Market Behavior & Price Reaction
For traders and investors in the Asian markets particularly for the Philippines start of the trading week. Take a precautionary measures to be able to sustain and absorb the negative impact of the US market spill over sentiments on the PSEI sectors that would be affected from Friday's movements. Being able to fairly yet accurately predicted the DXY low @94.80 before it registered last Friday, the Dow break below the 17000 and the PSEI run through the 7500 levels; its now time to call the price below the 7000 moving forward for the week ahead.
As such moves would open deeply into the market's opening price the same manner that such bearish contagion would easily place the surrounding markets into hysteria that would force liquidation as prices reacts strongly. However, do not discount the case scenario where institutional may drive prices much lower after the opening bell and time a pull-buy-back from their lowest points. This is a common practice for companies with deep pockets to control stock prices by simply buying back what main street investors takes the loss when they throw in the towel.
This would provide a rebound or a short-live temporary relief and a price recovery from short-covering positions not only for Asian investors and traders , likewise as an anticipatory reaction from last week's declines. This normal market reaction may not occur right away and may simply try to take time to build its price adjustment period within the three major market's trading session.
This is a brief case scenario waiting to happen! Not unless a stronger follow through of such declines would be carried over by bears which would add more insult to injury. Watch, Learn and just be on the side line for now, while waiting for the next few days. Due diligence is a must and take the necessary strategies available to you as an investor and/or trader.
Update as of 9.09.16 Watch for the 7500 levels in the coming week.
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