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.

Pick of the week for Week 35: Possibilities

First off, although Im already sounding like a broken record, stay in CASH if you want to be safe.

BUT if you want to participate, here are 'possibilities' the stocks to look at:

1) Gold already breached 1400, and seems to be on an uptrend, but LC still went down 8.77%, and PX by 2.7%. As we've mentioned elsewhere, trend of LC and the bunch seem to follow the trend of gold the night before, but this day is a contrarian day. The big bearish shock early in the opening probably overwhelmed holders early. I'll be betting one tranche tomorrow each on LC (or LCB) and PX.

2) ALI, a solid solid company, is already oversold (20 RSI). I'll be getting in at 24. This stock, several times in recent past, quickly bounced with just a marginal breach of oversold territory. The only problem is if there is really a general, pervasive, bearish, sell-sell-sell sentiment or there's a big local bad news waiting to explode... then not just ALI but all of PSE is doomed. But If there are no extraordinary negative circumstances, 24 offers good enough price with right margin of safety to enter. Just remember to sell at a small profit. Do not aim for double-digit percentage gain at this time.

3) VLL is a good stock to enter at 5, 5.01. Im also predicting an upcoming hefty divs announcement (between 2 - 3% yield) in the next two weeks.

4) I have to include MBT in this list again. P/E at current price is 8.48! Cheapest among the top 3 banks by a wide margin, and this stock has an upcoming stock divs to boot.

5) If you are in a 'bargain-hunting mode, check the EPS and P/E of other index stocks. (no exhorting need to look at bazurs at this time since blue chips are going on sale). But in the end, these are still dangerous times. Youll have to have faith on the company and have some strong ('emotionless') resolve, or [better] to just stay in cash, and wait for a clear uptrend.

6) The Sy stocks including mother ship SM are also in oversold range. However, the MSCI adjustment is still for 1st week of September, and there seems to be an continuous ominous cloud of bad intention (or rape?) by foreign fundies toward the Sy's. It's fearful to get in to SM, SMPH. I wont get in.

C'mon index! C'mon locals. That includes me! C'mon--we can doh it!

Oh, Barnacles, SM!

SM gave back all its gains this week and shed more!

Major reasons should be another destructive MSCI re-weighting, and foreign sell-off from Deutsche, et al. Both reasons could be related--we dont know which one is the cause, which is the effect.  

But in any case, the more important puzzle is on when and where to get in. 

These are points for consideration. 

1) Chartists believe that next support is at 760. 50% FIbonacci retracement level also have support price at 750 -760 range. If true, this is going to be painful for fellow forum members at SMP who entered at 840 - 900.  

2) I believe that SM cannot go down -20% inside one month. This is a bellweather company. If SM suffers that much, something must be seriously wrong with our economy (which is contrary to S&P and 3rd party analysts' pronouncements), or there must be serious negative news again from overseas (like Moody's announcing we failed their recent evaluation, or Bernanke saying that QE tapering will start pronto).
3) Recent MSCI re-weighting causes 'instant' downtrend by 5-10% on affected stocks, within the week/day the re-weighting becomes effective. In this case, Sept 02 is the date to watch out for.
4) I believe SM is a bargain at P/E below 19. Fund managers should also be aware of this, because...
5) ... If you visit Megamall, SM North, MOA, you can see how full-packed they are compared to other malls by Ayala and Gokongwei. Esem is still Esem. And if our growth as a country is driven by domestic consumption, SM should be one of the main beneficiaries.

Given these considerations, I will enter starting at 775 or at whatever price SM is closing on September 02. I think 750 is too low, but if it reaches that and further down, I'll average down even until 700.

Market Skim Through, 14 August 2013. SUN shone on those who saw the disclosure early. SUN Sisters benefit. JFC is a mutant!

Another good, invigorating day for the market. Overall index increase was +1.56%, crossing the 20-day SMA, to 6600+, at a another respectable 7 B PhP trading volume.

	Stock Code	Last	Change	%Change	Value
1	SUN	0.8500	0.2800	49.12%	15,409,370
2	RPL	10.6000	2.8200	36.25%	493,032
3	PRMX	3.3600	0.3700	12.37%	20,160
4	GSMI	16.8800	1.3800	8.90%	1,211,856
5	ARA	1.4400	0.0900	6.67%	668,730
6	ICTV	0.4250	0.0250	6.25%	555,850
7	ION	0.5300	0.0300	6.00%	530
8	MED	0.2750	0.0150	5.77%	38,300
9	WPI	0.3850	0.0200	5.48%	44,800
10	CPG	1.3600	0.0700	5.43%	48,036,250
11	JFC	177.0000	9.0000	5.36%	176,314,323
12	PAX	2.3100	0.1100	5.00%	381,780
13	RLC	22.5500	1.0500	4.88%	38,765,040
14	MHC	0.6500	0.0300	4.84%	4,407,980
15	AGI	28.1000	1.2500	4.66%	399,259,775
16	MBT	110.9000	4.9000	4.62%	420,926,251
17	STR	3.8700	0.1700	4.59%	163,620
18	PRC	9.9000	0.4000	4.21%	0
19	PHN	15.0000	0.6000	4.17%	614,190
20	DFNN	4.8900	0.1700	3.60%	343,600

SUN ended at that rare ceiling price, because of a disclosed stock rights offering, to be set at a price of 1 PhP. There was no rumor or premonition to the upcoming rights; SUN's board is perhaps commendable for guarding the plan, keeping it secret until after board approval. Those who were focused on the PSE website for disclosures, and was able to catch the disclosure early, and got in early in SUN, deserved the gain. More so those who were already invested before hand. 

