PSEi Retests the 61.8% Fibo Retracement: Here’s My Advice

Stock Analysis -

In my article last February 5, 2018, I said:

But don’t expect a rebound to happen so soon. PSEi has been experiencing 7 consecutive days of net foreign selling. Consider the sentiment coming from the bigger global markets. The Exchanges in the US and Europe closed mostly in red. If you’ve been trading for a while now, you should have already noticed that PSEi is kind of piggy-backing the sentiment coming from bigger Exchanges particular those in the US.Jaycee De Guzman

Watch out for the immediate support near 8,440. If PSEi failed to protect that level, we might the see the main bellwether index near 8,310 before 8,150.

PSEi - Feb 9, 2018

I retain the same bearish sentiment based on what I see on PSEi’s chart. Dow Jones went down by 4.15 percent, S&P by 3.75 percent, and NASDAQ by 3.90 percent on February 8.

Back to PSEi, foreign investors have been selling for the past 10 trading days. Foreign investors withdrew P11.6B worth of investments from the PSEi basket over the past 10 trading days.

Look at the volume chart below. The outflow of foreign funds is supported by volume. What does that mean in layman’s terms? Investors are decided sellers in as far as what I see is concerned.

PSEi - Volume - Dec 11-Feb 18 2018

After all these bearish sentiments, let me give you a bullish news. Because of the towering net foreign buying registered last January 12, 2018, PSEi is on a Net Foreign Buying worth PHP5,806,902,524.60 on a 30-day trading period.

PSEi - Foreign Fund Flow - Dec 11-Feb 18 2018

My Advice?

Do you hold some stocks in your portfolio? Then revisit the reasons why you bought your stocks. I hope you’re not in a position wherein you cannot enumerate the reasons that made you buy those stocks. Otherwise, you’re in trouble. The decision to hold, to buy, or to sell is all about what your “buy case” (reasons for buying) is telling you.

If your buy case is still 80 percent true, it’s either you buy more shares tranches or hold your position. The size of each tranche is all up to you.

If your buy case is true by less than 80 percent, it’s either you sell at once or you sell in tranches so you don’t get whipsawed. Do you know the trailing stop-loss strategy? That’s one of your options.

A trailing stop-loss can protect your gains, preserve your capital, and prevent losses more than what you can only handle. Remember those 3 Ps.

Do you find my insights helpful? Please let me know in the comments section. Tell me what you’d like to see in my analysis.

Jaycee De Guzman

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