Market Closed in the Green... But It Could Have Been Greener

The market made an intra-day high of 3315 before closing at 3297, but still up more than 12 points from yesterdays close. Overnight, Wall Street edged higher after the fed kept interest rates at its lows. This helped the local market turn positive for today. But hmmmmm.... I believe it could have been more positive if investors did not succumb to mid-day profit taking. I'm believing that election anxiety is still a big concern. The big election news today is the denial of the comelec to do a parallel manual count (I 100% agree with comelec in this one).

Industrial stocks were the issues actively traded today with the biggest volume belonging to Aboitiz Power, folowed by Energy Development Corp. I believe that from this point, the market would enter a consolidative phase or resume an uptrend if supports hold at 3150. But this support may get a lot of pressure from worldwide events (such as sovereign debt downgrades of european countries) and as the May 10 elections draw near.

Expected a carnage.... however...

I expected a carnage at the local bourse today after the steep sell-off in Wall Street last night, but surprisingly (and fortunately), the decline in today's index was not that bad. I believe that much of the negativity about the world markets are already somewhat priced in. Remember last week, the local index sold even if Wall Street gained. The jitters are due to the downgrade in Greece's credit rating.

All sectors are on the red today but still, there were some stocks that edged up today such as the conglomerate JGS.

Watching the VIX, it was up 30% in one session closing at 22. This may be a good time to look into quality value stocks and snap them up while everyone's dumping. Maintain that cash position as any other prudent investor should do. Take advantage of these dips and wait for the fruits of this time tested strategy.

The Rally Continues

The local index rose for a 2nd straight day and now is only around 2% off its all time high (from 2007). At this point, we may really see some good resistance going into the 3400 territory. Resistance will come from the factual overbought conditions, the upcoming elections anxiety, as well as concerns overseas such as the financial reform bill being pushed through in the US senate.

Second line issues such as SMDC led the upswing today with some blue chip gains contributing the the index's climb. EDC continued its upward trend, while consumer staples URC stayed flat. MEG likewise stayed flat reinforcing a possible sideways trend from here.

Investors might want to cash in on some gains made during the last couple of days as there is much uncertainty in the market. A few days before elections, I would suggest holding to at least 20% cash just in case something unfavorable turns out.

Index Breaks Resistance

The PSEi broke past its 3230 points resistance today after buying in select blue chips led by AC. Other stocks that are up today include value plays such as JGS and URC.

As I'm writing this, Europe markets look horrible and US futures are indicating a sell-off at the open. I believe that whatever happens overseas tonight, the local market will end up lower tomorrow as some investors would lock in some gains and there is that 'weekend' effect.

Due to lack of clear direction and persistent election anxiety, I'll never get tired of reminding everyone to stay defensive.

Dip and Rebound

Yesterday, the local index shed another 50 points with investors taking more profits even after the overnight gains on Wall Street. Today is a different story as local stocks finally followed the Dow's lead. The question is: is the correction over? The PSEi corrected about three and a half percent from its high, which is still far from my prediction of about 5-7%. The lingering concerns about the local political scene could still be the trigger for another leg of the correction or a sideways movement. I would still suggest you keep a significant cash holding to snap up some bargains on downturns. It is unclear where the market will go from here due to election anxiety, so it is safe to be on the defensive.

Some winners today (but sore losers the past few days) include ICT, MEG, JGS, EDC and MBT. Megaworld should hit a higher-high within the next few days (past 1.44) for it to sustain it's upward trend.

A Somewhat "Expected" Sell-Off

The local index shed over 60 points today but still managed to close above the psychological 3200 mark. This followed the sell-off in Wall Street after Goldman Sachs got sued by the fed, as well as investigated by other countries for alleged trading fraud. I doubt if this would have a lasting impact as I'm sure Goldman employs top lawyers to make their case. But in the short term, this may trigger a shallow correction. I see this correction as a time to buy as the fundamentals of the economy is strong (so far a good earnings season).

From here, I would expect a downward-to-sideways movement until the elections on May 10. If the counting machines and comelec pull this one through, then I would expect a massive rally whoever wins. The opposite, likewise, is something to prepare for. I would slowly buy into stocks during this decline but still save some cash just in case it turns ugly in May.

Again, watch the S&P VIX for clues on when we can get in. As Warren B. would say, 'be greedy when others are fearful', but for our local stocks, moderate your greed until after the elections.

