Presentation by Mr. Juanis Barredo COL Chief Technical Analyst

1. 2014 COL Financial
1st Half Technical Outlook
Presented by:
Juan G. Barredo
Chief Technical Analyst
COL Financial

2. MARKET OVERVIEW
• Global markets have been pressed into corrective drifts
due to ‘taper tantrums’
• Emerging Markets (EMs) suffered the heaviest as
‘Withdrawal Symptoms’ as rerouted funds flows to
Developed Markets
• There may yet be some tail end selling for EMs as no
clear reversal patterns have been shown
• But some of these may be nearing intended targets in
Magnitudes (Price) and Duration (Time)… if not already
• Opportunities for range trades will again appear – as
prices stand near the lower end of trading bands

3. GLOBAL
MARKET REVIEW

4. Funds flow out from EMs to DMs
As economic signs of recovery in the US and Europe becomes
noticeable, the FED moves to taper stimulus shocking EMs
DMs versus EMs
Why the switch:
• Trimmings of excessive credit may
ease pushing an early rise in Bond
Yields then possibly into I-rates
• A Dollar recovery forced on a
defensive stand on EM currency
investments
• Pick up in EM inflation may wrestle
with investment yields

5. US Bond Buying Tapered
US Bonds reacting since mid-2012 as FED loosens stimulus; may
allow the SP500 to regain its inverse relationship into wider trends
10-Yr Bond
Fed Tapers
Fed Bond Buying Program
(QE1, QE2, QE3)
SP500

6. US Bond Yield eases from its earlier surge
The US 10-Yr Yield seems to have blown off and may need some
corrective consolidation time
US 10-Yr Bond Yield
Running too far ahead:
• Loss in upward momentum seen
• Bearish Divergences and
overbought conditions spotted in
weekly charts
• But short term signals do show
near oversold levels which may ask
for short term rallies
• This may lock Yields into a
medium term consolidation from
2.9% and around 2.5% to 2.3%

7. Perception runs ahead of reality…
The US 10-Yr Yield seems to have blown off and may need some
corrective consolidation time
History Sample
• US Bonds Yields
versus Interest Rates
2003-2004
• Two large surges
made before rates
actually picked up

8. Perception runs ahead of reality…
Markets Susceptibility
to Rates Rising
• Markets tend to
pullback months
before an expected
rate hike
• In 2004 markets
withdrew several
months ahead of any
rate hikes then
ventured to
consolidate thereafter
• Note however that is
should not derail the
markets longer term
upward track – may
provide several
trading windows

9. Perception runs ahead of reality… PSEi
The PSEi has also run ahead of the reality of rates rising by
drawing on several months of corrective action
PSEi and Rates Today
• Philippine Index has
retreated in
consolidation for the
better part of 2013
and unto today
• May have already
taken a good size of
intended magnitude
and duration

10. Spotlight on the US: SP500
The SP500 continues with its channelled advance but bumped
on its range highs and withdrew from overbought conditions
SP500
SP500 Review
Sup: 1,730 – 1,690
Res: 1,815 – 1,850
Overbought Levels
• Its advancing channel is still
secure but it does test its range
lows at the moment
• Weekly RSI levels 4-weeks ago
tagged overbought levels which
initiated the present correction
• Support is expected at 1,730 1,690
• A rally may surface but may need
one more reaction to complete
its corrective drive

11. EUROPE & CHINA: RESISTANCE & SUPPORT CHALLENGE
Europe may need to ease off a little more from recent range highs;
while China remains down cast testing 1 –year lows
Shanghai Index
European Index
Sup: 315 – 300
Res: 330 – 340
Sup: 1,980 – 1,850
Res: 2,130 – 2,237
Overbought Levels

12. CURRENCIES: EURO & DOLLAR
The Euro has slightly improved and carries an upward bias; the
US Dollar has shifted sidewards
Euro-Dollar Index
US Dollar Index
Sup: 132.5 – 128.1
Res: 139.0 – 143.0
Sup: 80.20 – 78.85
Res: 81.50 – 84.70

13. COMMODITIES: Mixed showings
Metals still show weakness... wary of slowing growth in China and
the consolidating Dollar; Oil stays perched on a wide range
Copper
Gold
Oil
Sup: 3.12 - 3.06
Res: 3.45 - 3.78
Sup: 1,200 - 1,180
Res: 1,290 - 1,400
Sup: 92.00 - 86.30
Res: 100.75 – 110.30

