Analysis of Stocks, Markets & Commodities

I sounded like a broken record and kept saying retest of July lows, restest of July lows, restest of July lows! Well, last thursday, we finally got that! Now what are we going to expect next after an accurate outlook? I think we will expect nothing but the same as what is happening to our markets right now. Whipsaws UP and DOWN in big percentages.

Now why is that? Because we don't know if there are other American financial institution out there that will suddenly collapse, each day is nerve racking. Over the short term, it's quite obvious that we will get a healthy bounce from the lows we made last Thursday but over the longer term, I think we have some more room to the downside as all the effects of what's going on will trickle down to global consumers. Don't forget that the global economy is slowing down while all this is happening so things may get much worse from now.

A strong resistance is expected in the gap that was created last September 16.

After the great opportunity to buy yesterday, that lovely bounce I've been expecting indeed came in today. I sold everything I bought yesterday at profit. I sold all of them because Singapore and other Asian markets suddenly showed signs of weakness. Fear also rushed in me since everyone became greedy. That's because after being down 100+ points yesterday, today we suddenly went up more than 60points in mid day trading?! That's a an opportunity to sell sell sell!

Now that the rally already occurred, I'm not quite sure what to be doing next. As of writing, asian markets continue to fall and DOW futures are down more than 100 points and I'm not sure why despite the news that U.S. government will be saving AIG with $85billion infusion. Lets just wait for the market to test its intermediate lows before considering buying again.

The financial markets (at least in the U.S.)  is collapsing in a blink of an eye! Lehman files for chapter 11 bankruptcy, Merrill is lucky as it is being bought by Bank of America and AIG (American International Group) needs to be restructured. Global markets panics, the dollar falls and oil falls with it! No one was expecting something like this to happen but a retest of the July lows seems to be very achievable now. (See August 10 entry)

Accept it, that is how bear markets work.We need to see double or tripple bottoms to occur before calling an end to an existing bear market. Now is not the time to panic and stay away from the markets. Now is the time to BUY BUY BUY! Let them panic and sell you bargain prices! Value will eventually come in and you will be rewarded. Yes the stock may fall some more when you bought them but at least you were not among those who bought up there because you thought that July lows was history and bought to ride with the train.

I was actually surprised that my September 6 call was valid since the DOW rallied the night after I posted that one. Seems like the PSEi had made a smart set up that had known what was coming.

BUY BUY BUY!!! PSEi 2,400 is just one hundred plus points away. Be GREEDY when EVERYONE is fearful! Again be cautious, don't go all in at once.

As shown in the chart, the market is now testing a support level. Key support levels are shown in the chart above and indicates that when it broke the first one, next target would be the next support level below that level that was broken.

Right now, there is no sign of NFS abating, in fact it continues to accelerate and broke the legs of our market. Some of our stocks now are trading at their lows, in fact one of them is at their all time low already. Should we be buying these stocks already? Maybe not yet, buy them when it was being sold down heavily at one point then the next day, panic sellers rushed in and the stock goes down more than 10%. It's really risky but if rewarded, it's one heck of a deal! I'm not saying you go all in at once, just start buying when people are panicking.

The market is on the verge of breaking its current short term uptrend. Markets globally remain volatile thus making it not safe for short term traders. If the market further plummets from here with volume (this is important), then expect a retest of our July lows. Foreigners relentlessly sells our market thus making it hard for our market to move higher despite the buy back programs.

Stay on the sidelines guys!

Is a double top formation in the horizon about to form? The Philippine Market has been holding up these past few tradings days despite bearishness in the global markets. All Asian and even European markets has broken supports and made new lows once again. Foreign selling has not abated yet and it seems that TEL is carrying our market. If TEL breaks down, I'm sure the rest will follow. Oil broke the $110 support and its major uptrend line and may correct further from here. The market rejoices that news and that OFW remittances is resilient and continues to rise and being sent home despite to global slowdown. Can the Philippines escape such a global slowdown? Maybe, maybe not.

The Philippine Market has the tendency to be the last one to move, will it be true again this time?

to zoom in press = CTRL +++

Lets revisit how this bag of Asian markets are performing. You may visit the August 1 entry to see the legend of these indexes. As you can see, the PSE which is in red has now catched up with its Asian neighbors and in fact is performing better than most in this year to date chart. This would mean that a significant high move from here is unlikely anymore so would you still be buying like crazy? I don't think you should because the probabilities is not in your favor. Remain on the sidelines and be cautious.

