Gus Cosio says so

Ideas on the Philippine Stock Market

A monday lullaby

7:00 am   Monday   15 March 2010    Philippine Stock Exchange Index 3072.91 (Friday close)

We could be lulled into thinking that the PSEi was down Friday simply because of the dividend adjustment of TEL.  If you actually measure it, TEL paid 141 pesos total dividends; that should bring the price down as far as 2535 since it closed 2675 on Thursday.  However, it closed 2560 on Friday and traded only to a low of 2550 which should tell us that TEL in fact gained on the day.

What brought down the market was profit taking or investors lightening up on a number of blue chips such as URC, AC, EDC, DMC, FPH, MEG, GLO, JFC and SECB.  Only MER was sold-off in a big way.  Strong stocks such as AP, MBT, AEV, SM and ALI appear to be holing their own.  It looks like the only speculative play that continues to draw volume is BEL followed by its alter ego – APC.

What could be negative for us is for traders particularly those who are strong adherents of technical analysis to see Friday’s move as a triple top.  With such a mindset developing, I am quite wary if  this  market goes up again and will not break through.

On Friday’s session, the DJIA rose while the S&P 500 and Nasdaq fell.  Investors are seeing mixed readings on the consumer: Retail sales rose unexpectedly last month, but consumer sentiment softened.  All three indices were, nevertheless, higher for the week: The Dow gained 0.5 percent, the S&P added 1 percent and the Nasdaq advanced 1.7 percent.  The VIX was very stable on the week, and with people betting on lower volatility, it looks like investor risk assessment in general is low.

Europe was also very positive over the last week indicating that investors are gaining comfort that a credit disaster of epic proportions is not in the charts for Greece and the rest of the PIGS.  Asia was generally upbeat as well except for China which hangs in the balance as its economy adjusts to credit tightening that had been set in place.

What does bode for us in the coming week?  I think the underlying sentiment is that investors and traders continue to look for buying opportunities.  It is a matter what are acceptable values and buying levels.  My thoughts on some of the actively traded stacks are that while there are stocks to avoid presently, there are those that look to be gathering momentum.

A stock that has consolidated sharply is  MEG.  It is a favorite of a lot of traders and it is one that has good long-term prospect, so it is a safe bet.  Stocks that are looking trendless are AC, ALI, BDO, & BPI.  these are fundamentally strong stocks but will likely be perceived to have to consolidate some more.  Stocks that are looking toppish and may need further correction are AEV, AP, FGEN, MER and FPH.  One stock that is presently very strong is DMC.  I think there is pent-up demand for this stock as people realize its cheapness valuations-wise.

A stock that is consolidating and is probably ready to go is EDC.  It is a favorite among traders.

These are just ideas that will probably be safe bets.  I mentioned that the index appears to have hit a triple top from the looks of the chart.  Technical traders will be looking for opportunities to sell although I do not think that it would bear too heavily for the time being.  What would be tough is that if it gathers momentum.

Advertisements

March 15, 2010 - Posted by | Financial markets in Asia

16 Comments »

  1. Hi Gus,

    If you had P 1 M to start a portfolio, what stocks do you recommend and in what percentages or buy prices? What amounts/no of shares do you recommend to buy?

    Thank you for sharing your advice to a new investor..

    Comment by Bobby | March 15, 2010 | Reply

    • Bobby,
      I would accumulate TEL close to 2500 for up to P200K. I would pick up P150k of MBT around 44. I would pick up P100k of PNB. I’d try to get some MEG for another 100K. I’ll buy P200K of AP. I’ll buy P150K of DMC and P100K of PIP. Whenever any of these pay a return of 30% or more, consider trading out and re-asses whether you still want to hold on or buy a different stock. A portfolio in our market should always be dynamic.

      Comment by Gus Cosio | March 16, 2010 | Reply

  2. Hi Gus,

    In one of your posts last week, you mentioned that the target price for AP is around P15. Today, you said that it may need further correction before going up further. By how much would you estimate this correction to be. Would you recommend to sell positions and buy back when it goes down or just hold and average until it goes up again.

    Thanks!

    Comment by richard | March 15, 2010 | Reply

    • Richard,
      I would not recommend a complete sell on AP rather buy on weakness. Alternatively, if you want to weight yourself in cash, sell 30% of your holdings looking to buy it lower. It is very difficult to call it but 11 to 11.50 is mu buying target. AP is the strongest buy recommendation of a couple of the largest brokers in town.

      Comment by Gus Cosio | March 16, 2010 | Reply

  3. Hi Sir Gus! Do you have any news on PNB? I noticed the heavy accumulation of Macquarie.

    Comment by jolly | March 15, 2010 | Reply

    • Jolly,
      I have no news yet. I’m just patiently waiting.

      Comment by Gus Cosio | March 16, 2010 | Reply

  4. Hi Sir,

    What are your thoughts on FPH? While it had cash,its MER and toll way business is no longer around. And if MER now under MPI starts power generation,although its operational in few years, this will in the long term compete with FGEN, EDC etc.

    While dividends are good, doing so partly with the sale proceeds from recurring business of MER and toll ways are in my humble opinion on the negative? After all, after paying a dividend with out a steady stream of income diminishes value?

    Thanks

    Comment by alexis | March 15, 2010 | Reply

    • Alexis,
      I do not think that MPI is in power generation and I don’t think they’ll get into that. FPH is strong because of FGEN and EDC. Personally, I’d rather be in EDC and FGEN rather than hold FPH. Alternatively, I would sell FPH infavor of its parent, BPC.

      Comment by Gus Cosio | March 16, 2010 | Reply

  5. how is the takeover of zijin to indophil connected to acr?

    Comment by Mark | March 15, 2010 | Reply

    • wait i got it! i read this in a forum.

      Indophil issued 25.9M Indophil shares to Alsons Corp. when they aquired Alsons` 3.27% interest in Sagittarius Mines Inc., the holder of the Tampakan project.

      Comment by Mark | March 16, 2010 | Reply

      • did i get it right?

        Comment by Mark | March 16, 2010

      • Mark,
        I do not know the exact details but from what my contact was telling me, they are looking to transfer the interest in the mine from the Alcantaras into ACR itself. The details of how they will do it is not available to me yet. Knowing this information is what is keeping this stock in play.

        Comment by Gus Cosio | March 16, 2010

  6. Hello Gus. I have been looking and looking and looking at SMDC as it goes to 4, then to 5, then now it’s at 6! My studies show that it’s good at 4 and even at 6! But, what do you think?

    Comment by Anna | March 16, 2010 | Reply

    • Anna,
      SMDC has caught our eye. It is fundamentally strong except that it might be a little expensive. If you like the stock, buy small positions on dips. That way, you can accumulate the stock in your portfolio. I don’t think that this will be a trading stock like most of the Henry Sy stocks but it is good for longer time horizons.

      Comment by Gus Cosio | March 16, 2010 | Reply

  7. thank you bro gus, very informative your opinions, looking forward to more updates in the future. thank you again… by the way , any infos on mrc ??? got stuck on this 3 years ago

    Comment by mike | March 20, 2010 | Reply

    • Hey Mike,
      I have no definite info on MRC except that it recently had a volume alert. I do not have any research on the stock.

      Comment by Gus Cosio | March 20, 2010 | Reply


Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: