Pick of the Week for Week 36: careful bets

I was hankering for a positive day today at at least 0.5% and 8 B PhP volume, to make me more confident to place bets this week, but it did not happen. We're negative -0.22 % instead at a small 'Ghost-month' average volume of 5 B. The volatility is also still apparent. If you observed SMPH, and most other blue chip the swings in positive and negative territory are still wild. This, again, makes cash the safest option. (When I last recommended to release cash, I was dumbfounded and proven wrong by typhoon/monsoonrains/floods and news of QE easing).

I am recommending to place small bets though on

1) BHI. Never imagined I'll recommend this notorious bazur that is known to jail many souls, but the risk/reward at this time warrants a small entry. The announcement whether ALI is finally buying Puerto Azul or Panlilio scuttled the deal should happen on or before September 7, (Otherwise both ALI and BHI should be sued for their misleading disclosures regarding nego time frames). Assuming, a deal is closed, I think +30% is minimum, ceiling in one day probable, for that day the announcement is made. I placed a tranche myself earlier at 0.134. I would have entered earlier if I saw the price movement before lunch. Anyway, there was a thick bid at 0.135 at closing, portending that that price level became the support at closing. And Im willing to average down until Sept7 if it goes down to 0.125.
The risk on the other hand is -10%. This would mean Panlilio took us for a ride all along (he is not selling Puerto Azul, after all). So risk:reward is 1:3 at least. If in the best scenario that it reached ceiling fast the first day (additional motivation: traders could still be hungry for that storied bazur a la SUN), I'll sell immediately. I wont be greedy to aim for another ceiling the 2nd day.

2) AEV. A good candidate for range trading again (just do not aim for more than 5% gain at a time).

If the volume remain low as it is today, the up-and-down swings from Jul-Aug can happen again throughout the week, until local Chinese investors wake up from Ghost Month (see caveat below). Also, this conglomerate is cheap today. It's surprising to see it slumped -3.97%-- negative gain!-- in 52 weeks, in the backdrop of unprecedented Philippines GDP growth, which AEV contributes in. The Aboitizes are also known to defend their issues, so expect that protection as well even at lower rectangle range (like 43.5 - 47.5).  

3) you can also choose recovering stocks like SECB and SM, as long as the climb is steady, preferably slow, and not stunted by a big foreign fund selling again in bulk as you observe price movement. Articles are now coming out commenting on how un-warranted this bunch slumped to so low a price, while their fundamentals are very solid, and growing revenue streams are assured in the future. 

But, caveats:

• Remember, these are short-term trade recommendations only. Bets should be divested also within the week. Take profit or cut loss early 
• If you see a threat of a huge red candle early tomorrow (especially if more than 1% negative in the first hour of trading), stay in cash. 
• If the volume is increasing in big hauls (say 4 B before lunch), go back to the solid companies you believe in that reported the highest earnings growth recently. AC, ALI, MEG, JFC, AGI, GTCAP, etc...are all good candidates (re-check their quarterly reports). Disregard the bazur, unless you are adventurous and fully focused on monitoring its price. 
• Remember, although they are already fighting each other (again) on some stocks, foreigners are still net sellers the past weeks, even on the days we are positive. We still need to be on our toes watching their moves. It also still pays to watch foreign markets (DOW is negative as of this writing). 

Remain cautious. Do not go all in.