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

Philippine Equity Research

May 5, 2015

Disclaimer: All opinions and estimates constitute the judgment of COLs 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.

DAYS HIGLIGHTS

US markets rebound, mid and small caps still tender

Europe also rallied and Asia was mostly higher

The Dollar index rebounded; Gold was up but Oil slid slightly

The Philippines PSEi rebounded strongly gaining 101-pts after a close step to its next support zone

Trend Watcher: Up Trends & Corrections

Notes: US markets rebound but need more push to recapture a solid advance; the PSEi bounces and holds over its next support

US markets rallied and once again braces itself over support and some now near resistance or recent highs. Clearly more advances are necessary to establish a better up trajectory after building consolidation patterns recently. Moreover its mid cap and small cap indices still look feeble and also show rallies from sidewards patterns. This keeps some tenderness in place and would advise buyers to be quite watchful and suppressive in taking an aggressive course for the moment while technical reads still look faint. In the local market, a 101-pt rally in the index was clearly welcomed after showing a vile three day pullback that breached the 16, 32 and 65-day Moving Averages. With some stocks hitting oversold fronts, it be but natural for some rallies to form and ease this exaggerated condition. Keep in mind that until reversal bases are shown & confirmed, rallies may be brief and temporary.

Focus Items Issue Highlight Page

US rebounds PSEi rallies: Overreaction = Temporary rallies 2-3

DOW Range Trade or Hold 4

PSEi Stay light; watch support 5

MSCI Phils EPHE Stay light; watch support 6

PHI Range trade 7 Issue Previous Current Change % YTD %

Philippines 7,715 7,816 101.62 1.32 8.10

Peso-$ 44.520 44.610 0.090 0.20 (0.25)

MSCI Phils 40.29 41.27 0.98 2.43 8.04

PLDT US 63.500 64.190 0.690 1.09 1.42

DJIA 18,024 18,070 46.34 0.26 1.39

SP500 2,108 2,114 6.20 0.29 2.70

Nasdaq 5,005 5,017 11.54 0.23 5.93

England 6,986 6,986 0.00 0.00 6.39

Nikkei 19,532 19,532 0.00 0.00 11.92

Hong Kong 28,133 28,124 (9.18) (0.03) 19.14

China 4,442 4,480 38.80 0.87 38.51

US 30yr Bond 156.73 155.61 (1.12) (0.71) 2.53

10-Yr Yield 21.170 21.350 0.180 0.85 (1.61)

Dollar Indx 95.440 95.640 0.20 0.21 5.54

Gold 1,177.20 1,187.30 10.10 0.86 0.35

Oil 59.26 59.02 (0.24) (0.40) 9.89

GTX 3,282.23 3,283.75 1.52 0.05 1.58

* Issue names in purple indicate a non-trading day

US rebounds: Mid and Small caps still show tenderness

Tech Spotlight --- Page 2

MACD readings still show vulnerability US Indices were higher last night after a bounce from support managed to stem the corrective tide at least for the moment. But some points of technical weakness asks for some defensiveness up until an improvement in such faults can be seen MACD readings remain corrective and highlights from Mid and Small cap indices do show continuing traces of weakness. Recent trendline breaks from these segments do portray a consolidating market if not one reading for more reactions. The rally into the last two days of which may simply serve to offset heavy declines which churned out into the last four days previous to the rally. Thus a careful watch on support should remain The US Dollar Index (95.64) rebounded for the second day after hitting oversold levels. The Dollar also remains into a corrective phase and drive a reactive consolidation Gold was higher $10 and managed to hold on to its recent lows of closet to $1,170 a consolidation also shows into this commodity OIL was lower by $0.24 but remains within its advancing channel whose support is raised to $57.00