I think SUN  will continue to go up tomorrow and should easily breach 0.9 PhP. 0.95 would be probable; while above 1 PhP would be remarkable (many would sell to take profit at 0.95 above). I havent and wont participate in SUN, because of its tarnished heritage. It's still the former BW Resources, raised by thieves that almost brought our entire economy down.  I still believe Andrew Tan shouldn't have bought SUN. 

But in any case, Andrew Tan seems mind the performance of his stocks and also does not disregard the small investors. His rights and follow-on offering are placed not at a steep discount (unlike SMC, ICT, ABS, SM, et al  have done recently), but more often at a plus premium (like what he did for GERI and MEG recently).

Probably due to the ceiling-move and goodwill from SUN, sisters GERI, MEG, and ELI also have shown significant increases. And then mother ship AGI surged +4+%. 

JFC, on the other hand, continues to show its mutant ability, and jumped even higher today. It disregarded already the downtrend of the past several weeks and now, since last week, is showing 52-week highs day-after-day, seemingly without any resistance. Its P/E is already at 40 (even higher than AC), but still not showing any weakness. Foreigners are participating in the buying. I will write a whole entry about JFC (close to my heart) within next week. 

SM and group also continued their recovery. 

And then CPG continued its uptrend. It was a good buy two days ago (good call by James K Nava). If youre able to enter art 1.22 or 1.23, best to take profit already.

Those watching in the sidelines, again, should reduce their cash position and enter on issues after doing their own personal research. If you need it, I have posted some suggested stocks, in recent posts, for you to look at, but most of them admittedly already went up considerably. You can also develop a strategy of your own. One input that Ive read is to check which hasnt increased significantly the past two days. Those stocks could be good candidates, because if the market goes into confirmed uptrend, every fundamentally-good company should go up. 

Market Skim Through: August 06, Are they really bargains?

PSE index tumbled down -1.37%, but many are still thankful because it was nearing -2.0% earlier in the day. PSEi is going deeper below its short-term moving averages, so chartists indeed exited in the morning. But many funds clicked buy in the afternoon, which also brought the volume to a decent 5.95 volume. Foreigners were net sellers mostly because they continue to unload Sy stocks, but these funds also bought some index issues like MEG, which recovered to positive.

#	Stock Code	Last	Change	%Change	Value
1	PORT	9.6000	-3.8600	-28.68%	960
2	SPC	4.8000	-0.5000	-9.43%	48,000
3	CSB	11.5400	-0.9600	-7.68%	463,056
4	SEVN	130.0000	-9.0000	-6.47%	358,110
5	PRIM	1.6100	-0.1100	-6.40%	54,950
6	CDC	1.0500	-0.0700	-6.25%	32,710
7	FFI	14.8200	-0.9200	-5.84%	8,836
8	EG	0.0170	-0.0010	-5.56%	23,900
9	ARA	1.3200	-0.0700	-5.04%	342,800
10	LIB	2.0000	-0.1000	-4.76%	734,000
11	OPMB	0.0200	-0.0010	-4.76%	2,100
12	T	2.1000	-0.1000	-4.55%	21,000
13	MAKE	27.5500	-1.2500	-4.34%	5,510
14	AP	32.0500	-1.4000	-4.19%	51,093,170
15	MWC	31.1500	-1.3000	-4.01%	71,176,810
16	SOC	1.0300	-0.0400	-3.74%	431,990
17	HI	7.2400	-0.2600	-3.47%	5,749,837
18	RCB	50.2500	-1.8000	-3.46%	14,116,674
19	EEI	12.0000	-0.4200	-3.38%	13,051,840
20	FGENG	111.6000	-3.7000	-3.21%	11,160

AP and MWC are in the list of worst performers, because of separate news items. AP, because supposed to be power will be the first to get hit by impending rising interest rates. The company's latest earnings report is also not too good compared to last year because of forex losses. MWC, on the other hand, is still threatened by a possible new policy of disallowing them to pass on VAT to consumers. (Changing the rules in the middle of the game = always bad for business).

Albeit the perceived low prices... Cash is still my pick of the week. However it is still useful to ruminate on these:

Sy Stocks are battered. What among BDO, BEL, SMPH, SM, SMDC are now bargains? BEL has potential I think as we near December. Gaming stocks should jump very high as it nears the opening of a new casino. BDO is a bargain at 10 p/e. The rest must find their bottom.

MPI, although it entered my previously declared price entry range,  I wasnt able to get in at 4.93 this morning (conflict with a meeting). Might have another chance within the week?

I added a tranche of MBT at 103.5; thankfully it rose to 105 + in the afternoon. This stock might be a good opportunity to profitably range trade again. Im keeping my substantial position. I also reentered BDO after cutting a small loss yesterday. The bank also recovered decently today, already showing me a bit of profit. But all these are gambles, mind ya.

There's a fighting chance that our market will be green tomorrow. JFC piled on good, confident numbers (and a relatively high divs announcement at that!) to encourage our PSE to show some life. Could be the needed antidote to what SM prompted.

Depending on you appetite for risk, you may get in or not. If you decide to get in, I cant over-emphasize the better-for-risk move of buying in tranches. Do not go all-in. Buy staggered.

If you decide to be on the sidelines, youre aligned with an experienced group of Ghost Month believers. (the month officially starts tomorrow and ends September 4). But would not hurt to be on the lookout for strong companies that are perhaps being sold-off by locals but becoming interesting for foreign brokers.

Good luck!