Picks of the week for WK12 is to HOLD the AGI and MWC that you've bought, and then TEL. at 2602

AGI could have fuel until 29 to 31. I'll probably sell all at 29 and some cents

MWC seems changing and consolidating hands in preparation for a move upwards. Although not that convincing.

If I have to choose between the two, only AGI's move up is probable. Foreign buying in AGI was solid and with conviction the past few days.

GMA7-- might need to cut loss at 6.5.

I also placed a buy in TEL at 2602. This is one of the stocks Im eager to go back to again and again and again. And it's lucky for our trading style that it moves in a channel rather than leaves you after you sell. Whatever happens, I'll start accumulating again from that price point (may be even at 2700). Remember--TEL gives divs, big enough to give you gain even if its price rests lower for longer vs. your entry point.

WARNING: SPECULATIVE. Picks of the week for Wk11 is slight buys on issues with apparent foreign buying

There's a "Warning: Speculative" in the title, but aren't all stock purchases speculative? Well, this only means that I see risks here more than our normal picks of the week.

Anyway, I suggest you make a criteria to sift through # of foreign brokers buying the stock that youre eyeing, before you get in. For my own, if I see three foreign brokers like UB, JPMORGAN, and DEUTSCHE appearing together in the net buy side, inside the top 6 buyers, thats significant.

I havent peeked through that many stocks yet. but in the group that I saw, I liked the foreign buying that I see in AGI so I added (buy up) one tranche more. AGI is our pick this week, together with two speculative picks.

Not, in these two other 'extra' picks, you should enter at your risk... but arent all buy at own risk, you say?

In any case, be ready to cut loss when you suddenly see yourself holding -8% in a few days. On the other hand, when you see a profit. sell also as quickly... the extra picks are

...GMA7 and MWC! Buy a few tranches each then follow closely.

James K Nava will blog on GMA7 in Filipino, I'll do a separate post on MWC.

Bull!? And what to do?

For posterity, Im writing here that our index reached a record high yesterday. Although it promptly went down due to profit-taking by both locals and foreigners, the uptrend indicator is strong.

I like the now vigorous foreign-buying in AGI. I'll hold even the block I freshly added this week.

I dislike that I dont have MEG anymore. I thought and was hoping it will go nearer for 4, so I can buy again there, but it just surged strong from 4.3. Ah, it's true that any respectable PSE portfolio should have a MEG.

Another perennial favorite (but I dont have at this time) GTCAP also surged to record highs, even with a disclosure of decreasing net income. Growth must still be foreseen in this conglomerate, armed with news from insiders. Im reluctant to enter at this 100+ level, in any case, unless I have that solid info that portends growth.

In any case, what to do right now? What should guide our general moves in the PSE?

Technical Analysts will say that the uptrend is very much intact. That we are in a bull market definitely with the appropriate moving average line above above where it should be above.

But where specifically to place your bets at?

I'd say buy-up and add to a fundamentally-solid issue already thats in your port. Buy up on that stock you have already studied in the past as having promising growth for the next three years. Buy in tranches still, since this might be a reluctant bull.

If you want specifics, Im sticking to the pick of the week.

For 'entertainment,' Im also tempted to go Bazura for short term ... like ELI... one remaining Dr. Tan stock that still hasn't increased enough. For the intermediate period, Dr. Tan should just fold this inside MEG. The only question is at what tender offer?

ELI is not a reco though. Choose your own bazura to gamble in for entertainment. Choose your own Bazura only if you have time to monitor the market.

Pick of the week for Wk39 is AGI (especially if it breaches 26 strongly)

I like my chances in this better diversified conglomerate ("better diversified" as opposed to SMC, for example).

The previous post about how A Tan looks at the different pieces of his conglomerate as complimenting each other adds value to the whole issue.

And at 14 forward P/E, it is also a bargain today.

Further, if it breaches 26 strongly, the TA believers will interpret this as start of recovery. They will come in droves

Enter one tranche, if you wanna be safe.

McDonald's, Golden Arches, and Andrew Tan's townships

The local McDonald's franchise reported negative growth at the time our economy is expanding, considering further that our expansion is largely due to consumption. Picture more OFW's remitting money and their families having weekly budget for fast food, but local McD is not getting any benefit in terms of increasing profit out of it.

