Gus Cosio says so

Ideas on the Philippine Stock Market

What’s the challenge?

10:20 Tuesday    25 August 2009  Philippine Stock Exchange Index  2864.01 (in the middle of trading session)

Frankly, I have never seen a single day rally of the magnitude that we saw Monday in the Philippine stock market ever.  This was a 5.11% rally where you had practically all the blue chips (TEL, AC, ALI, MER, MBT, BPI, SM, SMPH, BDO, GLO, AP, & MWC) gaining creditably.  You also had second line property issues (MEG, FLI, RLC, & AGI) rising strongly.  Then you have the mines (PX, NI, and GEO) drawing a lot of enthusiasm.  You also have consumer stocks (PIP, GMAP, GMA7 & URC) gaining handsomely.  It is just euphoria out there.

If you observe buy/sell activity, you’ll notice that the sellers never gave way to buyers such that before the close of session, a buying frenzy of sorts was seen.  The positive element that I attribute to this rally is that traders took profits at high prices leaving them more cash to support the market should a correction come.

Essentially, the bullish case for the market remains strong.  the GDP numbers expected to be released on Thursday should support the view that the underlying economy is resilient.  My only concern is the usual reaction of astute market players who buy on the expectation and sell on the news.

Nevertheless, since we are all aware that markets do not go up in a straight line, it is good to diversify the plays.  Yesterday, the move apparently was made by investors  simply wanting to buy the market which means most of the plays were in the blue chip issues.  In succeeding days, I think top slicing on previously profitable trades will allow players to get into theme plays like mining  and the cyclical move of real estate firms.  From what I am seeing, there seems to be strong interest in MEG, AGI, RLC and VLL particularly because ALI has gone through the roof already.

When the mood is as good as this, market plays will inevitably happen.  Money is always looking for assets in a strong market and ideas are what drive the search.  This is why issues like WEB and ISM are attracting a number of players.  MPI, which has been hogging the news lately, will also be a buying target. People will follow the momentum because it usually works for them.

Anyway, we are pretty close to the near term resistance of 2897 in the PSEi.  If we break that number, we’ll likely surge another 100 points.  If we don’t, I think it will be another buying opportunity because it is just a matter of time before we challenge the 3000 level of the PSEi.

P.S.  I’d like to alert readers on ELI which had a price and volume spike today.  Some money can be made here just trading the momentum.  Good luck.

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August 24, 2009 - Posted by | Financial markets in Asia

4 Comments »

  1. Stumbled onto your blog and based on what I’ve been reading it’s one of the more thoughtful ones out there concerning the Philippine market. I will be subscribing by RSS and I hope you update this blog frequently. I have to say it can be quite tiring reading local blogs dedicated to pure technical analysis which I find very sad.

    I have a tip if you like Bloomberg, if you’re on the move/travelling and have wifi access you can stream Bloomberg TV on your laptop using a media player (be safe and always use a firewall):

    mms://a1598.l2489858165.c24898.n.lm.akamaistream.net/D/1598/24898/v0001/reflector:52251

    I run it 24 hours during weekdays and sometimes supplement it with CNBC TV online. It’s exactly the same as cable TV covering Asia to the US except it doesn’t include the on-screen ticker and Cathy Yang’s wrap-up of Asian Business which instead goes directly to US coverage.

    Good luck with your investments.

    Comment by ed | August 25, 2009 | Reply

    • Thank you for your comments. I actually manage my own portfolio and advise some institutional managers in Philippine equities. That is why I try to find insights in the market on a daily basis for my own use. Sometimes, it can seem boring to read these posts, but my training helps me put some color to my comments. My advocacy is to have people learn to manage their portfolios wisely. I would like to help them put perspective in market behavior and money management in their portfolios and trading activity. I do not have a crystal ball so I can’t predict the futures. My views are what I find to be the best bets available to me. I am also a believer that I can learn a lot from other people so I’d like to invite comments to my views. I appreciate yours.

      Comment by Gus Cosio | August 25, 2009 | Reply

  2. Hi Sir Gus,

    Your blog contains updated and significant articles on securites and investing. There will be a time that I will concentrate on studying equity securities investing. Iv’e been an auditor of various corporation, one of them is a listed company.
    BTW, with regard to you question on my blog about posting graphs and charts, maybe this comprehensive article will help you… http://www.bloggingtips.com/2009/08/11/chart-your-way-to-readable-blogs/
    Just inform me if you need some help and free advise on effective blogging, internet marketing, accounting, etc.

    Comment by Vic of BusinessAccent | August 25, 2009 | Reply

    • Thanks. I’ll certainly keep on exchanging ideas with you. I appreciate your help. God bless you.

      Comment by Gus Cosio | August 25, 2009 | Reply


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