The patience to be right
9:15pm Tuesday 19 October 2010
From the way prices behaved today (Tuesday), I cannot help but think that stock prices in general will continue to consolidate. The quick recovery of MBT gives credence to the notion that there is nearby support for the stock. While my view on MBT is very constructive, I think that some more squeezing out from weak hands will be happening over the coming trading days. I do not think MBT will be moving up yet.
I had a look at how EDC traded today. I like this stock a lot because it has one of the most important resource in the country – the geothermal deposit in Ormoc where it produces about 700 megawatts of electricity from 5 generating facilities. While EDC similarly recovered today, I sense that there will be some sellers emerging at slightly higher prices. I honestly think that EDC can do much better if it goes down below 6 so that firmer hands can take over.
My favorite DMC was starting to trade below 33, but enthusiastic buyers took it back to 33.50. Personally, I would rather wait. I really like to get back in the stock, but I think time will cure my restlessness. Whether I buy it higher or lower matters less than the comfort of buying it after it has consolidated.
TEL has also come of a bit and is starting to look interesting. Having sold the stock above 2730, today’s level of 2660 is already looking to be a good buy back level. On second thought, I will probably wait a bit more, but 2600 on TEL will be difficult to walk away from.
SECB went ex-cash dividend today. They are paying a total of 1 peso cash dividend on November 19 which makes a total of 2 pesos paid so far in 2010. I think interest will continue for SECB. The second tier banks still look cheap and SECB appears to rank high among fund managers. SECB may be a better performer than PNB and RCB at this point. Nevertheless, given the underlying fundamentals of the economy, investor should not ignore the banks.
There have been concerns about SLI slipping much from the highs of 2.45 to 2.50 last month. The concern is if this stock has already run its course. Personally, I do not think so. I think the stock will still move beyond 2.50. It will just take some more time.
I received a comment that one reader has posted pictures of the ORE mine site on Facebook. Thank you. I think at this point, some fund managers have assured themselves that ORE indeed has a producing mine and will be shipping soon. Moreover, I think some investors are slowly being convinced that the reserve level of the mine is quite extensive. My take on the stock is that it will eventually attract the cash of other resource funds overseas. I was just at a meeting earlier today with a metals trader. He was telling me that there is quite keen interest in funding metals. Of course, a stock like ORE has to be marketed to these overseas fund managers. If there is that much nickel on the ground, it is just a matter of time.
I would also remind DGTL followers to keep an eye on the stock. It has been quiet lately, but you do not see any selling in a big way. I sense that there may be a big move soon. But even if it takes longer, I have chosen to be a lot more patient on the stock, just like I think we will need more patient in the broad market for the time being.
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