This regression of McD should also be placed side by side with JFC's report of high growth. Are the local McD stores raising their white flag of surrender to the Happy Bee? Jollibee is taking all the gains without leaving anything for McDo?

Why is this? One reason is probably. Andrew likes to complete his "townships," and a McDonald's store in a cluster of expensive condominiums and office buildings is a valuable chip for Dr. Tan. A chip that he utilizes for the 'bigger picture.'

Megaworld is even using a McDo store as a selling point, and AGI will build it, even if the store is not warranted initially given the small foot traffic (one first requirement for scouting for fast food location is high foot traffic). 

And so these stores may not be earning at all, but it would make the real estate around it more expensive. So, bad for Golden Arches (the company that holds the franchise for McD globally), but still good overall for AGI. 

But for long-term, AGI must still plan for Golden Arches to grow as well. I wonder though how AGI would resolve to show promise for Golden Arches as a subsidiary. Its marketing is still robust, commercials creative, and it is still differentiating itself from Jollibee as 'more premium' fast food alternative. Would this be effective in the end? 

About AGI, at this time

Weeks ago, I've listed AGI as among the issues I eagerly await to be given a chance to go back to. Among other reasons, I believe in AGI because

--this is the best-diversified conglomerate among its peers. 

--foreign funds has consistently show support for it.  

--Andrew Tan also is still hungry. He will continue to take risks and put money on opportunities that he sees.

--Ive never lost a trade with it (so far). This was one constant source of 'consolation prizes' many times over last year even during the hard downturn. 

But it's a foreign transaction that apparently now brought down AGI. Fidelity Fund, a big mutual fund in the US, apparently made a side deal with Andrew and bought a block at a big discount. At what discount? Appears they are not required to disclose.

In any case, this brought the wrath of other foreign investors. They sold down hard and perhaps attempted to bring down AGI to the perceived price that Fidelity bought it at.

And then there was also the lackluster earnings report for the most recent quarter.

The combination of the two negative 'catalysts' brought down price quickly by minus 20%, while peers such as AC continued to increase. Now, technical analysts will tell us that the downtrend is sure and continuing (see two parallel lines going down). It's not safe to get in yet.

Now, what to do?

Given that we dont know the buying price of Fidelity, and this is already a done deal, the first question is: has the market priced-in this factor by this time?

And then second question, can AGI recover to its winning ways in earnings on short and medium term? One subsidiary that reported negative is McDonald's. Can McD become a contributor soon? (More on McD as a member of AGI in another post)?

The forward P/E of AGI is now 14 and showing -7% one-year return. Compare this to AC  which have 25 P/E and +30% gain. If you consider just these data, it's time to start betting.

But if you are guided by TA,  you have to wait for around 25.3 to be breached convincingly (with good volume) before you get in.

For me, I entered AGI in my nimbler port at 24 and promptly sold all at 25 in 2 days when I saw that it is having difficulty breaching 25.

Then in my main port, I have been averaging down since this issue went below 25.3. Now my average price for 3 tranches is showing -4%. Im putting aside Technical Analysis mean time and just placed my next buy at 23.9. I wont be afraid even if AGI becomes 50% of my total port. I think all the four reasons that are mentioned in the beginning of this post are still true. It still sounds good to believe in the fundamentals of AGI.

Pick of the week for Wk 16 is to accumulate your favorites; give a special eye on banks

I was about to post yesterday LRI as the pick of the week because of the merger news, but because of an early morning meeting, I wasn't able to go online even to open brokerage and post a market opening buy (to add up early). LRI since flew away. Im selling current position--entered into months ago--in LRI at +20%..

I suggest you already position on other previously-good performing stocks. Check their upsurges during the bull run last year. These are my off-the-cuff suggestions:

--GTCAP still has a very probable +5% in short-term.

--then the banks BPI and MBT still have big room to increase, until before BSP announce an interest rate increase (you must watch out for news on this; we must exit some positions before they do the announcement and then just buy again below. bsp has no choice but to increase interest rates because the increase in inflation is also imminent at this time).

--BEL is a good stock to accumulate until Q4 when they open their casino and a surge will occur (if you wait that long, the price might already be too high). See the trend of BLOOM months before they opened Solaire in 2013.

