Tightening Upside Potential Appears

FACTS

The P7.75 billion value turnover managed to push the PSEi to a new high of 6,542.51 despite the defeat of the Advancers in the hands of the Decliners (72/84). Non-index stocks also participated in the surging force evidenced in the new high achieved by the PSE All Shares Index at 4,103.86.

 

McDonalds franchisee in the Philippines, Allied Global Group Inc (AGI), topped the most favorite stock of the day with P615.09 million value traded. Its price dropped 2.88% though at closing.

 

ANALYSIS

Lately the surging force continues to gasp every around two days, indicating that despite the huge investment money invested in the stock market, the bullish pressure is getting weaker and unsustainable. The investors simply are not as bullish anymore as some of them preferred to hold long-term. Traders can only push the market to new highs to a certain point. Only growth stocks seemed able to keep on gaining new grounds when liquidity is high.

 

The A/D Ratio of 0.86, the weak surge in PSEi High, and the stronger surge in the PSE All Shares Index indicates a potential dip in PSEi tomorrow with trading focused primarily among non-PSEi issues. Value turnover may dip to P6.0 billion.

 

RECOMMENDATION

Long-Term Investors

Except for those who stayed cheap during the recent bullish surge, no new cheap stocks are expected to appear tomorrow or in the following week, unless a drop of PSEi to 6,000 happens. Stocks are still generally overvalued. Keeping some cash ready for that proverbial "rare elephants" maybe a wise thing to do.

Short-term Traders

Certain issues, particularly the speculative stocks, continue to behave with wide swings. There is still a respectable profit to make there at this level. But it would be harder to do this time than late in 2012. Depending on your trading capital, single-digit stock prices may be better alternatives for a trader to speculate with rather than the double- or triple-digit priced ones.

Historic Turnover Rebounded PSE Index

FACTS

The PSE Index (PSEi) reached another new high today as it went beyond the 6,500 milestone, registering 6,531.79. This occurred as interest in the stock market surged anew with a value turnover of P11.84 billion, the highest so far since November 2012. It more than doubled the anemic turnover of P4.63 billion yesterday. Gainers left behind the Lossers with an Advance/Decline Ratio of 2.15.

 

The All Share Index High however continued to slip down to 4,069.42 from 4,077.00. This indicates a concentration of the surging stocks among the 30-stock PSEi, which spred to the other index stocks. The general market continue to be on a slow downtrend.

 

Puregold Price Club Inc (PGOLD) is the most traded, involving a value turnover of P1.50 billion; followed by Universal Robina Corp (URC), P693.2 milllion, and; SM Investments Corp (SM), P628.8 million. Advance rate however topped only at 8.88% with Megaworld Warrants 2 (MEGW2). And the Decline rate reached only 16.61% with Berjaya Philippines Inc (BCOR).

 

ANALYSIS

The historic rise in the value turnover in an 11-digit figure may not be sustained tomorrow. Value turnover will slide as the buyers of today may not be able to get out from their positions tomorrow and buy new stocks with the proceeds. But it is expected that Gainers will continue to dominate the day. Favorite stocks may continue to reach record highs tomorrow fueled by those who sold their stocks today.

 

RECOMMENDATION

Look out for sell opportunities tomorrow on those stocks that are already being overvalued. Long-term investors however may find their holdings grow more; while growth investors may continue to bet on the surge's ability to be sustained further within the week or so.

 

Battered Bull Failed to Register a New High

FACTS

The PSEi continues its downward beat pulled down by an anemic investor interest, as indicated in the worsening anemia in value turnover at P4.63 billion from yesterday's P5.85 billion, and from last Wednesday's P9.98 billion, the highest level this year. The PSEi change rate, on its 3rd day, also behaved like the four-day down ward behavior last week.

 

Moreover, Gainers finally gives in to the overwhelming Lossers, 55-106.

 

Most stocks behaved with uncertainties, and continued within a well-defined channel where they had stayed in a week or so. Some though already experienced gathering disfavor, such as Metro Pacific Investments Inc (MPI), Filinvest Development Corporation (FDC) and Alsons Consolidated Resources (ACR). Still a few managed to take on a new high (e.g. Allied Global Group Inc, AGI) or simply growing patiently (e.g. San Miguel Corporation, SMC).

 

ANALYSIS

The market tomorrow has an 80% chance of continuing its downtrend if the value turnover does not improve to the P9.0 billion level. And, although the market in general continues to be overvalued, another downturn tomorrow is expected to already pull down the prices of many stocks, back towards more fair levels.

 

RECOMMENDATION

Review your prospect lists for potential buys tomorrow if the market goes down once more. There is a good chance that a few of these may already be around 10% premium or below. Still traders may find a few opportunities to sell stocks intended for short-term trading. Long-term investors may found more value for value for their money; although no so much as in bear markets.

 

It is still not a bear market though.

Crawling Bull Managed to Break New High

FACTS

Today's market closed with unexciting behavior. The value turnover is thin at P5.85 billion, the fourth day in a series of dropping liquidity since it reached a peak of P9.98 billion on Wednesday (February 6). Gainers barely outmatched Lossers 83-to-81. Last Friday Gainers failed to outdo Lossers at a deuce.

 

The good news however is that despite the crawling movement of the exhausted bull, the PSEi managed to breakthrough a new high and at the milestone level of 6,500, and just barely did so at 6,500.08.

 

The anemia of investor interest can be seen in the value turnover of the Top Three most-traded stocks of the day. Globe Telecom Inc (GLO) had a measely turnover of P210.34 million; SM Investments Corp (SM), only P182.87 million, and; Bank of the Philippine Islands Inc (BPI), P150.76 million. Compare that to the most favorite stock on Wednesday--BDO Unibank Inc (BDO)--which logged on a value turnover of P1.82 billion.

 

ANALYSIS

The PSEi performance is mimicked by the PSE All Shares index, indicating that the market malaise has been widespread in the market.

 

Today belongs to the second set of dissipating market interest; the first of which occurred last week from Monday through Thurdays, wherein PSEi change was at its highest of 117.17 and then dropped boldly in the succeeding days--to 29.87 on Tuesday; 7.14 on Wednesday, and culminated into a negative figure (-26.46) on Thursday. Today is the second day in the downtrend of the PSEi change (from 29.91 yesterday to 10.18 today), which may result into a negative figure tomorrow and Wednesday, bringing the market prices downward and more strongly... unless buying interest recovers at the level of at least P8.00 billion.

 

Nonetheless, the general prices in the market continues to be very high; that is, overpriced. A persisting bull with renewed spirit this week remains possible which can bring the PSEi to new heights. There is however a probability of profit-taking when such occurs, which can dampen the buying momentum.

 

Should a reversal occur, and a sustained one, value investors would be opening their purse wider. But that could spell the end of the Bull market. And who wants to end the enormouse stock pricing growth than those who had not bought in at attractive prices?

 

RECOMMENDATION

Despite the impending persistence of the downward pressure, this week's prospect continues to be a wait-and-see situation. The drop in prices may not dint the overvaluation that is reigning in the market. And the absent P4.0 billion funds in the market can become a buying force that will push the level much higher this week. There is a strong probability though that the traders who have already gained so much profit (at least 20%) on paper may decide to cash in on it when the market players decide to push the prices once more. At this pricing level, these are a trader's most tempting times.