The VIX case

As I have predicted. The dictum "the VIX is low, time to go" still applies. The DOW shed 120+ points fueled by the SEC case against Goldman Sachs. I would suggest to stay on the sidelines for now if your local bourse cannot short the market for a few days. I would expect a 5-7% correction at the very least for all markets.

The local stocks closed lower and extended profit taking along with the rest of asian markets. This might continue throughout next week. However, if you have heeded my advice regarding securing some gains during the last few trading days, you will be very well equipped to snatch some bargains as this correction proceeds.

Again, use the VIX as a guide. Once it hits 24-26, I suggest you start buying!

PSEi Decoupled... in a Negative Manner

My internet conked out yesterday hence the missed blog. Anyway, yesterday was a boring market over all with the index closing virtually flat. Today was an exciting day but in a negative light. The PSEi struggled to hold the gains and closing 20 points lower. Local investors ignored the 100 point rally of the DOW overnight, the 11% china 1st quarter growth, and a slew of generally positive earnings. What's the reason? Failure of election worries? The news on bombings and acts of terrorism? Whatever the reason, I believe investors found an excuse (a measly one, I suppose) to lock in their gains. And I see this pullback as a chance to buy-in in quality, value stocks.

Whatever happens overnight on wall street, I believe that tomorrow's local market will not be pressured to the downside. We might even see a decent rally tomorrow if the dow will not end as bad tonight.

PSEi eked out small gain

The index eked out a small gain today brought about by a mid session rebound. Again, this intra-day turn around movement is a bullish sign, taking in the correction early and quickly moving on to eat the goodies.

MEG rebounded after trading lower early in the session and established another higher-high. The stock pulled back to the 1.36 level before making the run to 1.44. That drop to 1.36 may have been the new higher-low and we might expect MEG to run towards it's key resistance at 1.5-1.52

PNB succumbed to some profit taking after a very good and solid run the past few trading days. At the closing price of 32.5, this stock is still very cheap. Short term resistance and target price is at 35 but I will not be surprised if it would correct first down to 30 before making another run.

URC corrected some more, going as low as 24.25 and closing at 24.75. That signaled to me that URC may be on another leg up. As I have mentioned in my previous posts, URC is still a cheap, very good quality stock and still has a lot more room to the upside. It's parent holding company, JGS, seems to have entered a sideways pattern and this maybe a good time to accumulate this stock.

While everything looks bright and shiny, it will never hurt to still play a little defense. Lock in some of your gains while the market is still hot, especially on 2nd and 3rd line issues. The S&P VIX is already at the 15's level and I view this as complacency in the market that often precedes a significant sell-off. As they say in wall street, 'if the VIX is low, time to go?'

Upward Trend Continues

After a long weekend, the market is back and resumed its upward movement on a fairly decent trading volume. The index established a higher high today which is again a bullish signal for the market. All these gains thanks to positive overseas leads last friday, as the DOW touched 11,000 before closing 3 points shy of the important psychological barrier.

The index's gain was led by TEL, energy company EDC, and property giant ALI. JGS once again gained 3% reinforcing a sideways trend. MEG likewise established a higher high today making the next pullback a buying opportunity for this stock. A big winner still is PNB gaining 4.6% with investors finally seeing value.

The S&P VIX is approaching historical lows and contrarians may see this as a time to sell or short the markets. For local markets, this may also be the signal to lock in some gains and save the money for the next pullback (which will come, in due time).

Inhale.... Exhale.... Exhale some more?

The market corrected through a small volume trading session today and it's really hard to tell if profit taking will continue next week. Sentiments are still bullish with still some room to the upside. The index lost a little over 14 points today, which is seen by analysts as a healthy move. This correction also followed the decline in the Dow overnight. The overseas markets are once again spooked by Greece's problems as well as the Fed hints of caution.

Still, some issues managed a gain such as MEG. MEG continues to establish a higher-low, higher-high pattern which strengthens its uptrend. I plan to increase my position on this stock on the next (hopefully) 'higher-low'.

PNB also continues its trend higher but still trading below par and book value. Before getting into PNB, I would suggest to wait for some kind of pull-back ( at the 29-30/sh level) where the stage will be set again for hopefully, another run.

