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.

Recounting Week 39

If I was asked to place a bet last Sunday on whether the market will go up or down throughout last week, I would have bet that the market will go up even by 1%. What happened instead was we went back to a low 4-6 B PhP trading per day, and locals took profit. We're down 2% as a result.

There were also some negative rumours about AGI that made locals sell. That news about its shortchanging of upcoming backdoors and IPO's could be true, but Im ready to average down even if it goes down to 19.

The news about SMC, JGS, and MER also made impact. I made a separate post on this topic.

The main news that brought down equities seems to be the stand-off between US Congress and Obama on budget. Obama should show the lower house that he has some balls to shut down the government if needed. I think Speaker Boehner and his cohorts have smaller balls, and will give in the next two weeks, prompting a rally just before FED tapering news permeates again by end-October.

I profited +3% twice on JGS in the week, and sold half of green MEG just to hedge. I will add in MEG though if it goes down to 3.34 again. Im sticking to MEG as a good pick, with a time frame of two weeks. Im also still holding a significant MBT at 6+% gain
Im retaining cash position at 30%

I also made one tranche entry in SECB, which immediately turned green on the same day. I think its preferred shared rights is good for the stock price in the end. And SECB also tumbled dwon so low from its June high, it has so much room for an intermediate uptrend.

I was also watching VLL, because of its low P/E (good for value investors), new vigorous involvement of basura swimmer (good for 'N' in CANSLIM as explained by James), and solid sales growth. But it seem unable to get past the 5.5 hurdle. And more importantly the sell-side volume is always higher than ask. Im eager to get back to this issue at 5.05, but will probably start with one tranche on 5.15.

And then I also caught up on the last two episodes of Breaking Bad. Ive been a heavy user of IMDB since college (more than a decade ago), and this is the first time ever I've seen a 10/10 score in any film or tv episode. And it's fully deserving this perfect-ness. I cant help but blurt out an audible "wow" after I finished watching it myself, alone, in front of a desktop computer.

Others who are not following Breaking Bad might not be able to relate and be "hit" with the fullest impact of the episode. If you are not yet a Heisenberg follower, start now, even with just the 4th season. It's good to invest time in probably the best series ever in TV history (beating even Sopranos and The Wire).

A quickie on VLL

Manny Villar

Basura Swimmer has no further plans to run again for President? He probably feels he had his chance, and missed it with over-advertising. Or is he just building up his war chest again?

Anyway, This comics is now immortal: 

And quickly, merits of VLL as a company:

• 18% increase in net income and 20% increase in revenue 1H2013 vs 1H2012
• 8.66 forward P/E at current price. One of Peter Lynch's basic rule is P/E less than earnings increase. Way less could mean a bargain. 
• Land bank is solid. Good roads leading to them arranged by Villar himself :-) 
• Plenty of room for growth. 
• Both Manuel and Manuel Paolo have good academic credentials, and have been in the business for years. 
• Decent-dividend paying.
• Manny would know how to plow through bureaucracies--a trait always valuable for an executive. 
• And who wouldn't want a board chairman who can beat Chuck Norris? 

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.

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...

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!