GDP figure came it generally worse than expected at 4.6% and it's funny how the market ignores such figures. Does this mean that all the bad things are all behind us? Or does it prove to show how small our market is that whatever news we get from the U.S. , good or bad, we just follow them like the good GDP figure of their country? They got 3.3% growth and now the question is, will it be sustained come 3rd quarter? Will it be revised lower again just like what happened last 4Q of '07 when it was revised to negative territory. Our 1Q was revised also from 5.3% to 4.7%. My goodness, I mean .5% is a lot! What is this?! I don't know what is really happening behind the revisions and all that but man... It goes to show that whatever figure comes out is definitely not accurate or reliable anymore. If a 1Q 4.7 was previously reported, I'm pretty sure things would've been different don't you agree?

The PSE moved higher by 1.22% last friday this time with better volume. Why? Because the U.S. market rallied by 200+ points? I don't think that would be a good reason because the U.S. market is moving triple digits daily this past few days and it does this on small volume. Not to mention that it fell 171pts yesterday. There will be no U.S. market action on Monday because they will be celebrating their labor day. We had better Net Foreign Buying today. AGI was up huge today! 

I don't think that brighter days are here to come to our markets not until oil convincingly falls below $100. Right now, the key to the movement of oil prices is Hurricane Gustav, if it does cost tremendous damages to energy infrastructures like oil rigs and refineries, then expect oil prices to be higher than $120 again and stay there. If it does not, then maybe we will see a break of the key $110.

Yawnnn! Same boring day for the PSE. Foreign money is still selling up to today most of which came from MEG, AGI and GLO. It's interesting that despite the P5 billion (5,000,000,000) buyback program launched by MEG / AGI (2b / 2b + 1b), foreign took this as an opportunity to sell as the rally started after trading was resumed 11:35am.

“We believe in our capability to build businesses and thus contribute to the growth of the company and our country. This share buy back program clearly underscores our confidence in our strategy and the sustained long-term growth of Alliance Global. We strongly believe in the long-term prospects of our existing businesses. The next few years will be very exciting for Alliance Global as we continue to grow our existing businesses and catapult the company to a new level of growth as we chart a new path as a major player in the Philippine tourism industry. There are always opportunities in every situation, and in the current environment, we believe we can enhance shareholder value by buying our own shares. Our P5 billion share buyback program for both Alliance Global and Megaworld is our best option under the present circumstances," said Andrew Tan.

Andrew Tan-Led Alliance Global Launches P5B Share Buyback 

More trading action may be seen tomorrow as investors will position themselves before and after the announcement of our 2Q GDP. I'm not an economist but let me just guess that it will be 4.6 - 4.8%

B-O-R-I-N-G! Volume /value turnoever today was still light. Foreigners are back and continues to sell our market. Manila Water Company (ticker: MWC) was the bread winner today with net P57m foreign buying of this issue. Market is now filling the gap as can be seen in the chart below.

The strong probability that the market will move lower some more was evident today. TEL (ex date for P70 cash div is today) and AC was not able to support the market today. AGI was down almost 10% today. SM was down 5%. Bank stocks like MBT and BDO were down 4%. BPI held on today but I think it will follow the pack in the coming days so if you have BPI, sell it then buy lower! BPC, FPH and FGEN was down 5% 8% and 7% accordingly. This sector reported lower earnings compared last year and was obviously way overbought and is now correcting as reality bites. MEG was also alot lower from the highs when it hit P1.7 and went somewhere in the P1.30's range.

I've mentioned last August 11 that we should be selling that rally. So what should we be doing right now? Do we buy and go all in into this market? Hell no. If prices fall further (in which I believe will do), I might dip my small pinky toe into the water but it will definitely be a small position and will add some more as it moves lower. If you have bought that rally as some few were selling them to you, I don't really know what you should be doing right now.  Cut loss, average down or wait. That's a tough decision to make because to tell you the truth, you are the new generation of ipits (see August 6 entry).

U.S. Markets is now breaking down from the its minor uptrend line which means that danger is in the horizon! I'm typing this at 10:30pm right now so anything can happen after this. If Dow confirms a close to this break down and did not manage to rally tomorrow, then we will be expecting a revisit of the July lows (see August 10 entry).

The continuation of overbought sectors being sold down is again evident today. New (greedy) buyers are again ipit up there, sweating and very nervous on what to do. It was Ayala who saved the market this time if it was TEL yesterday. There were a lot more decliners (54) than there were advancers (34). I think that there is still a strong chance that the market will move downward from here because there is nothing that can hold the market at these levels. Crude is still above $100 and is still expensive. Global GDP figures are ugly, Japan and Euro Zone turned negative (for the first time since it was created with Germany leading the pack of -0.5%) in the 2nd Quarter.  Our Philippine GDP will be released on Aug 28.

