In trading stocks in PSE, it is very important for a trader to keep in mind the big picture. And that is the long-term direction of PSE.
Viewing the 30- year history of PSE in relation to Elliott Wave Theory, I can't understand why most "master traders" I stumble with in trading fora are all bullish. They claim to be guided by the same EWT. However, I am thinking that perhaps the difference is caused by a failure to look @ PSE from a longer time frame.
As for me, using the 30-year chart, I see that PSE has already completed the series of five impulse waves and is now in the corrective phase, Wave A-3 in particular.
From monthly time frame, you can see PSE differently. Beginning 2008 up to the present, PSE has already completed the entire market cycle, both the impulse waves (Waves 1 to 5) and the corrective waves (Waves A to C).
Many market analysts are aware of such market cycle and so they see PSE as preparing for another level of series of five uptrend impulse waves. It is popular to hear from them a forecast of PSE 10,000.
I have two major difficulties in accepting such forecast:
First, if it is really true that PSE is heading towards another level in bull cycle, how can we account of such run in view of the deteriorating global economy? We have been hearing a lot about the European banking crisis, liquidity crisis, the bond and the derivatives bubbles ($100T and $555T respectively), the destructive impact of ZIRP and NIRP, and the war on cash. Do these economic and monetary phenomena indicate a healthy world economy? Is Philippine economy really that exceptional to be immuned from such catasthropic events?
Second, how about the impact of the stronger USD on emerging markets? It has been reported by economists Claudio Borio and Hyun Song Shin that "the strong dollar could precipitate a wave of defaults on $9 trillion of dollar- denominated emerging markets corporate debt." If this is the case, how can you expect PSEi to continue soaring while businesses in emerging markets like the Philippine market are struggling to pay their debts?
With the above two considerations, I think looking at PSEi from a daily time frame shows us a more accurate direction of the PSE in the coming months.
Based on the above chart, PSE now is done with the series of corrective waves and is now reversing its trend and heading downward to complete Wave 5. We just don't know exactly the low of this wave. The important thing to bear in mind is that if this interpretation is correct, there is another huge downleg to complete this downtrend impulse series of waves.
Viewing the 30- year history of PSE in relation to Elliott Wave Theory, I can't understand why most "master traders" I stumble with in trading fora are all bullish. They claim to be guided by the same EWT. However, I am thinking that perhaps the difference is caused by a failure to look @ PSE from a longer time frame.
As for me, using the 30-year chart, I see that PSE has already completed the series of five impulse waves and is now in the corrective phase, Wave A-3 in particular.
From monthly time frame, you can see PSE differently. Beginning 2008 up to the present, PSE has already completed the entire market cycle, both the impulse waves (Waves 1 to 5) and the corrective waves (Waves A to C).
Many market analysts are aware of such market cycle and so they see PSE as preparing for another level of series of five uptrend impulse waves. It is popular to hear from them a forecast of PSE 10,000.
I have two major difficulties in accepting such forecast:
First, if it is really true that PSE is heading towards another level in bull cycle, how can we account of such run in view of the deteriorating global economy? We have been hearing a lot about the European banking crisis, liquidity crisis, the bond and the derivatives bubbles ($100T and $555T respectively), the destructive impact of ZIRP and NIRP, and the war on cash. Do these economic and monetary phenomena indicate a healthy world economy? Is Philippine economy really that exceptional to be immuned from such catasthropic events?
Second, how about the impact of the stronger USD on emerging markets? It has been reported by economists Claudio Borio and Hyun Song Shin that "the strong dollar could precipitate a wave of defaults on $9 trillion of dollar- denominated emerging markets corporate debt." If this is the case, how can you expect PSEi to continue soaring while businesses in emerging markets like the Philippine market are struggling to pay their debts?
With the above two considerations, I think looking at PSEi from a daily time frame shows us a more accurate direction of the PSE in the coming months.
Based on the above chart, PSE now is done with the series of corrective waves and is now reversing its trend and heading downward to complete Wave 5. We just don't know exactly the low of this wave. The important thing to bear in mind is that if this interpretation is correct, there is another huge downleg to complete this downtrend impulse series of waves.
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