Last Friday's sell-off on SM puts its price at the immediate support area around 600 (588~603).
The unusual price action was likely the result of a rebalancing activity by both local and foreign funds prior to the effective date of PSEi recomposition this coming Monday, March 13, 2017. PSEi recomposition memo:
http://www.pse.com.ph/resource/memos/2017/CN_2017-0008.pdf
With SM as the largest company in the PSEi by weight and free float market capitalization, any shares flooding the market at the pre-close bidding will understandably pull down the price to accommodate the seller's volume appetite.
Trading Plan
- Buy this dip.
- Set a wider stop-loss other than immediate support breakdown (take higher risk).
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