My strategy for next week: watch out for earnings, Greece, and the US Fed. Persistent Greece and Fed worries could trigger a further market correction of about 5-7%. If earnings are generally good, then the correction brought about by the former could be a good opportunity to buy. If earnings were disappointing, then we are in for a much more deeper correction.

Notice that in analyzing Philippine stocks, I frequently mention the US and the global scenario. That's how much intertwined markets are nowadays.

Happy long weekend to everyone.

Follow-Through Rally

After awakening yesterday, local stocks managed a follow-through rally though the volume traded declined. This small increment, small volume rally is still a welcome development since I have expected a small decline for today after the massive gains yesterday. Value turnover reached 4B after the block sale of EDC shares conributed 1.6B.

The 'uber' undervalued stock PNB that I mentioned yesterday came roaring so much louder today, up by almost 9%. I've been waiting for this PNB play for so long now, and despite the recent rally, this company is still 'way' undervalued. It is rumored that PNB and Allied bank will merge this year though it is still unclear which bank will benefit more.

URC continued its marathon up gaining one full peso in value. I've been playing URC since it hit its lows at the 4 -5 pesos level and has rewarded me handsomely compared to my other holdings. At 27/share, believe it or not, this stock is still cheap! Yes, despite almost yielding 500% since the crash of 3Q 2008, this stock is still trading at 8-9X 2010-2011 PE. There is still a lot more room to the upside for this stock but I would suggest to sell some shares to lock in some profits.

Be fearful when others are greedy. This old Buffett adage is the sole basis of my advice to lighten up on some of your positions and save the cash for the rainy days (get greedy when others are fearful).

The Awakening

Wow... Today's market action brought us twice the good news. One is that the index soared higher, up by more than 2 percent. The other is that high volume trading is back (at least for today). And what do these two market moves tell us? These mean that market sentiment is outright bullish. But then again, I can't help but be worried by overly bullish conditions.

The index rise is led by blue chips and selected second line issues. PLDT was up almost 2% while consumer stock URC was up a whopping 4%. It's parent company, JGS, likewise climbed back 0.3 pesos and almost eradicated yesterday's losses.

Select bank stocks roared today such as BDOand the 'uber' undervalued PNB, while BPI and MBT just er... ...purred. Mining and oil stocks also flew, probably boosted by increasing oil prices (Oil just busted through it's 84-85 dollars/barrel resistance the past week)

Property stock MEG rebounded from yesterday's decline and avoided a technical resumption of a downtrend. Watch out for MEG establishing a higher-high after recent higher-low of 1.22, as this will reinforce an uptrend pattern.

Where do we go from here? Expect some profit taking within the next few trading days though I also expect the 3200 index level to hold. There is still more room on the upside especially with improving US economic conditions. Prudently, keep a healthy cash position (about 15-20%) of your portfolio to keep your guard up.

Market still in vacation mode

After a long holiday, it is really very hard to pull yourself up and get back to work. This is called vacation blues. Though the market is up, the volume unmistakably tells us that a lot of investors are still not back in action.

JGS corrected today, probably triggered by its announcement to delay the much awaited Cebu Pacific IPO. I agree with this move since there is really a lot of uncertainties with the upcoming automated elections.

Property giant Megaworld (MEG) also closed significantly lower today, but watch out if it holds at 1.20. Holding at this support level would establish a higher low, and would reinforce an uptrend line. Breaking below this level would otherwise consolidate a sideways pattern or even resume a downtrend.

US futures are up, and hopefully will translate to a positive close by tomorrow morning (betting on DOW 11,000?). Hopefully also, the local market will follow suit and break its vacation blues.

April Fool's! And the joke's on who?

I keep on forgetting that this is a regular trading day for most countries. I was thinking that this is a day free from posting until I tuned in to Bloomberg TV.

Asian stocks are mostly up due to the optimism in the economic recovery as well as a positive Tankan survey which measures business optimism in japan. It would be hard to say if we would have traded likewise higher especially after the DOW lost close to half a percent overnight.

Wall street ended the quarter on a low key, but still higher than the start of the year (bumpy, but still higher). The jobs report this week provided for that negative investor sentiment which drove US stocks lower. But again, I believe this pause is healthy to say the least, if not setting the springboard for another leg up.

Even when on the beach or other vacation spots, I believe local investors are keeping an eye on international equity movements, rearing to go once trading resumes next week. Whether resumption would turn positive or negative would depend on the direction of international action by the end of this week.