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 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.

Pick of the Week updates

I'll make it a practice to review my picks 4 weeks back always, since Ive made it a point since Q4 last year to stay with my picks normally at a month's horizon.

It's nearing harvest time for the picks of the weeks.
--in wk8 (GTCAP)... Im at 5% now, will be considering to sell at 8% tops.
--wks 9 and 10 (TEL)... on top of the hefty dividends in PLDT, we might get some cherry on top, probably +3% in the coming few days.
--wk 7's MBT, where I profited already (with MEG) substantially, I still have some position remaining in my nimbler port at +4%. We'll probably sell all at +5%. (My bigger port still has substantial MBT, remnants of last year, at -2%).
--Wk 11, the dividend-paying-company-nearing-exdate-announcement that I chose is MER. It is showing +1.97% for me today, but I placed only a small bet. I'll sell at +4 or 5%.

These target sell prices are based on the premise that PSEI will correct again once it reached 6650. As most retail investors, Im hoping that the PSEi will have momentum until 6800 in a few days; after all, it's rare to see a net foreign selling day since beginning Feb. But Im already willing to take some profit at 6600-6700.

Good luck with the possible jump up in the next few days.

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.

Mamingwit sa ilalim vs. maghintay ng breakout

Totoo namang mas delikado mamingwit at manghula na pinakailalim na ang mapupulutan mo, kaysa maghintay na lamang ng breakout tsaka makisakay. Sa pangalawang istayl ng trading, mas may istruktura ang mga gabay. Meron kasing mas mahigpit na paalala na kitilin ang pagkatalo kapag hindi nagtuluy-tuloy ang breakout tulad nang inaasahan. Sa halimbawa ng PGOLD (na isa kong perinyal na paborito pero di na nasubaybayan)--

Bagamat hindi mataas ang bolyum kumpara sa gusto ng mga tagahanap ng lehitimong breakout, nilampasan ni PGOLD ang 42 na ilambeses nyang sinubukang basagin bago pumailanlang na ngayon. Kung bumili ka sa 42.1 noong 10/02, mayroon ka na ngayong mga 8%. Kung kasama naman sa mga natakot noong Miyerkules at nagbenta sa 45, oks na rin ang +7%.

Paalala ng mga tagasunod ng sistema na ito na magkitil ng talo sa pinakamalapit na support kung peke pala ang breakout. Sa kaso ng PGOLD, sa 40 o 38 mag-cutloss.

'Malinis' ang istayl na ito, subalit mas eksayting ika nga ang sumubok mamingwit sa ilalim. Tulad ng totoong isport sa fishing, napakasaya (tingin mo'y napakagaling mo) kapag tama ang hula na ilalim na talaga ang napagbingwitan.

Ang karaniwang guide ng mga mangingisda sa ganitong istayl ay ang RSI. Kapag sumasadsad sa 30 ang RSI, pero solido naman ang kita at kinabukasan ng kumpanya, dapat daw mamingwit na. Sa kaso ng SECB na dinispatsa ng mga pondo dahil sa mababang ulat ng kita noong nakaraang quarter--

--kung bumili ka sa dulong 105, meron ka nang 30%+ ngayon. O kung sa saktong 30 RSI bumili  (mga 118 ang presyo dito), 16% pa rin ang kita. Mas mataba nga ang ganansya at para kang henyo o pinagpala ng maykapal kapag bumili sa isang mababang presyo at biglang tumaas agad mula doon.
Subalit napakahirap nga namang alamin kung talagang dulong ibaba na ang mabibingwitan. Pano kung sumadsad pa sa nuwebe halimbawa ang RSI?

Ang sagot siguro ay, kahit anong sistema man yan, kailangang ang fundamentals pa rin ng kumpanya ang saligan. Tuluy-tuloy pa rin naman ang kita ng SECB at makikita naman sa paligid ang patuloy na pagsulpot ng mga branches ng bangkong ito (nag-eexpand ang negosyo), kaya siguro marami ring pumasok at sumuporta sa bandang 105-110.

Ganon din sa mga sumabak sa GTCAP. Di na kailangang hintayin pa na umabot sa 30 ang RSI sa kumpanyang ito ng mga Ty, solido naman kasi ang Toyota, Metrobank, at Insurance na pag-mamay-ari nito, at pag tinignan ang graph, parang malaki na ang probabilidad na tumalbog sa 750 ang presyo dahil ilambeses nya na ginawa ito noon.

Ang problema nga lamang kapag may matinding bad news sa bansa o sa merkado (tulad ng QE easing), maaaring lumagpak pa sya ng husto. Sa kaso ng GTCAP, umabot pa sa 700 ang lagpak (maiging dagdag na lang siguro pag abot doon).

Alin sa dalawa ngayon ang mas mabisa? Walang aksyon masyado pag hintay lang nang hintay ng breakout. Madalas lang ang kasong ito kapag 'overall uptrend' ang merkado. Kapag ganoon, hindi na nga kailangan maghintay ng breakout, dahil lahat halos (lalo ang mga magagaganda ang paglago ng kita) ay tataas. Kung aksyon ang gusto, ang mamingwit sa inaakalang dulong-ilalim ang magagamit. Ganoon din kapag di kalakihan ang itataya.

Kabaligtaran naman ang sa mamingwit sa ilalim. Bihira naman ito kapag tumataas ang merkado sa pangkalahatan. Madalas, ang mga bumabagsak ay ang biglaang bad news sa pang-araw-araw (halimbawa, ang biglaang paghahabla ng smuggling ka PNX).

Pero pwede namang gamitin pareho. Tandaan lamang marahil na ang fundamentals pa rin ng kumpanya ang dapat saligan. Ang PGOLD ay patuloy naman ang paglaki. Dito rin kami nag-go-groceries ng pamilya. At dapat walang malaking bad news ang kumpanya. Halimbawa ang MPI at MWC sa ngayon--dahil sa order ng MWSS na magbaba ng singil, di pa solido ang sitwasyon nila para hulaang mamingwit sa ilalim. Kasama na ang mga minahan na napakalikot ng presyo at wala pang liwanag ang kinabukasan hanggang di naaayos ang batas sa pagmimina sa Pilipinas.

Alin ang magandang abangan ang breakout sa ngayon? GLO siguro, subalit di ganon kalakas ang paglago ng negosyong ito kumpara sa PGOLD. Pwede rin ang ICT? JFC? DMPL?

Alin naman ang magandang abangan sa baba? VLL sa 5-5.05, AP sa 30 - 31, AEV sa ... magbasa ng forum tulad ng SMP para makasamang mamingwit. Madalas may isang pondo lang na piniling idispatsa ang stock, kaya nagiging parang bargain ito panandalian. Ang sarap talaga kapag nakatyempo ng ganire.

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.  

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.