VIX is UP... TIME TO BUY!!!

This is the time when contrarians should make it big time! Don't worry about the elections. Don't worry about the DOW's 1000 point glitch. Don't worry about the eurozone's credit downgrades and debt problems. Be greedy when others are fearful! That's the way to make it big in this arena!

For local stocks, focus on the big losers of the past few trading days such as MEG, PNB, and even URC. These stocks are set to rebound in the near future.

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?'