Sectors that was being bought before is now being sold again. The bears took control of our market; there were 27advancers, 65 decliners, 50 unchanged. TEL me, why are we up today?! This is the time that the market reminds you how small it really is. That's because our market is 30% of Philippine Long Distance Telephone Company (Ticker: TEL). That means where TEL goes, our market goes. Without TEL today, we should be down by 16.5pts.

Ayala Companies (AC, ALI, BPI, GLO, MWC) also controls at least 26% of our market which brings us  a total of 56%. Without these two giants, we don't have a market!

The 130ma (around 2,800) proved to be one tough resistance as the market retreated after almost touching that area. Support is around 2600 which is the 65ma and where a gap must be filled. Oil also rallied to $117 from a low $112 thereabouts which proves us that there is clear support near the $110 levels. Foreigers are still selling whichever way the market goes. Why? Don't ask me. Ask them! Because... I'm not a foreigner!

Today, we continue to see a correction in the market; the index fell 1.23%. The greedy people who bought prices at the high are now puzzled, they're thinking weather to cut losses or hold on for dear life. After concerns that the global economy will further slow down because of China and Europe, today, Japan shared its share of the pie (see notes below). It is becoming clearer than we will see a global economic slowdown in the coming months, weather it will be deep or short-lived is yet to be known. I think oil prices will play a huge factor to answer that question. If oil suddenly spikes for other reasons despite the weaker demand for the commodity and traders started to speculate on this one again, we may see stock indexes plummet once again and revisit its lows. The world has been flattened so much because of globalization that inflation is trying to make it rounder once again. 

Here's some notes from the news about Japan:

This is also bad news for our economy because Japan is our 2nd largest export market (1st is the United States and third is China and then Hong Kong). Asian markets fell today with Nikkei leading the pack down 2.11% and is already near the psycological support of 13,000. A bounce or a break of this support is yet to be seen. 

*Got the news from http://biz.yahoo.com/ap/080813/japan_economy.html

The sell signal was very clear yesterday and we did get it today. Some small caps encountered heavy selling pressures which may set the mood for the PSE this week. Now the question is, will this correction be short lived or are we going to revisit the lows again? Let's not put ourselves ahead of the market and try to predict where the market will go again because in reality, I can't predict where it will be in weeks or months, no one can. We can only give probabilities where it will be headed.

*sorry for the late update, it was a busy day.

Market gaps up again and moves closer to the 130ma at 2800. Man... I'm telling you, when a market moves like this with volume / value that used to be normal during the last bull market and that foreigners continue to sell. We are due for a correction! SELL INTO THE RALLIES! I hope I'm wrong but this is what I think will happen. We went up 3.12% while the most of Asia was up by less than a percent and China plunged 5.21% today (at 19month low). Is China cooling off more than most has anticipated? Europe is currently experiencing growth issues, will this lead to another wave of global economic slowdown but without inflation because of weaker purchasing power (demand < supply). Time will tell.

Our market is now enjoys a huge huge rally from the lows and is very convincing. The MACD is above the zero line now; the last time it was above it was last Nov '07. This is good sign for the bulls but the RSI is now at overbought levels. We may see another rally come Monday because of the surge from the DOW and the drop in oil prices. I expect the market to correct after than and fill the gap created a few days ago and get a support from the 65MA (purple line) and establish a base from there. I'm still holding to my anticipations that the PSE will revisit it's July lows soon because of how markets (in bear mode) tend to behave when the economy is bad. (See how the PSE has behaved in bear markets below)

Today,market has rallied 18% from the lows. When will it top out or will it top out? Perhaps at 130ma (2,800)? Only time will tell.

Greed takes a breather. My "Greed-Fear Index" is now at 80-5-15 

When greed takes charge of the whole market what are you suppose to do??? Yeah that's right! Sentiment is what drives these markets! Never put yourself in a place where the whole crowd is because usually, the unexpected or the inverse on what everyone is expecting happens! Clearly, the global economy is still in bad shape and nothing significantly will change in a span of weeks. Sell on rallies and buy the inevitable dips! Don't trade illiquid stocks or those that don't have fundamentals with it because when it goes down, you have nothing to hold on but paper and paper alone. Fundamentals will not be there to comfort you on why you made that trade or investment. This advise of course is only suitable for bear markets.

People who say that this is a start of a new bull market that will last for quite some time is crazy! They better have good reasons on why that will be the case!

Foreigners are still net sellers. Until we don't convincingly see that they are buying our market, I will expect our market to further go down.

Asian markets continues to drop! Will the PSEi follow suit? Abangan!

Just a side note: I do hope that the opening of Olympics in China will be peaceful tomorrow. You should know what will happen if it's not. A repeat of September 11? Shhh! Wag naman!

