PSEi 2/22/08 WEEKLY MARKET REVIEW

PRICE AND TURNOVER
Close: 3,080.24
Change: TODAY -95.82 (-3.02%) WTD -102.61(-3.2%) YTD -532.74 (-14.7%)
Value: 2,542,198,000

MARKET BREADTH
Net adv/dec issues: -84
Net up/down volume: -852,536,450
NFB: TODAY -377,424,756 WTD -567,810,001 YTD -12,986,913,213

TECHNICALS
Major consolidation, intermediate downtrend, short term downtrend
Support 3,000 Resistance 3,350
A potential double top has unfolded in the major trend (weekly chart).

OUTLOOK
The index takes a beating today declining by 3.02% with below average turnover. It opens shy of yesterday's close, heads south without looking back, and closes at the low.

For those who follow the trends closely, I am sure today's price action provides no element of surprise, at least as far as the direction is concerned (a trend is valid until proven otherwise). The magnitude of the decline may have more to do with the fear and uncertainty about the scheduled mass demonstration on Monday, but thats pure conjecture on my part. Nobody can say for sure why a market "moved", "moves" or "will move" the way it "did", "does" or "ought to" and I steer clear from people who bluster their way with seeming authority thru each and every market uptick or downtick just to look and sound smart conveniently knowing that the market can not talk back and argue with them. Of course there's nothing wrong with hazarding guesses and speculation as long as theyre not made to appear otherwise. They are great conversation pieces to while away idle time. As a technician, all I need to know is that buying interest and selling pressure determine the direction of the market. Besides, the "why" doesn't really mean much to me as a trader. Its the "where" and "how much" the market "moved", "moves", or "could move" that directly impact my trading profits. The daily chart clearly shows the intermediate and short term directions on a decline and this week was no different. If at all, it is reasonable to expect something like this can happen. On a downtrend, price typically bounces off the trendline resistance. Today's steep move is a signal that a new and faster downswing may be forthcoming. It doesnt mean that it will, but odds are that it might. So expect some degree of acceleration to the downswing while the index moves toward 3,000.

Looking at the weekly chart, we see the intermediate and short term trends moving in synch to drive the index closer and closer to the critical level of 3,000. A significant breach of this number will complete the much dreaded double top formation. For those who hold no long positions there is no reason to be anxious. But if i am holding one today, I will be hanging on to each and every tick of the index as it draws near that important support and I will surely have an exit strategy handy (I can't seem to say that enough). If the support fails, I dont expect it to come crashing though that level without any opposition. A more likely scenario will be an initial defense by buyers resulting into a weak bounce from that level. It will be within reason to view that as an opportunity to get out of market. If no reversing catalyst appears shortly after, the buyers may lose their resolve and the support may fail at the retest.