--TA has room until it reaches another resistance at 2.18 - 2.23

But these are not strong recos at this point. I suggest you still look around. Look around on your own. Research. Check history, previous price movements of specific stocks, news, committed milestones. For power companies, for exampl, check when plants and increases in capacity are planned to happen.

For me--Im still maintaining a good cash position just in case AGI, MEG, SCC, or PGOLD temporarily goes on sale. I have already GTM buy points set for these stocks.

Stocks Im aching to go back to

If Putin's posturing indeed brings our PSE down, 

there could be some benefit to many of us who's holding a healthy cash position.

For myself, a steep correction could allow me to place some bets again in these issues I never lost a bet with (you can call this my Top-5-but-Im-not-currently-holding stocks):

1) MEG -- I'll start entering at 3.73 with one tranche and continue to add even if it struts down to 3.0

2) PGOLD--will start at 38 and place bets until 30

3) AGI--25.9, will add until 20

4) DNL--785 will add until 700

5) toss-up between SCC (290... but improbable to happen) or GTCAP (785 until 700)--

Apologies to those still holding.
Yes, Im wishing for these to go down, but I consider these issues among the most resilient of the past 12 months. They seem to be among the stocks that return back to previous highs (and make new highs). Besides being fundamentally solid, they also seem to return to their 'true' valuation (in terms of growth promise) the fastest way.

There are others that perform like them, but these are the ones I dont have current positions in (and would want to go back to) asap.

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.

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.  

And now we're starting over again...

Our market's year-to-date gains were erased last Wednesday. Yes, it's like starting over again... and worse, to some, present sentiment is bleaker than in January. There are doomsayers who want the index further back to 5200, back to exactly a year ago (instead of just beginning 2013), when Ghost month was also ending.  

Fortunately, the index bounced back +6% in two days, and I profited from the swing. The first gain was from a purchase in GTCAP, which I believed did not deserve falling -10% in one day. And then by early Thursday, when there's an apparent chance of a big bounce, I got in in AGI, CPG, TA, and VLL (these also tumbled down to below 'strong support' on Wednesday). By Friday, there was already a positive general sentiment. Our sell points for AGI and VLL got hit, bringing back cash position to above 30%. We came out okay for the week.

Now, what's next? We're ending Ghost month next week and the past 3 years show consistent good performance from this time up to year end. The problem though is the volatility that remains in our market. Bleak conditions, not present last year, like the impending bombing of Syria and QE easing of US Fed, continue to bring us a shaky market. If you observe the exchange of trades in a stock like SM, even for just a few minutes, you can see the extraordinary tussle between bulls and bears. And worse, the bears are mostly foreign funds that seem violent, with bad intentions, seemingly intending to leave carnage, when they exit. Although I have some doubts in divesting AGI (this stock prove to be one of the most resilient across the PSE), it's only right to secure some profit and better our cash positions in this backdrop.

It's also useful to consider that many traders are resigned to the scenario that we will not be able to go back to a 7 K index this year. Most of them are just hoping to go back to 6600. And 6600 should be an easy target, if we base on the +11% that happened last year. I would also be happy if we hover between 6600-6800, BUT with stability. It feels not an even playing game when there's always a threat, that 'easiness' from foreigners to bring down a blue chip by -10% in a day. And the minute they decide to do that, you may be occupied in a meeting in the office in your day job.

What would bring that stability? 1) the Fed should announce a firm timeline on what they want to do. 2) the foreigners should finish withdrawing 3) probably more Pinoy buying strength. It's interesting to note that we're still net-foreign-sell days during the big bounce on Thurs and Fri. Local funds believe in our companies in that two days enough to prop our market back. I think this is not empty fear, but a threat that is apparent and which we should be defensive against.

On another macro point of view, going back to January prices somehow disregards all the good news and achievements (of our OFW's, of our call center agents, et al) from start of the year to now. It's like the pride-inducing GDP disclosures, investment upgrade never happened at all. And the rosy corporate earnings are negative instead. Should we be part of this group that disregard this solid data?

On the other side, we could also look at it this way: we could have been on a lower level today if not for those catalysts. And yes, we have to be at peace with the fact that our PSE is one of the most vulnerable to outside factors because 1) it is not that big enough yet and 2) we Filipinos who participate in equities are also not yet that many. Following foreign funds is still one of the most safest trading strategy until we find resolutions to the factors. If I use this, I should divest (or at least lessen) big position in MBT... that's something to ruminate about at the start of the week.

