PSE Index Breaks 7,000, What's Next?

The Philippine Stock Exchange Index (PSEi) has finally breached the psychological price level of 7,000, a level it has been hesitant to trade above since early 2022. This development has been in line with the "PSE Sustainable Rally Checklist" published by Mangun in August, which highlighted five key indicators of a sustained rally. As of the last four weeks, four of the five items have been checked off, with the only remaining item being a confirmation of major price resistance breaks and holds.

Key Takeaways:

• The PSEi has been trading below 7,000 for 36 months, creating a risk of there being no buyers above this level.
• The recent weekly market low in June 2024 has seen a 15% increase in the PSEi, with buyers coming in at the 6,500 area.
• The steady price increase is due to buyers at 6,600 not selling at 7,000, and the longer 7,000 stands firm, the more buying will come in.
• The "PSE Sustainable Rally Checklist" was first published on August 20th, and four of the five items have been checked off, pending confirmation of major price resistance breaks and holds.
• Mangun identifies several "Good companies; Bad stocks" that he watches continuously, and will only buy when the price is going up.
• The Executive Chef (institutional investors) and Head Chef (market makers) are not responsible for the daily price movement, but rather the line cooks (individual traders) who provide the daily liquidity, volume, and price movement.

Statistics:

• The PSEi has been trading below 7,000 for 36 months.
• The recent weekly market low in June 2024 has seen a 15% increase in the PSEi.
• The proportion of buyers at 6,600 not selling at 7,000 is unknown.
• The "PSE Sustainable Rally Checklist" has been followed for four weeks, pending confirmation of major price resistance breaks and holds.
• The number of "Good companies; Bad stocks" that Mangun watches is unknown.

Sources:

• Mangun, (August 20th, no specific date provided), "The PSE Sustainable Rally Checklist."