Don’t throw mud at my parade!

7:10pm  Tuesday  April 27, 2010    Philippine Stock Exchange Index   3307.71  (+0.459%)

We have had two days of strong performance of stocks in the Philippines with most of the sentiment being influenced by the surge in neighboring stock markets as well as the U.S.  Analysts in the U.S. are saying that stocks are in their cheapest levels since 1900.  First quarter results are beating analyst forecasts by 22% in the U.S. fueling further bullishness.  In Asia, a resumption of export activity and a smaller trade surplus from China is making growth prospects even more attractive for countries like the Philippines.  At the same time, no investment alternative presents itself as more attractive than equities.

Yesterday, practically all the most active stocks closed higher, and those that did not simply had their prices unchanged.  It was one of those days when you just buy anything and it will go up.  Today (Tuesday), judging from the behavior of prices, the rising trend remains intact.  With other stocks like TEL doing a catch up, the trend is confirming itself even further.  For example, MER bottomed out last week at 165 and recover a few days later to 171.  Slowly, it crept up to 176 yesterday and has consolidated at the same level today after trading at a high of 178.  Even second liners such as PIP and third liner CMT are both showing strength giving further bullish signals to enthusiastic buyers.  PIP looks to be headed back to its IPO level of 3.15 where I expect the resistance to emerge.  Of course, I could be wrong and PIP could go even higher to 3.50 because of momentum.

I had mentioned in the past that the trend is your friend and for as long as the trend is going our way, we should stay engaged.  I mentioned earlier that I was 80 percent in the market.  I am tempted to go fully invested, but I will probably chose to be conservative.  What I am considering is to sell some slow movers even at a loss and deploy the cash into stocks that could move even stronger.  I noticed that AGI could be breaking out soon.  MEG and FLI are both looking to be trading buys at this point.  Again, I will raise a flag and mention that we should not be careless and be left buying stocks that people are starting to dump.

While I would like to see DMC come down so that I could add to my position, I just may have to pay up for it.  There are guys out there who are seeing their EEI positions pretty much in the money.  I would like to suggest a switch to DMC since the latter trades a lot better.

FGEN and JGS hardly moved the past two , so they might be good buy candidates.  SM and SMDC has been quite strong leaving SMPH behind.  Perhaps, SMPH might be a safe bet although I could see SMDC and SM performing.  I would probably ignore ALI and AC for the time being but among the Ayala portfolio, I think BPI and MWC may be worth looking at.

For those who are concerned that prices are too high compared toa few days ago, I think what we are seeing is a market that is trying to discount events that are ahead of us.  In my case, I would buy whatever weakness emerges for as long as the index stays above 3150.  I would like to ride the market’s wave for as long as the momentum is there.  My second thoughts would probably hinge on negative political developments and I am not referring to the mudslinging going on.

P.S.  Wednesday 9:15 am

Wall Street was dwon over 200 points on account of Greece.  Should we be worried?  The answer is yes.  Should we lose our heads?  I would not want to.  Remember, I reminded people to keep some cash in their portfolios for a possible drop.  Well this is it.  There should be some blood on the street, and normally attracts the wolves.  The question is are you a wolf or a pussycat?