PSEi rallies: Overreaction = Temporary Rebounds

Tech Spotlight --- Page 3

Trading oversold rallies

The PSEi scored a 101-pt rally yesterday after seeing a hefty 3 to 4 day retreat. Although the rally is much welcomed, we must carefully understand that rallies from over-exaggerated reactions (oversold) could open to temporary rallies and not necessarily be new advancing trends. It is to this tentative situation that potential trades are also kept tentative as the frame for an advance has not been appropriately setup. Thus anyone buying in yesterdays rally would have a quick 2-3 day trade window to exit as there may yet be the need to second test support and show a proper base pattern or formation. If the trade opens due to an expected oversold rally, then once oversold conditions ease the trade may also require to be eased off. You can also utilize a rising support line to raise ones support stop along a rally to call off the trade when it breaks. BDO for instance shows an oversold mark after hitting an RSI of 30 and hitting its 61.8% Fibonacci Ret. zone this may provide for a rebound hopefully closer to short term resistance at 115 but such a rally may be brief and fleeting as it may yet require resistance to be broken to renew its advance or for support to be retested to enforce the holding power of demand. MACD readings are negative and still show the corrective bout to be in place. PLDT (TEL) shows good examples of such oversold rallies and how they can be fleeting especially so if prices have already broken below short and medium term averages.

Oversold rally Oversold rally

Stop Stop

US: Dow Jones Tech Spotlight --- Page 4

Recommendation: Range trade or Hold

Support: 17,748 - 17,777 Resistance: 18,200 -18,288

The Dow rose 46-pts and once again hurls another challenge to resistance

Thus the test of resistance proceeds, and a punch out of 18,200-18,288 (Resistance zones) is what is needed to break free from its pattern and restore the advance (and a Buy) otherwise the range trade option stands

A reactive style of consolidation or channel presently runs obliging us to follow its range limits

Support is placed closer to the 130-day Moving Average (MA) at 17,777 or its recent low of 17,748 - this is followed by the range lows of 17,579 17,500 a Hold will be terminated if these support areas are broken

Philippines: PSEi Recommendation: Stay light; watch support

Support: 7,795 -7,657 Resistance: 7,964 8,136

The PSEi jumped 101-pts after finding some support near its next support zone of 7,657

Our recent cast estimated next support at:

38.2% 7,657

50.0% 7,509

61.8% 7,361

The index has swerved sideways and now needs to hold over this next support to hang on less it be pruned into a down trend

Some technical issues prevail making this rebound an imperfect or poor trade and as such still recommends a defensive posture by staying light despite the rally

Prices stay below its 16, 32, and 65-day Moving Averages and its MACD is still reads a sell and has just gone below its zero threshold indicating corrective pressure

Prices need to overcome 7,964 to improve its technical standing and propose some thing better

Tech Spotlight --- Page 5

US iShares MSCI Philippines: EPHE Recommendation: Stay light; watch support

Support: 40.20 38.69 Resistance: 41.77 42.20

The MSCI Philippines rebounded nicely gaining 0.98 off its next area of support but remains in correction mode

The rebound was stemmed by its second Fibonacci retracement zone of 50% (40.37), its 3-month lows (40.51), and the proximity of its 130-day MA (40.14) which should serve a weighty and important support site

Now is a sideways trend, prices must stand over this zone and not break otherwise a wider downside shift may surface

And although a range may again build between 40.20 and next resistance 41.77 this may be too small to range trade and thus the course of safety may just be preferred for the time being given inherent technical weakness

MACD reads still shows corrective signs (cross down and below zero) and prices sit below the 16,32 and 65-day MAs

A push over 41.77-42.20 is what is needed to allow for an improvement in its technical condition

Tech Spotlight --- Page 6

PLDT-US (PHI) Recommendation: Range trade

Support: 62.00 - 60.13 Resistance: 66.40- 68.10

PLDT-US rallied $0.69 to $64.19 but proceeds to stay within its range bands

However a recent slide below support 64.62 to 64.51 adjusts PHIs range to the lower end of its estimated band which now now cascades between next support at $62 and its lower-high band of $66.40

A weekly view of PHI shows a triangle like pattern whose major support (at $62) is close by and still under threat a break of which will trigger a major down trend & a Sell

Price parity of PHI to TEL stands at ($65.35*44.32 = P2,996)

Tech Spotlight --- Page 7

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