Bottom line, I envy those starting at 100% cash today. It's a good time to start. Or if you cut loss, it's a good time to start over again...

Whatever it is, remember to take profit early

The market gained +3.59%.

Some are calling it dead cat or technical bounce, others assign it to the GDP growth press release. 

Technical bounce is short word for people like me buying, after thinking that prices has reached bottom and should be rising up asap. But that buying was also done on faith that our economy is growing vigorously, and that the firms that are part of that growth does not deserve the humongous minus-10%-in-one day that we're seeing the past days.   Therefore, we can say that the increase is a combination of both. 

My risky buys in GTCAP and AGI paid off, although GTCAP's increase has some luck and good timing in it (it is to be included in PSEi by Sept 16). AGI on the other hand is one of the most resilient stock I am eager to come back to since divesting for profit early August. Also took minimum tranche positions in CPG, TA, Im down to 20% cash today.

	Stock Code	Last	Change	%Change	Value
1	MCP	9.0500	1.1800	14.99%	38,031,116
2	GTCAP	780.0000	90.0000	13.04%	429,077,175
3	SEVN	105.0000	12.0000	12.90%	172,295
4	LTG	18.0000	2.0000	12.50%	349,055,466
5	WIN	0.2400	0.0250	11.63%	2,400
6	ABS	34.0000	3.4000	11.11%	77,400
7	CHI	5.7900	0.5400	10.29%	129,998
8	CYBR	0.5800	0.0500	9.43%	51,380
9	WEB	12.0000	1.0000	9.09%	74,087,622
10	MWIDE	14.9800	1.1800	8.55%	9,966,814
11	JFC	167.0000	13.0000	8.44%	256,748,864
12	PGOLD	39.3000	3.0000	8.26%	87,051,735
13	DAVIN	1.1000	0.0800	7.84%	1,624,980
14	GMAP	8.4000	0.6000	7.69%	13,980,480
15	ABSP	35.0000	2.5000	7.69%	55,137,950
16	BDO	73.3000	5.1000	7.48%	522,727,851
17	MIC	5.7500	0.4000	7.48%	552,990
18	MA	0.0300	0.0020	7.14%	5,552,700
19	SINO	0.3000	0.0200	7.14%	36,000
20	FOOD	1.2000	0.0800	7.14%	1,947,280

I also averaged down on AC on my main port--this appears also to be a good move. And then some strong recoveries in BDO and MBT. I have a big position in MBT, and Im still wondering why foreign funds seem to be exiting from this stock seemingly in a hurry. Even the ex-date of a heft stock dividend was ignored by these sellers. Has MBT a huge exposure in forex, hedging in favor of PhP? Is the bank's porfolios not robust against the upcoming QE tapering. I remember MBT being one of the hardest hit among local banks in the 2008 subprime crisis. Its managers should have learned their lesson.

It must be noted though that yesterday still is a net foreign selling day at 1 B PhP. And also we must not forget that the day before yesterday, all remaining year-to-date gains in our market was erased in a matter of hours.  The market that we have today is as volatile (and as dangerous) as that. 

Anyway, I think we should still be green today with all the positive sentiment. Some people includes Napoles's surrender in their motivation.

I believe these will also help: window-dressing, positive GDP hurrahs, even the CFO's of many companies are cheering at this time.  Technical Analysts might also be going and in and betting on te chance that index will bounce high and strong again at the same level as it did last June. That we will return to 6500 in the next few days.

PSEi to bounce strong again from 5700? 

BUT I intend to sell this afternoon to increase my cash position back to at least 50%. The volatility, obviously, is the one that portends danger above all. On some stocks, you can even observe the tussle between bears and bulls, and on many days the foreigner bears are winning. Only GTCAP might remain the one unsold 'green' stock. Its inclusion in the index will officially start  Sept 16. I think the upside of this issue from now until that date is still fat. BUT I will sell if it reaches 830 or 850, or there is a terrible sell-down again.

And so, in closing, be cautious on your bets!

Technical Analysis does not always work--many were duped by false breakouts early August and whipsawed in their cut-losses early this week--
and belief in Strong Fundamentals is also invalidated--solid companies like AGI are being divested like the company will go out of business immediately--
...when merciless foreigners are selling down indiscriminately.