14. PHILIPPINE
MARKET REVIEW

15. PHILIPPINE PESO: Devaluating Trend
Peso reversed its firming trend after breaking above the P42 &
P44 levels; resistance seen at P45.50 then P47.00
PHILIPPINE PESO
•
•
Sup: 44.60 – 44.00
Res: 45.50 – 47.00
•
Divergence
•
PESO
Philippine Peso has lost quite
a bit of ground since 1Q13 as
flows back to the Dollar
precipitated
It has hit our intended target
of 45.50 and but has not
showed enough power as of
yet to stop this devaluing
trend that eyes P47 next
However a divergence is
noted on its weekly RSI – this
may offer a possible reaction
towards short term support
at P44.60… maybe even
P44.00 if the Dollar staggers
Trading Buy on the Dollar
into dips

16. Spotlight on the Philippines: PSEi
The PSEi proceeds to range within a reactive channel; a recent
higher-low (5,700) offers a chance for a possible major base
PSEi
PSEi Review
•
•
Sup: 5,835 – 5,700
Res: 6,200 – 6,460
•
•
Index is cascading within a ranged
channel whose current range breadth
is 960-pts large (6,460-5,500)
A recent and hopefully significant
bottom was pinned out at 5,700 – this
being our critical support
Weekly and Daily MACD reads have
shown some rally improvement
contributing to the possible firming of
its base out scenario
Nevertheless a range trade is offered
into the medium term looking a trading
buys closer to 5,830-5,700 and selling
points closer to 6,200-6,460 as pressing
resistance bands

17. PHILIPPINES: Elliot Wave Count
PSEi shows itself within an extended corrective wave; could be
driving out a tough 4rth-wave correction in the guise of a bear
ELLIOTS IMPULSE (BULLISH) WAVES
PSEI RUNNING ON A TOUGH WAVE 4
Wave 3 Cannot
Be the Shortest
Wave
Wave 4 Cannot
Overlap Wave 1
Wave 2 Cannot
exceed low of
Wave 1
(Elliot Guideline # 2 notes:)
The forms for Wave 2 and Wave 4 will alternate…
• If Wave 2 shows a sharp correction, Wave 4 will be a flat
• If Wave 2 is flat, then Wave 4 will be sharp
(PSEi notes:)
The Index still carries itself well above its Wave 1 top
• Its Major Up Trendline (5,760), which began in ‘09
remains intact
• But prices do stand below its 1-yr Moving Average

18. PHILIPPINES: A Bearish Tone
PSEi and other sub-indices have tagged 20% declines in shades of
a bear… but generous downsides have already been registered
“A downturn of 20% or more in multiple broad market indexes…,
over at least a two-month period, is considered an entry into a bear
market”.
Index
PSEi
All Share
Comm/Ind
Financials
Holdings
Property
Services
Mining/Oil
Current
6,011
3,655
8,861
1,495
5,406
2,287
1,850
13,551
Top
7,403
4,571
11,177
1,925
6,700
3,089
2,181
28,102
Date
5/15/2013
5/15/2013
5/15/2013
5/15/2013
5/16/2013
5/23/2013
5/14/2013
4/26/2012
Change*
-18.80%
-20.04% 
-20.72% 
-22.34% 
-19.31%
-25.96% 
-15.18%
-51.78% 
* Net Change from its dated Top
PSEi has crossed this 20% threshold three time since its 5/2013 Top
Note: Currently 5 out of 8 Philippine Indices stay crossed below a
20% Downturn
Note: The tagging of this threshold several times in 9-months along
with other related indices qualifies for the Bearish drift.
On the positive front, these qualifications usually turn up once
80% or more of the intended move has been already
accomplished.

19. PHILIPPINES: Moving On
PSEi shows inclinations for a possible base as compared with a
2005 historical sample
Scenario 1: Rally & Consolidate
PSEi Today
•2005-2006 showed a 5-pts pattern gradually
grooming into a rally then to consolidate
• After the 5th drive, a rally was reinstated after
higher-low bases were successfully drawn out
• Today we seem to be in similar pattern stand
• This could also be timely in asserting a credible
rebound; but prices today stand below its 1-Yr
Moving Average intoning less bullish calls in demand

20. PHILIPPINES: Moving On
PSEi can still drift off into extended corrective cascades if recent
lows are broken or retested
Scenario 2: Extended Correction
• Could retest 5,700 or even 5,500
• Peso drags up to P47
• Will proceed until higher-low
bases are confirmed and resistance
breaches are seen
 Few Months

21. PHILIPPINES: Keeping its nose up
PSEi Versus EMs & DMs: Keeping Itself in the Race
PSEi – Versus DMs & EMs (YTD)
PSEi – Versus Asia (YTD)
PSEi
MS WORLD
MS EMF
PSEi stays ahead of DM and EM indices
Indonesia & the Philippines: Top 2 in Asia

