A Weakened Bull

FACTS

After seven days of consecutive runs that went through the long pause for the Holidays since 2012 December 21, the surging Bull shows a day of weakening today as some investors cashed in their profits from the strong surge yesterday as the PSE Index (PSEi) breached the 6,000 mark. While the PSEi reached a high of 6,055.42, sectors suffered the brunts for the strong selling in the morning session which had partly made up for issues that experienced heavy buys. Favorite issues in the previous day dropped to almost its previous levels. The Financial, Properties and Services sectors reddened.

 

As disinterest marked certain stocks yesterday when traders ran after the surving prices, these neglected issues got much of the attention today. Seven fewer companies participated in the trade today. Gainers dropped to 85 as Lossers tried to overtake it but failed at 78.

 

Metrobank (MBT) led the most active at a turnover value of P626 million. Philex Petroleum Corporation (PXP) led the top Gainers with a moderate price increase of 10 percent. The worst Loser of the day is the Philippine Racing Club (PRC), which dropped by 18.33 percent.

 

ANALYSIS

The value turnover of P7.37 billion indicates a continued strong stock market interest today, which may continue tomorrow. Only that the favorite stocks today are not so much the stocks favored yesterday, and may reverse tomorrow. This hiccup however can be a very temporary respite before another surge continues tomorrow. But such higher surge can happen only if more funds--P10 billion or more value turnover--come in to prop up the prices to newer heights. Otherwise the strength of the Bull will weaken, allowing the Losers to overrun the Gainers. And that can become a trigger that will let loose the Bear. Speculative stocks can experience a steep dive in market price.

With the 6,000 mark achieved there will be lesser motive for a stronger surge until the inflow of funds is strong enough to bring the PSEi up to 6,5000. There is however so much motive in keeping the PSEi at the accomplishment, providing hope that certain issues may not go back anymore to their lower market valuations until the next Bear awakens and dash the prices to the ground.

 

RECOMMENDATION

Review your portfolio for the intentions you had when you accumulated them. Speculative buys that have made profits around 20 percent may be disposed at the highest opportunity tomorrow if the Bull continues to show weakening. Cashing in your profits can give cash power that can repurchase your favorite issues at lower prices.

 

Keep your stocks bought for value unless its market price got so speculative in today's session reaching as much as 40 percent in profit. However keep at least half of your holdings in these value stocks, especially those bought at the lowest price, for long-term keep.