Feathers in my nickel
9:20am Thursday 16 December 2010
I continue to think that the trading range of the PSEi for the rest of 2010 will be between 4000 and 4250. Again, there are causes for some worry although most of them appear to be external to the country such as continued concerns in Europe on account of Ireland and the lingering credit tightening in China which has heightened the jitters in the Hong Kong stock market. I see these developments as good news for investors like myself since I was lucky enough to keep a comfortable cash balance since the middle of November. I find myself in quite a fortunate place because I can see the sentiments of many investors. I have always believed that it is cash available for investments which provide the fuel that drives the market. Hence, I am quite relaxed to see the market ease up in this season particularly because many savvy investors have taken profits and have sufficient cash balances in their account.
There has been quite heavy profit taking in the large caps such as MBT, JGS, ALI, BPI, AGI, MEG, AC and SMPH as these issues accounted for 42 points of the 58 point decline yesterday. Looking at these companies individually, all of them undoubtedly should perform better in the first quarter of 2011. If you want to establish a core position for Q1 2011, I would choose among these big losers yesterday except for MEG. I favor VLL or FLI among property counters because of their relative cheapness and better track record in delivering satisfactory finished units. AC, ALI and BPI were not spectacular performers in 2010, but I think because they are in the MSCI Philippines Index, portfolios which would be building up in the first quarter will be taking these stocks in together with MBT, JGS and SMPH.
I would also be keeping an eye on MPI now that it is trading below 3.50. While I will patiently wait for lower levels, I will probably take a position when I see the support getting stronger close to these levels. In the mining sector, while I had taken some profit on PX, I will be looking to buy it back a little lower. Since I pared down my position on ORE and taking some profits as well, I am looking to add to my positions since many have already taken their profits as well and will likely play the game again in this stock. Essentially, I would like to keep myself involved in mining stocks for 2011 due to the slow but sure global recovery which will result to steady demand for commodities. This means that I will continue to feather my NIKL nest and even consider taking trading positions in AT from time to time.
Again, I would like to express my sentiment that this market is setting itself up for a good year ahead that is why the recent declines do not make me nervous. The data on OFW remittances for Jan. to Oct. 2010 which showed a 7.9% increase standing at US$15.5 billion only assures us that consumer spending in the coming months will remain robust. Since consumption makes up 78% of our GDP, there is good reason to foresee that good economic growth will obtain at least in the current quarter.
So if things are moving north and the market recently going south, do we really think that this is the real direction? I am looking up at the sky.
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