Authored by: Juanis G. Barredo VP; Chief Technical Analyst COL Financial Group Inc. (632) 636-5411 Juanis.barredo@colfinancial.com

Philippine Equity Research

May 22, 2015

Disclaimer: All opinions and estimates constitute the judgment of COL’s Equity Research Dept as of the

date of the report and are subject to change without notice. The report is for informational purposes only

and is not intended as an offer or solicitation for purchase or sale of a security.

DAY’S HIGLIGHTS

• US markets were slightly higher, as was US Bonds; Europe was up

• Asia was again mixed

• The Dollar index slid allowing Oil to rally 3.2%

• The Philippines’ PSEi fell 46-pts but still holds itself within a consolidation range

Trend Watcher: Up Trends & Consolidations

Notes: US stocks were little higher as were Bonds; the PSEi softened down 0.59% with some stocks re-threatening support

US stocks showed slight advances for the day while US bonds showed better rallies. This seems to have enforced the support arm of bonds which puts greater pressure into the corrective drive of bond Yields. The Dollar backed off from resistance and this offered some upward lift to Oil prices ($60.68) which bounced from its support shelf of $58. The Philippine markets was put under pressure after a few retail stocks and gaming counters fell prey to selling activities (see page 3). These issues may or will drive renewed support tests which could keep the local mood on the defensive given the large number of consolidations and short term reactions being shown. As the PSEi remains in consolidation mode we would continue to keep on the alert against such support threats and stay light or being very selective until the index can warrant or decide upon a clearer trend directive.

Focus Items Issue Highlight Page

Dollar slips from resistance PSEi slides: More support tremors seen 2-3

DOW Hold with stop at 17,924 4

PSEi Range trade 5

MSCI Phils ‘EPHE’ Range trade 6

PHI Range trade 7 Issue Previous Current Change % YTD %

Philippines 7,882 7,835 (46.55) (0.59) 8.36

Peso-$ 44.600 44.490 (0.110) (0.25) (0.51)

MSCI Phils 41.60 41.66 0.06 0.14 9.06

PLDT US 64.400 64.660 0.260 0.40 2.16

DJIA 18,285 18,286 0.34 0.00 2.60

SP500 2,126 2,131 4.97 0.23 3.49

Nasdaq 5,072 5,091 19.05 0.38 7.49

England 7,007 7,013 6.21 0.09 6.81

Nikkei 20,197 20,203 6.31 0.03 15.77

Hong Kong 27,585 27,524 (61.33) (0.22) 16.60

China 4,446 4,529 83.13 1.87 40.03

US 30yr Bond 151.55 153.09 1.54 1.02 0.87

10-Yr Yield 22.510 21.850 (0.660) (2.93) 0.69

Dollar Indx 95.510 95.330 (0.18) (0.19) 5.20

Gold 1,209.30 1,206.30 (3.00) (0.25) 1.95

Oil 58.76 60.68 1.92 3.27 12.98

GTX 3,240.74 3,295.84 55.10 1.70 1.95

Dollar slips from resistance: US Bonds & Oil attempt to rebound

Tech Spotlight --- Page 2

• The US Dollar index (95.33) slipped as pressure from estimated resistance zones put some pause action into its recently oversold inspired rally. Given that prices have come close to Fibonacci rally estimates which have shown potential target ranges between 95.88 (38.2%), 96.71 (50%) and 97.55 (61.8%)… these being the next resistance spots, the Dollar may produce a short ranged pattern here • Gold (-0.25%) was little lower but has so farf held over its estimated support of $1200. Gold is drawing out a reaction after its earlier resistance break from a sidewards pattern • The US 10Y Bond (+0.38%) rallied and has so far built a supportive base at its 260-day MA (126.34) and its MACD reads show that possibly more rally or ranged action can surface. Bond Yields do show opposite intent as MACD readings adhere to more corrective swing action into he short term • The Japanese YEN index which took a beating into the last three days, managed a small rally after prices neared its major support low of 82.25 • Oil prices rallied strongly up by $1.92 to $60.68 (+3.27%) as its critical support of $58.00 managed to hold its ground. Momentum signals still peg a consolidation swing which can only be disrupted if prices surface over its $62 to $62.58 range highs

