Formulate your action plan for longer, say the next 4 weeks

My suggestion is to change trading time frame and go 4-6 weeks. Suspend for the mean time the day-trade or 3-day time period. Choose your favorite companies, perhaps those that steadily gave you profits last May-June. Remember, their earnings remained steady as they are--except the banks that lost big in trading (after foreign money pulled-out en masse) and the companies that borrowed heavily in dollars early this year.

There's a theory that the stocks that were not as affected and not too up-and-down shaky during the down turn will also become the first ones jumping in the upturn. PGOLD, JFC, AGI, are three of these stocks. I placed my bet on AGI. If you want to align with this theory, do a quick look at the graphs of all the PSEi stocks and some second liners. Find the one which did not dip too low and did not oscillate too wide.

MEG, although dumped by foreigners in July-August,was heavily bought up again yesterday. It can become the reliable stalwart again. In fact if this becomes a steady hand , the whole index would also be comfortably steady in its upturn. MEG is now moved on the first page of my watchlist, a candidate for adding-up.

AC and MER were also steadily-increasing index stocks before the QE tapering news. They also deserve some focus.

The banks are being bought up by foreign funds again. Search a bank of your own if you still have funds to allocate. Also dont forget dividend paying and those with low P/E, remember those metrics are also being looked at by fund managers.

Half of my holdings in MBT was hit at previously-set 88.5, all remaining GTCAP was also hit at 840 (previously set), as well as tranches in VLL, even before I got the chance to open FMS or BPITrade. Im suddenly 50% cash when I started checking the market. I bought one tranche in JGS and AEV to release some cash. Only AEV was the bad pick, but Im betting this will recover today.

By the way, thank you GTCAP for being a good pick of the week. Although youre not a favorite by locals, you gave me profit 3 times around.

I don't agree with the early profit taking done by our fellow locals late in the morning and late closing. (My own mistake was in not taking time opening PC at home to cancel all sell orders before the market opened). The FED tapering was the most important concern, since we were relieved by that then our market will probably be allowed its "natural" trend, which should be up given the rosy corporate earnings and braggable GDP growth. Im not privy though on the emotions of our fellow pinoys that sold big yesterday (see COL selling figures). They might be shell-shocked new investors  that want to just want exit out unscathed or recover some of the losses.

And yes, the "relief" is only good until November 1.The FOMC will meet again Oct 29-30. By the time we go back on trading again on November 4, there could be a firm announcement on the amount of tapering that will happen within the year.

But at least Ben Bernanke now  laid out more certainty. He said that tapering will not start if US unemployment wont go down below 6.5%. So that's also a number to watch out in the news for.

Now, how would we know when to sell?
1) check the trend. If still going up or above the SMA lines, let your profits run, and MACD histogram trending up or stable.
2) but i'll be comfortable selling at 12% gain. (My current MEG and MBT are already showing 8%)
3) sell when you see the  US unemployment improve to way below 6.5%
4) sell before All Saints day break.
(strong sell if there's combination of the 4 conditions)

And dont forget to read news daily. For instance, you would not know there's another bacman bad news in EDC if you dont read the news for a few minutes.  

Market Skim Through: MPI, MWC, AC, DMC, hit with regulatory bad news, market recovery stunted

What bad timing by MWSS. Our market is on its path of needed recovery until this regulator unleashed a big-impact ruling. Can we expect them to adjust their schedule to the stock market? Probably not, but since MWSS board  know ahead that both MWC and Maynilad will not swallow a rate reduction, and would go to arbitration, the least that they could have done is announce that the issue will go to arbitration directly. And that the fair rates will be determined after arbitration. Unleashing a proud memo with an imposed -16% reduction in water rates is not the best direction for the multitude. After this order, the two companies now announced anyway that they will continue to charge current rates, so there's no benefit in announcing immediately reduced rates after all.

	Stock Code	Last	Change	%Change	Value
1	LMG	2.0900	-0.3900	-15.73%	2,090
2	VITA	0.7000	-0.1200	-14.63%	567,740
3	LAND	1.5300	-0.1700	-10.00%	291,420
4	MPI	4.7000	-0.4000	-7.84%	364,749,731
5	PX	9.1200	-0.7600	-7.69%	55,174,061
6	EG	0.0150	-0.0010	-6.25%	226,500
7	LCB	0.4900	-0.0300	-5.77%	10,623,370
8	MRC	0.0900	-0.0050	-5.26%	22,440
9	OPM	0.0180	-0.0010	-5.26%	3,985,900
10	ORE	1.4500	-0.0700	-4.61%	132,070
11	DMC	46.2500	-2.1500	-4.44%	42,961,425
12	ROX	2.4000	-0.1000	-4.00%	78,200
13	MWC	31.0000	-1.1500	-3.58%	123,876,820
14	BDO	72.5000	-2.5000	-3.33%	224,559,549
15	MAB	0.0290	-0.0010	-3.33%	1,067,000
16	AGF	2.3900	-0.0800	-3.24%	125,140
17	HI	6.1100	-0.2000	-3.17%	227,088
18	DIZ	5.1000	-0.1500	-2.86%	220,735
19	ABSP	31.8000	-0.9000	-2.75%	16,434,380
20	DMPL	25.8000	-0.7000	-2.64%	10,511,185

Although the sword is hanging on MWC and Maynilad's heads since two months ago, when activists and some politicians took up the popular issue (regarding why the two concessionaires are passing on the VAT that they pay to consumers), the announcement still came up as a surprise.It negatively jolted the prices of four important index issues.

