well; Short term adjustments will
be needed
• Recent run-ups are reaching extended
proportions that may be soon subject to
profit taking (and is quite overdue
because of excess liquidity flows)
6-month Performance

The Philippines has managed to

outperform in the last 6-months…
6-month Performance
From the worst to the best… all in six
months
Percent Change in the last 6-Months
PSEi
SP500
Emerging Markets
Broad View

All Share Index widens spread to its

short and medium term averages
6-month Performance

Wide Price to 32-day MA spread may

induce short to medium term corrections
4% and 8% Thresholds
14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
Reviewing the PSEi

PSEi also shows some elevatedness

but its up trend remains clear
Support:
(1) 4,900
(2) 4,790

Resistance:
(1) 5,220
(2) 5,310-5,500
Reviewing Sentiment

How is the crowd looking?

Too Bearish Overly Short

Too Bullish Overly Long

Volatility Index ($VIX) Put-Call Ratio ($CPC)

Mapping Markets

Elliot’s Wave 3:
Breaking recent
highs and
looking for new
resistance

Bear Bottom
Mapping Markets
Elliot’s Wave 3:

• Wave three is usually the largest/longest

• As wave three starts, the news is probably
still bearish as viewed by most market
•With the advent of positive news, analysts
start to raise earnings estimates
• On the later end, prices rise quickly &
corrections are short-lived. Buying
opportunities on worthy pullbacks are rare
If history can tell…

Bottom
Strategy

• Stay tuned to the advancing theme

• Reactive and Rotational swings can be a
traders window
• Be alert of overbought conditions but
don’t let it pin you down – Risk can be
controlled by volume moderation and the
proper use of stops
• Volatility and weaker momentum should
announce more dangerous times
Strategy
Metrobank
1) Buy closer to rising
support of MAs or
Trendlines
2) Prefer strong
momentum reads
in MACD and ADX
(> 30)
3) Wait for reactions
or slight
consolidations from
overbought zones
(RSI 70+)
4) Raise your stops
Strategy
Metro Pacific Inv
1) Buy closer to rising
support of MAs or
Trendlines
2) Prefer strong
momentum reads
in MACD and ADX
(> 30)
3) Wait for reactions
or slight
consolidations from
overbought zones
(RSI 70+)
4) Raise your stops
Strategy
Oriental Peninsula Res.
1) Fast markets require
faster signals
2) Use an 8-day MA for
stops or last reaction
lows
3) Be very diligent in
watching volume:
*small to no volume
= no trade
* Volume spikes or
dry ups may be
dangerous
Eyeing the Technicals

Tech Review of some of our Fundamental Picks

Short Term 16-day 32-day
Price Code Trend Status MA MA RSI ADX

Metrobank 88.1 MBT UP 84.58 83.58 63 38

Metro Pacific Inv 4.1 MPI UP 3.77 3.65 73 39
Ayala Corp 422.8 AC UP 414.86 403.27 62 36
Alliance Global 13.1 AGI UP 12.18 11.42 70 40
Ayala Land 21.45 ALI UP 21.02 20.32 57 44
Bank of the PI 75.45 BPI UP 72.31 69.82 71 45
Robinsons Land 17.22 RLC UP 16.02 15.6 72 43
Manila Water 23.55 MWC UP 22.5 22.27 72 36
FilInvest Land 1.32 FLI UP 1.23 1.22 71 39
EEI Corp 5.67 EEI UP 5.39 5.28 65 40
Megaworld 1.9 MEG UP 1.83 1.77 61 19
Eyeing the Technicals

Technical Guide Up Trend List

Financials Commercial Conglomerates Consumer Mining/Oil Property Services Telecom
BDO ABS AC AGI NIKL ALI WEB UP
BPI AP AEV JFC MARC FLI PAX
CHIB CMT FDC SMB ORE MEG
MBT DMC FPH URC NI RLC
PNB EEI JGS RFM TA SMPH
PSE GMA& LPZ FOOD PNX VLL
RCB HLCM MPI OV
SECB ICT
UBP MWC
NRCP SCC
ACR
AGP
Review

• Markets maintain bullish trends

• Liquidity driven swings will foster
extended up swings
• These may be open to price reactions or
corrections soon
• But as up trends direct, look for key buys
into reactions that preferably drive to
short term support or off consolidation
sways
 Juanis G. Barredo
VP and Chief Technical Analyst