Inflation came it at 17year high at 12.2%. It was slightly above the BSPs forcast. This headline may be considered at no news anymore because it is old news already. That's because we are now seeing oil  under $120 and so a lot of investors will be seeing lower inflation in the coming months already. That's if oil sustains its price at these levels or lower. Market is now seeing fewer buyers as resistance at these levels are quite heavy already. The FED is also expected to keep rates unchanged later. All eyes are still on the small cap stocks, their gains aren't affecting or shifting to our big caps, foreigners still continue to sell our market to hell. Are you prepared for a pull back soon? I hope so.

Our market has now confirmed a higher low and is now forming a higher high approaching the 65ma which is the resistance, next would be 130ma which will be around 2800. It did touch that level yesterday but as greediness conquers the market, you should know by now what to do ( if not, look at the upper left of your screen. Today I expected a pullback and yes we got that but our market remained very very strong, in fact it erased its early pullback and closed with singled digit gains. So why did our market remained strong despite continued foreign selling and sell offs in other major markets.

This chart my dear readers is a comparison of markets I look at. If you can't see it clearly, just kindly zoom in your web page by pressing CTRL ++. For those who does not know or aren't familiar yet:

• ^psi = The Philippine Market
• ^ks11 = Korean Market
• ^sti = Singapore Market
• ^klse = Malaysia Market
• ^n225 = Japan Market
• ^hsi = Hong Kong Market
• ^dji = U.S. Market

Sorry no update today, I attended COL's mid-year market briefing today. Also, greetings to my brother! It's his birthday today! Happy birthday!

What a way to start the week! Our market rallied today by a percent BUT with no significant volume or value. I hate to be a spoiler or whatsoever but I'm really not convinced that our market will now start trending up and up. The difference between what was happening before and today is that we can now clearly see that a higher low was formed and that our market is clearly above the 32ma but we are still waiting for a convincing break at the 2,600 level to happen with great volume or value, don't forget that because that is very important. 2,600 is just 60points away and a few stocks are already showing some heavy selling pressures specifically MEG which opened at 1.48, then went as high as 1.54 then some funds started to sell down to 1.44 then closed at 1.46 sell side. A lower close than the opening price means that a bearish black candle is formed. When a black candle is formed when a stock is going up is bearish but who knows what will happen.  Also, based on PSE's quotation report, we again had a net foreign selling day today at almost P300m. These are some of the reasons why I think the movement we are seeing right now is a bear market rally and also the reason why I think that many people are becoming greedy. Maybe people are getting the feeling of being left behind, thus buying some shares not knowing that at the end of the day, the big guys will sell them down (again). Oh well, enough of that, the important thing is that there will be buyers around if and when the market tries to battle the 2,600 level or when selling pressures comes in, buyers will absorb them. Fool me once, shame on you! Fool me twice, shame on... ME!

I posted that the market was quite greedy (in home page) on Thursday (up 3%) because the buying was clearly overdone and sure enough we encountered some selling pressures today. It should be noted that the PSEi was strong today despite the huge huge drop in the U.S. Most of Asia markets were down by almost 2% but ours was down by just almost a percent. This is good sign for the bulls since it is evident that there are buyers supporting our market but i don't want to get my hopes high since we are now near the 65ma ave in which I believe will be a strong resistance because this is also the resistance of the trading channel of the PSEi (see chart below on July 21).

What a day! The market is up 2.2% with good volume! Total value for today was P2.5b, this isn't bad for a 2.2% up. At least it was well above P2b which is what we all want to see. The problem however is that foreigners continue to sell our market (net foreign sell of 360m), this is not a good sign for the bulls since we know that for our market to start a decent trend, foreigners should be riding with it because they practically control our market. You can see above that our market is already near the red line and we may see some selling pressure from here on, if not some sideways movement. It's also nice to note that the battered property and financial sector showed some strength today, they are usually the ones who recovers first before everyone else and int the same way the first ones who breaks down first. I sure hope that this is not another bear market rally but there is a strong chance that it is since oil prices are still high at the pump, inflation is still to be seen in the double digit levels as transport and labor groups want higher fares and wages.

It was another quiet market today as value turnover was a little less than P1.5b and almost half of it was cross transactions. This is the reason why I think sixty percent of the market does not have feelings anymore. Either because they are very ipit or because there is no quick opportunity or profits to be made in this kind of market. Foreigners continue to sell our market, now on its seventh consecutive day. The PSEi moves closer to the red line (32ma) and may face another selling pressure (I hope not) as people who has bought this market may get impatient and just sell their positions and move their money to fixed income securities.

The Philippine market is clearly in a downtrend and is now hovering in the middle of its downtrending channel as seen in the chart above. I expect the bulls to fight its way to the 32ma (the red line), currently at 2,500 and continue to move downwards and retest its recent low of 2,340. We need to see the market to convincingly break this downtreding channel in able to see a reversal.