Pick of the week for Week 45 : TA TEL, and look out for buy-again points in GTCAP, SCC, MEG, AGI, JGS, and AEV

TA has good momentum currently and the sell volume is getting thinner and thinner since late last week after it surged up. Im heavy on TA; I was able to get back to my previous big position after I sold near half of holdings at its 2.8 peak months ago. Even though TA was not in my pick of the week list, I just bought tranches gradually when it was hovering at 2.1 - 2.2. This was done on faith given TA's growth potential, the management of the company, and its clear plans. Any one can read up on the plants and windmills under development, as well as Dean Viray's existing clout in the industry (including regulators). Lastly, Ive never lost yet a trade in TA and it gave me consistent hefty profits since to start of the year, so to support the stock's price at 2.1 can be sheer returning debt of gratitude (utang na loob) on my part :-) Further, Im still expecting gains on the property divs for Trans-asia Petroleum.

I was not expecting TEL to go back to below 2900, more so to go back insider its previous strong support at 2800-2830 range. This is always a safe stock to accumulate given its dividend yield. Furthermore, its current P/E is 15.8 while GLO is already at 21. I think the market is mis-pricing TEL and we should take advantage of the opportunity handed to us. Im ready to just add and add tranches even if TEL goes down to 2500. After adding earlier today, I now hold 5 tranches of TEL in my two ports (two brokers) combined.

Both TA and TEL I believe should gain +10% within this month, but I'll be starting to sell at +8% vs. their current price, considering that we are still not in a confirmed overall uptrend.

One should also keep an eye on stocks that may offer good reentry points within the week. MEG I think is a buy-again/add at 3.69, AGI at 25.30, JGS at 41.50, and AEV at 49. I have already set GTM buys myself at these levels. Part of the wishlist is also for solid favorites (but not holding currently) GTCAP to go back to 803 and SCC to 240ish before we enter 2014, but these could be far fetched.

Late Pick of the Week: Look for higher lows in JGS, MBT, MEG, but if you're eager to position now, choose TEL

I knew I have time to monitor the market this week; there is valuable time to spend to hunt for short terms gains, so I disposed some green in MBT, MEG, AGI, and AEV to raise cash. I expect that sentiments of some locals will be to dispose at our current 6600 levels. Some of our countrymen who were jittered before are probably exiting at near breakeven, so it's time to dispose some green and wait for them to dip again by at least 3%--better at minus 5%--to re-take similar position size.

For example, I disposed a huge chunk of MEG at 3.91, the moment that I saw that 1) the stock is already oversold, and 2) it's too weak to even break 3.95. And so, 3.91 less 5% is 3.71. Im waiting since then to enter some at 3.71, add another position at 3.70, and then a huge buy position at 3.68. I still haven't been blessed with shares at these levels, but am waiting. If MEG continued strongly at this very high RSI. I still have 20% of my original position. I just have to live with my bet that it's more probable for MEG to cool off a bit and be below oversold levels.  

Same applies with AEV, AGI, and MBT... I disposed all or huge chunks of these stocks, and now Im waiting for their higher lows to materialize before getting in again (first reentry at -3%, ideal at -5%).

But since I wanted to take some new positions and not be holding too much cash, I took positions in TEL and DMPL as well. I think TEL is undervalued at this time, and will perform some +5% in short term. Why? 

1) its forward P/E is 16, while its only competitor GLO is trading at 23 - 30 P/E. I know that the Ayala's enjoy some premium over competitors because of their perceived better managers, but that disprity is just too much. 

2) the BPO industry is experiencing tremendous growth and TEL should be one of the main beneficiaries  

3) PLDT's DSL is way faster than those stupid Tattoos and mobile broadband scams.
4) If youre caught ipit even at -10%, there's still some margin of safety. TEL always pay hefty divs to make up for it.

DMPL I placed a small position in because 1) its current price is below its current at SGX, 2) I feel that the market hasnt fully taken in the impact of the acquisition of the US Del Monte business. This makes for some good reading regarding DMPL:

http://research.maybank-ib.com/pdf/document/Del_Monte_141013c_5174.pdf

Besides that, Christmas is nearing. We're approaching that time for Buko and Fruit Salads. That would have some Del Monte Fruit Cocktails by default.