AC was on its way to a respectable increase, MPI on a gradual run-up, DMC being supported by buy-ups of the Consunjis, and MWC part of a group that is also recovering, but all four promptly went down after lunch when the disclosure was put up. MPI went down -7.84% in closing, behaving like a bazur. 

I wont argue here whether the ruling is right or wrong. That should be answered by what's written in the concession agreement. At this point, the arbitration needs to move fast. If it's proven that the government changed rules in the middle of the game, they should retract promptly.  If it's decided on the other hand that it's not right for company taxes to be passed on to our water bills, MWC and Maynilad would have to look hard at the viability of the infrastructures they are planning for the future. The rate reduction will impact their top line by a huge -16% in one go. The reduction/pain will not be gradual.

At our end, as consumers, I think everyone can say that water pressure in our homes improved vastly from when everything was still being handled by MWSS. And the cost of electricity is the more painful utility than water.

As a stock market participant, we have no choice but to be hands-off on MPI and MWC. MPI in particular was in my radar the past few weeks for its cheap  valuation and price swings (a good candidate for range trading). It was a definite buy before at 4.9. What happened instead was I escaped with breakeven yesterday, and now will be waiting with one tranche buy at 4.6. If MWSS's move turned out to be another unfortunate catalyst for a downtrend, well damn damn damn, we really have to wait until Christmas to take our PSE to where it should be. Im betting is should be 7200 by yearend. But now, I think 6800 is more realistic. 

Market Skim Through and Midweek Assessment: Another gain, adjusting sell points

 Index gained 120 +points, or +2%, to close at above 6200. We're green on the fifth straight day (although the first 3 days yielded only small increases).Volume was again a respectable 9.22 B. And most important: Foreigners were net buyers at Php1.56 billion.

	Stock Code	Last	Change	%Change	Value
1	VITA	0.8200	0.1200	17.14%	1,304,090
2	IMI	2.2900	0.3000	15.08%	2,543,610
3	RPL	16.9000	1.9000	12.67%	85,640
4	ATI	12.0000	1.1000	10.09%	42,000
5	BLOOM	11.8800	0.8800	8.00%	198,293,778
6	EVER	0.2500	0.0180	7.76%	373,200
7	EG	0.0160	0.0010	6.67%	49,600
8	PA	0.0350	0.0020	6.06%	6,400
9	OPM	0.0190	0.0010	5.56%	90,800
10	ALI	26.7000	1.4000	5.53%	730,105,940
11	WEB	12.0000	0.6000	5.26%	54,995,934
12	VMC	1.7000	0.0800	4.94%	354,530
13	CLOUD	6.5000	0.3000	4.84%	650
14	FLI	1.5200	0.0700	4.83%	103,712,780
15	EDC	5.7000	0.2600	4.78%	88,401,522
16	MFC	690.0000	29.5000	4.47%	199,390
17	DNL	6.6000	0.2800	4.43%	19,660,775
18	BEL	4.7000	0.1800	3.98%	25,081,260
19	AC	574.0000	21.5000	3.89%	263,228,045
20	AEV	48.0000	1.7500	3.78%	220,973,800

Among all the gains, I liked the increases in AEV and AC, where I averaged down heavily in in my main port. Im now almost green in these two, although we're not even close to returning to 7 K, or even 6800--which local pundits is now setting as the yearend target. This is  far below 8000, 8500, or the moooonn as others were saying last June. But any way, I plan to sell portions of these two before the week ends as hedge to another news on QE tapering that may hit us next week. 

One of my sell price points in TEL was hit at 2904 in the first trade of that issue, for a 5% gain. This is my fifth time gaining from range-trading TEL since the downtrend, and I still have one position left.

I entered one tranche in VLL, which increased 3+% immediately after, but was reduced to a measly +.9% at closing. I might add another tranche first thing tomorrow. The Villars announced divs and the assumption of Manny Villar as Chairman. More on VLL on another post. 

EDC also announced respectable cash divs. This one plus the one they paid in March makes EDC a +3% yielding issue.  Not bad, but would be better if it goes back to to at least 6.5+. It is -1% in one year, and -30% year-to-date, -60%+ from 52-week high, clearly one of the worst performing index stock. Can it recover soon?