22. OBSERVATIONS:
• The Peso’s devaluation is still in trend though over-extended
action shown by divergence calls may need some adjustment
• PSEi may yet need to complete its corrective sway but we are
hopeful that much of corrective intent has been priced in
• In the Medium term, expect a wide consolidation pattern
(6,460 - 5,500)
• In the short term, stocks may try to pull a rally out of a hat
and recover to next levels of resistance (6,200-6,460)
• Given the consolidation and brief rally opportunities we will
gear towards range trading – buying after support rebounds
and take trading profits on resistance zones

23. TRADING STRATEGY:
• Best Actions in Corrective Consolidations
–
–
–
–
Always look for underlying strength, not just the heaviest declines
Watch for higher-low bases / clear support frames to push trading buys
Watch for possible oversold readings or bullish divergences in fallouts
Exercise patience and keep with your view to buy out of good sense
• Exercise prudence in targets , diligence in following support
–
–
–
–
Target next resistance zones estimated by tops or averages
Sell some on established resistance points to earmark gains
Avoid buying after several days of advances
Always know when its time to quit – utilize stops on support ledges
• Medium to Long Term View
– Buy dips from henceforth as corrective magnitudes are fairly done in

24. Sectoral View: Stronger Formations
Services
Holdings
Property
Financials

25. Sectoral View: Less Impressive
Commercials/Industrials
•Lower-lows were still shown
Mining/Oil
•Heavy oversold levels may need some
adjustment
•May have a kicker if somehow metals
can rally further – particularly if the
Dollar allows it (further pullback in the
greenback)

26. TRADING STRATEGY: Showing Good Traction
‘A Good Anchor is when you Have Both Feet on the Ground’
‘Watching for a Foothold’
• Allow reactive swings to
call out a firm base
• If price > 32-day MA then:
• Buy rebounds off short term
averages (16 or 32 day)
• Preferably Positive MACDs
• On our radar:
• AC, AGI, AP, AUB, BDO, BEL,
BPI, COAT, DMC, DNL, EDC,
EEI,EMP, EW, FDC, FGEN,
FPH, GLO, ICT, LR, LTG, MBT,
MEG, PAX, PCOR, PGOLD,
PNB, RRHI, SCC, TEL, & UBP
MBT
16-day MA
32-day MA
65-day MA
Higher-Low
Support Retest

27. TRADING STRATEGY: Wait for proper setups
‘When the Ground is Soft, Take More Careful Steps’
‘Not Every Rebound is Right’
• Corrective trendlines
breaking should alert of a
possible reversal / rally
• Successful support retests or
higher-low fronts add
demand
• Durable breaks above the
32-day or even the 65-day
may announce Up Trend
reinforcement
• Stops placed on recent lows
• Find positive MACDs
EDC
16-day MA
32-day MA
65-day MA
Wait for break
above 32-day
Stronger
Support
Base
Positive
MACD

28. MODEL PORTFOLIO: Technical Review
Stock
AC
ALI
BDO
DNL*
EEI*
MBT
MEG
SMPH
TEL
Price
535
26.35
79
6.99
10.06
77.75
3.74
14.98
2686
32-MA MACD
527.5 Buy 26.03
Sell 74.34 Buy +
6.73
Sell +
9.97
Sell +
76.11 Buy +
3.45
Buy +
14.66 Buy 2682
Sell -
RSI
52.01
50.69
60.5
60.27
51.79
56.05
67
52.4
50.7
Support
(1)
515
25.35
78
6.94
9.8
75
3.58
14.46
2,600
*Subject to illiquid threats into reactions
** Price is either close to resistance and/or almost overbought
Support
(2)
508
24.17
76.8
6.73
9.29
70
3.45
14.1
2,572
Resist
(1)
550
26.35
80
7.3
10.58
80
3.8
15.51
2,695
Resist
(2)
572
27.7
85
7.77
11
85
3.92
16.3
2,805

29. SUMMARY:
• Global markets will seesaw as money flows will rotate
• DMs have held and may yet hold attention (after completing
corrections) along with some stronger EMs
• US Bond yields to continue to ease then consolidate – deflating
any rush up in interest rates
• The Peso may need to show some technical adjustments but is
still prone to devaluation
• The PSEi attempts to carry a higher base (at 5,700) though still
driving an ongoing consolidation pattern (5,500-6,460)
• Range trading into stronger stocks are recommended or buy (to
accumulate) into dips with medium to long term views

30. “A pessimist sees the difficulty in every
opportunity; an optimist sees the
opportunity in every difficulty.”
― Winston Churchill
Thank You!
JUAN G. BARREDO
CHIEF TECHNICAL ANALYST
JUANIS.BARREDO@COLFINANCIAL.COM