During the last two – weeks the technical conditions of the Philippines Stock Exchange (PSEI) has changed drastically. About two – weeks ago it appeared that a rally to new all-time highs could developed. What happened was a break below chart support at 6,537. Then a move below Fibonacci support at 6,430. Meanwhile in the U.S. there have been two major bonk failures. These factors imply the PSEI, and the global stock market could be in the early phase of a larger decline.
The monthly PSEI chart courtesy of Trading View illustrates a bearish Elliott wave count.
In Elliott wave theory there are always alternate wave counts and its important to know the alternate counts if conditions change.
This wave count shows that the second phase of the bear market that began in 2018 is under construction. In Elliott wave terms this is Primary wave “C” – boxed, that could ultimately terminate below the major bottom made in March 2020.
The most important feature on the Logarithmic scale chart is the rising trendline from March 2020. A break below this trendline could trigger a move down to 5,000.
The daily PSEI chart focuses on the decline in 2023.
The PSEI may have completed an Elliott – five wave Impulse pattern, if so there could be a rally in the next few days. The potential rally could be just a bounce in a larger developing bear phase.
On 03/22/23 at 11:00 AM – EDT the U.S. FOMC will make its interest rate announcement. How the U.S. stock market reacts to the announcement could effect the direction of stocks globally for the next several weeks.
If the reaction is bullish the Dow Jones Industrial Average could rally to a new all-time high. The PSEI could also rally, but because of the recent drop, it may not make a new all-time high.
If the reaction is bearish both U.S. stocks and the PSEI could within a few weeks go below the bottoms made in October 2022.
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