Gus Cosio says so

Ideas on the Philippine Stock Market

Arguing against an idea

11:00pm  Sunday  27 June 2010

According to an analyst that I follow, the DJIA “failed at its declining 50-day moving average.Even worse for the bulls was its failure to attract buyers at last week’s breakout area and 200-day moving average near 10,250. This area may become resistance on a bounce moving forward, so traders should keep an eye out. While DJIA closed flat on Friday, it was well off the lows that could be showing some buyers in the low 10,000. This was where the majority of trading volume occurred in the past few weeks and could represent an area of support.”

He further wrote that:”The markets are at an area where traders need to show patience. Overall, most of the market indexes are right in the middle of their most recent highs and lows. The weakness shown this week was not promising at all, but there is the possibility that the markets will form a higher low in this area. This would be a positive sign, and could cement the recent area as a more important intermediate low. However, it is still too early to interpret the possibility that this will happen, and there is still the real possibility that the markets will flounder in this area for a while before breaking much lower. This is why traders need to show patience, and allow the markets to fluctuate until more clear patterns emerge. While it is tempting to try to pick the bottom of this pullback, traders are probably better served waiting for the markets to stabilize and present a better opportunity.”

Local traders may be wondering why our market is slightly out of sync with the weakness in the global markets of the past week.  My only answer is that there are quite a number of special situations which are too compelling to ignore.  MBT for instance, as a proxy play for the economy, may just exceed expectations.  While this presents a very strong possibility, the market may just have moved ahead of itself already.  I would not chase MBT at this point and try to wait for a consolidation.  I feel the same way for AEV, AP, URC, RLC, and even DMC.  I would use any steep correction, nevertheless, to accumulate these stocks in the coming days or weeks, and I will be patiently waiting.

For stocks like DGTL which to my mind has gathered a lot of following and momentum, I would take bold moves and ride the momentum.  For the likes of PNB, EDC and FGEN, I think that they remain at the low-end of their recent range so I do not think it very risky to position trades for these issues.

As the man who analyzes the developed market say, the real virtue in this market is patience.  Ask any businessman, patience is what you really need for a sustained stream of profits.  I wouldn’t argue against that idea.

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June 27, 2010 - Posted by | Financial markets in Asia

16 Comments »

  1. hi sir Gus, I think the Market will move sideways for the next several months..most Blue chips stocks rallied BIG since February….Mpi,tel,smph,meg,fli are moving sideways since dec.09….

    Comment by wilson | June 28, 2010 | Reply

    • Wilson, Just like you, I am moving to be defensive while the market in the Philippines is still strong. I may be wrong, but I would like to protect some of my profits.

      Comment by Gus Cosio | June 28, 2010 | Reply

  2. Chasing any stocks is not a good strategy bought PNB @ 31 still holding after 1 month without paper gain…also with DGTL….lesson learned..

    Comment by dexter | June 28, 2010 | Reply

    • Hi dexter, I don’t know what happened to the font. I’m trying to get it back to the original.

      Comment by Gus Cosio | June 28, 2010 | Reply

  3. hi sir gus,

    nice blog here. i agree with you about not chasing MBT and patiently wait for consolidation but the fonts were too little for my *chinky* eyes though 🙂

    Comment by lilfonts | June 28, 2010 | Reply

  4. Hi sir Gus. Either your FONTS are in CONSOLIDATION, or my reading glasses need CORRECTION. 🙂 Seriously though, do you think PNB should be making its MOVE UP sometime soon? It’s being so true to its reputation of a laggard. Most of the banking issues have already DEFIED gravity.

    Comment by jojo | June 28, 2010 | Reply

    • Gee, I don’t know why the font got smaller. I did not do anything new. Anyway, yes PNB tends to lag, that is why I call it a special situation. Also the movement of banks defied expectations because I think people are quietly making a bet that the economy will be buoyant in the 2nd quarter. The thing about PNB as a special sit is that it could jump 30 to 40% in one go. I just do not know when it will happen, but I just think it will. At the end of the day, allocating among your favorite stocks is still the key.

      Comment by Gus Cosio | June 28, 2010 | Reply

  5. got to sell all my pax, ip. some fli, edc. shifting to fgen and dgtl any comments? but it hink all these will rise not at the end of the year but 2nd qtr 2011, patience sucks….

    Comment by gerald | June 28, 2010 | Reply

    • personally, i would have kept edc instead of shifting to FGEN. DGTL is fine at these levels.

      Comment by Gus Cosio | June 28, 2010 | Reply

  6. Hi Gus. I wonder what happened to MarcVentures Holdings (AJO) today. It fell almost 30%. I had some shares that I have been waiting to recover (I bought them last year). The went up for a bit this month and suddenly it plunged.

    Comment by Redge | June 28, 2010 | Reply

    • Sorry Redge, I don’t follow AJO.

      Comment by Gus Cosio | June 28, 2010 | Reply

      • Read from a forum that the reason for the big slide in the price of AJO is that TODAY is the end of the lock-up period of shares which the company sold to some groups. Obviously it was bought at low prices and the volume of sellers just overwhelmed the market.

        Comment by Jojo | June 28, 2010

  7. Hi Sir Gus.

    I view MPI as an undervalued stock so I am planning to invest/buy it and just wait for my investment to grow on the long term. Is this a good idea? I have cash right now and still looking for good, undervalued company to buy. MPI is one that I am eyeing.

    Thanks,

    Comment by Tubski | June 28, 2010 | Reply

    • Tubski,
      I totally agree with you. MPI in our measure should be worth at least 4, however, it could take some time to get there. By that time, it may eve be worth closer to 5. If you’re taking a long term strategic investment, you’ll probably see outstanding return.

      Comment by Gus Cosio | June 28, 2010 | Reply

  8. Hi Sir Gus,

    Any comment/view on AGI, it keeps going down for the past few days. Do you think it wil turn around soon?

    Comment by twent42 | June 28, 2010 | Reply

    • Twent,
      I cannot tell you when it will turn around, but better to have a position on AGI than to be without it.

      Comment by Gus Cosio | June 29, 2010 | Reply


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