Choose to be conservative with a cash position (maybe just for this week)

PSEi broke through convincingly its short-term moving average. MACD is also now [also convincingly] above signal line. To chartists, both are signals to buy.

Technical Analysts believe that the chart should already contain all the story and emotions (or everything 'priced-in'), including the plans and anxiety of the participants of the market. This could mean that the price improvement show there are needless worries for the upcoming FED meeting. And that stocks that jumped high today will jump higher in the coming days. The next resistance levels are 6400 and 6500. At that level, we might see SM at 850 and MBT at 90+. So, given this, what should be our 2-week plan?

I would love to say that it's safe to go long now. Meaning, stop the quick cutloss and stop selling at 3-5% according to our rules in this type of market; hold for longer time periods instead, and probably shoot for 20%.

But I'll be choosing a semi-conservative route. Half of my gtcap was sold earlier on an automatic sell-point set last week (at +6%), this helps me prepare more cash for Thursday. I will also sell some green MBT this morning again to ready higher cash position. And then I will also observe the moves of foreigners more. Even if the stocks that rose already (ike GTCAP, SM, and MBT) surge up to 52-week highs from here on, I think there are plenty of opportunities with other stocks. FLI, FDC, SCC's also have good earnings, but have not yet surged up at this time.

So, Cash is still a useful defensive position at this time. Even if this is now a start of a true uptrend, and we miss some of the equities that already jumped higher, there are still other nice ones (still cheap) to ride in. I recently saw in one presentation that PSE is 60% a listing of fundamentally solid companies. Even if the first 30% already is on an eventual uptrend, we'll still have the other 30%, which we can easily find (our PSE isn't that big yet).

Market Skim Through: Surprise Surge Up

PSEi increased big by +2.76%, to close above 6,300, at a significant 10 B turnover. Foreigners were net buyers at Php1 B. The % increase is indeed high, but not all index stocks were green.

	Stock Code	Last	Change	%Change	Value
1	RPL	13.1000	-3.8000	-22.49%	11,600
2	SMC	65.5000	-7.0000	-9.66%	21,079,783
3	I	2.6200	-0.2400	-8.39%	15,720
4	PHES	0.4300	-0.0300	-6.52%	107,500
5	VMC	1.6000	-0.1000	-5.88%	14,338,980
6	CHIPS	14.0000	-0.8000	-5.41%	51,550
7	ZHI	0.3700	-0.0200	-5.13%	235,350
8	LC	0.4400	-0.0200	-4.35%	28,200,350
9	STR	3.6300	-0.1600	-4.22%	145,350
10	MA	0.0270	-0.0010	-3.57%	13,591,900
11	HLCM	13.0000	-0.4600	-3.42%	65,000
12	BEL	4.7800	-0.1600	-3.24%	96,947,010
13	BKD	1.0700	-0.0300	-2.73%	219,350
14	STI	0.7600	-0.0200	-2.56%	14,125,410
15	MER	268.0000	-7.0000	-2.55%	511,089,210
16	T	2.2400	-0.0500	-2.18%	12,740
17	ARA	1.5000	-0.0300	-1.96%	217,160
18	COL	17.5000	-0.3000	-1.69%	2,765,048
19	SEVN	105.1000	-1.8000	-1.68%	1,398,312
20	SLI	0.6100	-0.0100	-1.61%	323,730

SMC is now officially behaving like a bazur, or a poor-performing second liner like ROCK. It is the 2nd worst performer at - 9.66. I wonder what Ramon Ang will say again about taking SMC private (it is rationale). Will he brandish again the chunk of Meralco he can still sell, just so he can show liquidity?

Foreigners CLSA and Deutsche sold big at closing, and power companies are seemingly hit. MER and AP, for example were positive throughout the day but suddenly closed in the red at closing.  Are these brokers worried about another move by the government ordering another slash in utility tariffs (for electricity this time after water)?

The bulk of the increase in the index was courtesy of SM, MBT, MPI, and SMPH, which all rose big.

	Stock Code	Last	Change	%Change	Value
1	SUN	1.5700	0.1900	13.77%	15,305,640
2	ATN	1.1800	0.1300	12.38%	141,560
3	CDC	1.1200	0.1100	10.89%	5,600
4	EVER	0.2650	0.0260	10.88%	17,600
5	IPO	12.5000	1.1800	10.42%	398,946
6	CPG	1.5500	0.1400	9.93%	45,751,090
7	SM	805.0000	61.5000	8.27%	980,861,995
8	AGF	2.8100	0.2100	8.08%	2,751,110
9	ALHI	23.4000	1.6000	7.34%	64,655
10	APO	1.9800	0.1300	7.03%	1,980
11	NXT	2.1500	0.1400	6.97%	38,670
12	CEB	55.5000	3.0000	5.71%	18,150,905
13	OPM	0.0190	0.0010	5.56%	39,800
14	KPH	4.7500	0.2500	5.56%	28,300
15	MPI	4.6300	0.2300	5.23%	298,078,170
16	MBT	86.0000	4.2500	5.20%	506,718,473
17	SMPH	16.9800	0.8000	4.94%	234,222,736
18	PAL	5.7700	0.2700	4.91%	469,106
19	IMI	2.6000	0.1200	4.84%	391,410
20	GEO	0.4350	0.0200	4.82%	8,800

The 1B foreign buying is small for comfort given that we reached 10 B in total volume (their buy figures are usually higher at this total volume). The culprits are again Deutsche and CLSA, which combined for over 2.5 B of selling. Good thing other foreigners and local neutralised Deutsche selling in SM, for example. And again, a big chunk of the sell-down, of both brokers happened at closing (which, incidentally I think is better than gapping down at opening, because panicky locals frequently follow gap downs with some immediate sell-downs of their own, making a painful chain effect).

All these were surprises. Majority were expecting sideways, low-volume trading, and sell-off by many funds to prepare for the FED meeting. We can only wonder what these funds are planning for near-term (how do they intend to position throughout September) and intermediate (until Dec 30). We must be aware of their moves until Wednesday, and change action plans if needed.