Gus Cosio says so

Ideas on the Philippine Stock Market

Looking for Rangers

10:00 am  Tuesday  8 February 2011

A reader had commented earlier that recently, the market opens with higher prices only to drop in mid-session.  Fortunately today, prices recovered at the close.  We saw this recovery clearly in AP, MER, AGI, BPI, NIKL, RLC, and MBT to name a few.  The thing about a strong opening that wanes as trading goes through is that it reflects selling on strength   The question that comes to mind is what news or development would provide stimulus for sustained buying by investors.  Last week, investors sold the market off after the strongest GDP growth in 34 years was reported.  Right now I am groping for signs of positive stimuli for the market.  Valuations may be attractive already, but that does not mean investors will be buying already.  The fear of more selling seems to have the stronger influence in the market now.

What will likely underpin this market is interest rates.  In the past three weeks, we saw bond yields back up by more than 100 basis points.  Such an action reflects investor anxiety for higher interest rates to come.  The latest inflation figure of 3.5% is not at all threatening yet.  Nevertheless, people are anxious and are closely watching the BSP.  Inflation appears to be the major stumbling block that market practioners are watching in both Emerging and developed markets.  The by-word among global fund managers continue to be beta investing which in lay man’s terms means simply traccking the major global indices.  So far, the theme looks to be working, in fact since the PSEi peaked in November, the U.S. blue chip index has gone up around 5% while ours has declined by around 8%.

At this point, I think it would be wise to observe the price behavior of the strongest stocks in the market over the last 3 months because these are the stocks that could be traded in a range.  I think range trading would be the only way to make money in these times.

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February 8, 2011 - Posted by | Financial markets in Asia

6 Comments »

  1. Hi Sir Gus,

    Am still holding on to DMC, SMC, MER and AGI. I hope the market ends green naman. 🙂

    Comment by Shan | February 8, 2011 | Reply

  2. hi sir,

    8 Feb pa lang po.

    Comment by Sh3rwin | February 8, 2011 | Reply

    • Gap up ng 3 flucs ang date ni Sir Gus hehe..

      Comment by boy | February 8, 2011 | Reply

    • i must have been in a hurry. I corrected it already.

      Comment by Gus Cosio | February 8, 2011 | Reply

  3. the challenge of timing the market…

    Comment by cliffhanger | February 8, 2011 | Reply

  4. The PSE Market is in Spinning Top…I wish there will be a “three White soldiers” next week…Pls check Bpi candle stick formation 2 white candles….If Bpi Rallies tommorrow to 56/sh then a 3 white soldiers is confirmed a Bullish sign for Bank Stocks….

    Comment by SarapMagingBanko | February 8, 2011 | Reply


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