Again, these picks of the week have time frame of at least four weeks. It's time to revise your portfolios for intermediate and long term and prepare for the surge until March.

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? 

Pick of the week for Week 37: GTCAP hopefully at 750; observe VLL; GMA7 for divs???

GTCAP is the pick of the week due to the index adjustment favoring this stock. As mentioned here, Im hoping to re-enter at 750 (which served as strong support before). If not, I might enter at any-price-below-800 on Thursday.

I will also be closely watching VLL. It should announce divs soon, and would easily make 5.5 after.

GMA7 might also announce hefty divs soon, giving whoever is lucky enough to buy on the same day an instant +4%. (ABS, no chance, since it is tied up with a covenant of no-dividend higher-than-previously-set with its creditors). There is a question mark though since it is lightly-traded. GMA's price is at currently at its previous lowest/strongest support, furthermore at a cheap 14 forward P/E. But at this volume, it can still go further down. So I guess, it's whether you are willing to hold this stock until the rosy months of Dec - Feb, in case it goes further down after you buy.

All these picks are made, again, on the backdrop of volatility and low volume. Yes, we are still at that environment where +5% is heaven. Volume is low and there are up-and-down tussles even in solid companies. The aim is to just benefit the volatility, sell in a few days. In fact it is better to just stay out.

Our kinds who still participate in these conditions are probably just after that fulfilment and entertainment in getting +3-5% in days, rather than solid assured portfolio growth. For this purpose, GTCAP, VLL, GMA7 could be good picks (for short-term only) this week.

Lastly, as we've been saying since June, never all-in.

p.s. The Consunjis and the Aboitizes are known to defend their stock. I was also about to choose among DMC, AEV, AP, and SCC to take advantage of their buying. But all four already have significant increases yesterday. They might have bought already (wait for the disclosure), there might not be a quick +3% in the coming days.

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.

Update on pick of the week for Wk 32

Although it may just be random walk in the end, it is still better to study ahead, plan, and follow that plan.

Would like to write for posterity my own progress from when I posted my plan from last Monday. 

"MPI is also worth watching and betting small bets in if it flirts with 4.93 - 4.96 again." 

I entered MPI at 4.9 and 4.85, and sold all at 5.08 (posted yesterday, triggered today) for a good 4-digit gain. Not bad for 2 day's 'work.' Although, this stock might continue to go up (I should have stuck to my original sell post at 5.14), it's always good to profit in a market that is not in a clear uptrend.

"I was about to choose a pick of the week from SCC, MER, MBT, and MEG, betting that at least one will make a substantial bounce in the coming days,"

I bought MEG last week and sold early at 3.23 this week for a small coffee-budget gain, but MEG continued to go up to 3.26. Added MBT at a low 102.5 and then it recovered and now trading sideways at 106-107. Both are good moves, bottom-line.

Did not do anything with SCC and just retained my holdings in MER (although I should have added). SCC increased marginally and MER increased considerably. So all four 'pick candidates" practically did well.

My mistake was entering AEV at 46.1. This was not in the list but I thought that the conglomerate is too cheap at current price, regardless of the unimpressive  earnings report. Although price today is at 47, this will gap down on Monday. I'll closely observe AEV if I need to cut loss or cut at breakeven (damage is brokers fee). Either way no regrets, a bet's a bet. Do not enter in a market that is not in a confirmed uptrend if you want to have all your moves come out right (with greater probability).

In the end, Cash, as recommended, proved to be the safest and rightest bet. There's still a dangerous number of previous-favorites-but-now-diving-down this week. Also, imagine if one veered to a Sy stock , he/she could have lost more than 5% in a couple of days. It just happened that we intended to devote time on the market, and it's good to make picks (stocks that you studied ahead for a good entry price) and place small bets since we're focused any way. Let's just remember to continue to keep a big cash position, during a non-uptrend-market and in a ghost month at that!

Watch out also for news and updates about FED stimulus in the coming week.