82.79

PSEi slides: More support tremors seen

Tech Spotlight --- Page 3

Consumer related and Gaming stocks quake

• The PSEi clipped off 46-pts yesterday after a number of stocks began to soften once again… with some showing renewed threats to support after failing some resistance challenges • JFC is now testing its reactive channel’s range highs and could proceed to feel some pressure – a trading range (215 -192) shows it to be near its high zone perhaps ripe for some ranged profit taking • COSCO is now consolidating near its low range (8.16-8.05) a break from which may cause further slipperiness into the short term • RRHI is also testing the low band of its rectangular pattern, 82.30 (broken) and 81.30 (major support) and may need to drive more reaction time if the second support fails… thereafter next support is at 80-75 • AGI just broke its support shelves of 24.00 – 23.15 possibly pressed by similar weakness seen from MEG, EMP & RWM • Gaming companies also saw red with BLOOM falling to a new 12 month low. This reverberated to MCP, PLC, and even LR • RWM was also weak as prices now come to retest its recent lows of 6.38 and if broken would resume its perpetual down trend

US: Dow Jones Tech Spotlight --- Page 4

Recommendation: Hold with stop at 17,924 (18,094)

Support: 18,110 - 17,924 Resistance: 18,288 -18,726

• The Dow was sideways and takes on some profit taking after its 4-day up move

•As we noted earlier a punch out of 18,200-18,288 (Resistance zones) is what was needed to break free from its pattern and restore the advance (and a Buy)

•Given that it last high barrier (18,288) has broken and its MACD readings have improved… its does suggest that some follow through action is expected perhaps after some easing or reactions as prices are now a little wide from its short term averages

• Support is now raised to its recent higher-low base of 17,924 or can be trailed on the shorter term averages (18,110 or 18,065) now that the up trend has been restored

•Upside for the Dow after 18,288 is estimated at 18,726 -18,826 as the size of the recent pattern measures a range of 626-pts grooming a break from over 18,100-18,200

Philippines: PSEi Recommendation: Range trade

Support: 7,657 – 7,564 Resistance: 7,964 – 8,136

• The PSEi slipped 46-pts and still remains in consolidation mode as it needs a resistance break to offer something better

•A recent successful double support test contributed to recovery that swung into a consolidation which acknowledged a range trade recommendation

• The index now needs to show a resistance break over 7,964 to improve its technical standing and propose more than a Range Trade (between 7,657 and 7,964)

•Our recent Fibonacci cast estimates support at:

– 38.2% 7,657

• Some technical issues prevail as its MACD still remains below its zero threshold indicating consolidating pressure… and that the recent recovery we are seeing is pegged as a rally (temporary rebound)… up until a resistance break can be shown

Tech Spotlight --- Page 5

US iShares MSCI Philippines: EPHE Recommendation: Range trade

Support: 40.20 – 38.69 Resistance: 41.87 – 42.20

• The MSCI Philippines picked up $0.06 and rebounds after a two day reaction to try to challenge resistance one again

•An earlier rebound stemmed from its second Fibonacci retracement zone of 50% ($40.37-$40.20) and so far shows good ability to hold and present a stronger foothold here

•With the rally breaking over its corrective trendline, some impetus to challenge resistance is seen – plus we do see a rally phase building within the MACD (though an imperfect buy is shown given negative values… this may make the rally choppy but still open to a range trade)

•A push over 41.87 or even 42.20 is what is needed to allow for better recovery swing

•Any break below the $40.20 support zone would reassign a short term down trend and recalibrate support to $39.73 then $38.80

Tech Spotlight --- Page 6

PLDT-US (PHI) Recommendation: Range trade

Support: 62.00 - 60.13 Resistance: 66.48 - 68.10

• PLDT-US rallied $0.26 to $64.66 but proceeds to stay within its range bounds but has so far held over its support with a higher-low base

•A sidewards range between $66.40 and $62.00 is currently being drawn and hosts a Range Trade

•A weekly view of PHI shows a triangle like pattern whose major support sits at $62 – this zone of support must hold

• Price parity of PHI to TEL stands at ($64.66*44.49 = P2,876)

Tech Spotlight --- Page 7

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