An Imperceptible Shift

FACTS

Despite the dominance of Gainers (116) in the Philippine stock market today, PSEi experienced its first real drop since its rally in the last ten days at 6,057.48. The value turnover of P8.92 billion helped Gainers surge from their closing prices yesterday, having increased almost P500 million in fresh funds. But then again it failed to prevent the drop in the PSEi value. This happened even under low participation levels (210 companies).

 

BDO Universal Bank Inc (BDO) is the most favorite with a value turnover of P1.09 billion. Unioil Resourcs and Holdings (UNI) topped the Gainers with an increase in price by 12.0 percent. The Worst Loser of the day is Lorenzo Shipping Corporation (LSC), which dropped by 17.68 percent.

 

ANALYSIS

The dominance of Gainers over Losers indicates that the gains came from an increase in prices from very low levels. It involves mostly secondary issues instead of the stocks listed under the PSE index, explaining the drop in PSEi. Traders may have found the blue chips too expensive to buy into, and opted instead to go for the cheaper secondaries. This indicates an increased presence of heavy speculation considering most companies even among the secondaries are also mostly overpriced.

 

The 40.66-point drop in the High PSEi level provides an early signal of a downturn coming. It may not be on Monday; but there is greater probability that on Monday, the index drop may continue and at a bigger figure than today. With cash tied up in the buying today, the sellers today may have to buy back in strong in order to prop up the PSEi. If that happens, a correction may only be happening. Although it is still too early to say that it will be a bearish trend setting in.

 

RECOMMENDATION

Monday would be a good time to SELL acceptably profitable holdings, especially when morning session indicates a serious movement downward. The increased buying today may stiffle the buying power of investors, eliminating the chances that loose cash can propel the prices high next week. If prices goes up on Monday, it would probably be a modest one, perhaps enough to make up for the lost level of today's downturn in PSEi.