Range-trading during a period of uncertainty

As Im writing this, PSE index is only 4 points away from 6800. Many 'investors' that were left holding the bag at above-7000, those shell-shocked by the sell-down of foreign funds last month, are starting to smile again. Im partially one of those investors. I chose not to cut loss, or I did not cut clean on most positions, and was only able to 'save' about 20% of my cash. That obviously was a bad move.

But I elected to pool a smaller fund, open another account in another online broker (to sort of start in a clean slate), still trade actively during the uncertainty, and focus on a few securities only, with two criteria: no bazurs (no BHI, no CAL, no TSI, however hyped they are in forums) and no lightly-traded security (no ANS, no SGI).

I profited a good +6.3% (of capital) taking advantage of predicted range trend in MBT, GLO, TEL, DNL, SCC, and VLL and partially (small one-time impacts) in ABS, BDO, ALI.  For example, I was able to go back and trade TEL four times, in the span of 4 weeks. I bought in tranches at 2830 and prices below and then immediately sold whatever I accumulated at 2930ish--no questions asked.

I would like to think that Im an expert with these moves that are suitable in an environment of volatility, but in truth, as most transactions in the stock market, these are all just bets. There were some rational bases, but luck (more like winds going in your favor) still is the bigger factor.

Nevertheless, if you ask for the bases and rules that I used, . Here they are:
1) took on faith that TEL and others are solid companies that is undeservedly cheap at their prices at that time, especially because there's the backdrop of an unusual, severe sell-off. For TEL, below 2830 was my set price. MBT and AEV at one time went below 10 P/E. And the circumstances (caused by merciless sell-off) were abnormal; these should not be their prices as normalcy returns.
2) forecasted that big bulls and bears are going to fight during that time of uncertainty, so small-time investors can benefit from their tussle.
3) when you observe even the daily trade, volatility was apparent. you can place a bid on the perceived lowest before price jumps again and then return to same number (some call these levels true 'strong' supports) in these daily trades and aim to exit in 3 days.
4) for GLO and TEL, I also relied on the fact that these are high-dividend paying securities, and that this fact would also be in the mind of players foreign or locals alike. Remember that if dividend yield of a stock is 4% of its price, you can be comfortable easily a loss < 4%. We know that GLO, TEL, SCC, Aboitiz stocks, MER, are generous in giving out dividends.
5) also held on to our recent gdp announcement --  +7.8%. You dont see that gdp number brandished every day at any part of the world!
6) also disciplined myself to be at least 30% on cash at any given trading day. At one point, after a previously-set sell points on two big positions were hit while I was on a beach, I was only 26.66% invested.
7) buy in tranches, ready to average down if needed. If your revolving capital is 1 M PhP, buy in amounts of 20 K - 30 K PhP. If 500 K PhP, buy in 10 K - 20 K PhP tranches. This is also optimum to avoid inefficient transaction fees.
8) lastly, again... no bazurs , no lightly-traded stocks.

So there, the reasons for my big gains in just 5 weeks.

But, as a caveat, there were downsides and mistakes:
> VLL, TEL, DNL, GLO, have now increased significantly since I last unloaded them, so there are still that couldve-been shouldve-been imperfect calls, bottomline. No remorse from my side, but trend traders would surely fault my method for not taking full advantage of the trend.
> I also made a mistake in buying and averaging-down on GMA7. The media stalwart aligns with #1 and #4 conditions,  but not #8, GMA7 is a non-bazur but it is very lightly traded nowadays. So this bad move was caused by not following set rules completely. Matigas lang talaga ang ulo (inborn stubborn).  
> MER was also a mistake, but it was caused by extraordinary circumstances prodded by SMC.
>> BUT Im still holding Kapuso and Liwanag. The loss in both after averaging down is not even 4% at present. So obviously, these are not staggeringly as bad a move in terms of impact.

Although, again, on hindsight, these are gambles. 'Expert' traders (like CANSLIM practitioners) will tell you never to come in when there is no clear market uptrend. However good the individual stock is, it will get pulled down by negative sentiment. If the volatility had a downward bias on medium term, if Bernanke firmed-up on his decision to ease QE by end of the year and did not become sheepish on his most recent testimony to the US Capitol, I could have been holding another portfolio set showing nothing but paper losses.

Good luck with your trades. The battle continues.