Pullback or reversal Den Somera Philippine Daily Inquirer
June 19, 2009
WHAT’S happening in the market with technical reports to arrive at a decision whether to pass up or take advantage of the current weakness to enter the market.
Actually, our stock market players in the virtual game are faced with the same quandary at the moment. The market last Monday, June 15, proceeded to hit its next big target, which was placed at the 2,627 level of the main Philippine Stock Exchange index, the PSEi, following the market’s strong close for the week last Thursday.
At the virtual game
Encouraged by this trading result, the “Integrator” sent three “buy” orders just before opening bell on Monday. The first was 200 shares of SM Investments Corp. (SM) at P310 per share. Second, was 25,000 shares of GMA Network Inc. “common” (GMA 7) at P6.90 per share, which was validated at P6.60. As was explained already before, following actual trading rules, the highest “bid” price gets the opening “ask” price, which was P6.60. Third, was 100 shares of Philippine Long Distance Telephone Co. “common” (TEL) at P940.00 per share. This was voided as it was a wrong order.
To digress, confusion or mistake happens when you cram or don’t give yourself enough time to review your trading calls. Remembering the first rule of the market, you must “win your trade even before you begin.” We can’t, therefore, over emphasize the importance of preparation before taking action.
His reasons for picking up each of these stocks were the same: “Relative undervaluation on account of positive earnings growth.”
As the market still ended in the positive although not as strong as the previous close, he gave another round of “buy” orders on Tuesday, June 16. These were: 30,000 shares Alliance Tuna at P1.42 which was validated at P1.36 as said stock opened at such price; 20,000 shares of Splash Corp. (SPH) at P3.05 per share; and 100 shares of Globe Telecom Inc. (GLO) at P995.00 per share which, again, was validated at the opening price of P990.00
For his second tranche of trading orders, “relative undervaluation” was his basis for his stock picks.
The “QB Trader” sent what seem to be a well thought-out trading order in the afternoon of Monday, June 15, for execution the following day. As if having conferred with the “Integrator,” she also ordered to buy 30,000 shares of SPH at P3.05 per share which was validated at the opening price of P3.00. She also ordered to buy 2,000 shares of Security Bank Corp. (SECB) at P42.00 per share.
Characteristically laconic, she has one short remark about her stock picks. They have “lots of room for growth.”
The “CycleReader” just sent this message: “Market has set into the corrective phase already. Still early to buy since a .3817 retracement should be in order. Share prices may just exhibit muted end-quarter bounce due to window dressing. Will just e-mail buy/ (trading) order.” “The Oracle” and “Ponkan” seem to share the same sentiments. They remain quiet.
“Trader28” actually gave a trading order in the afternoon of Tuesday, June 16, for execution on the next day, but she subsequently called it off before midnight, saying “Sorry I won’t push through with the order ... Would expect a down surge/sideways range of prices tomorrow.”
Bottom line spin>
And surely the market did. At the end of trading on Wednesday, June 17, the PSEi was already 184.46 points down from the intra-day high of 2,626.21.
On hindsight, it appears that the local market is finally affected by the sharp market volatility on Wall Street. US investors had been vacillating. Doubts on the ability of the US economy to recover soon continue to surface. The “better-than-expected” story line could no longer induce positive reaction as well. Then the strengthening of the US dollar added fuel to force the sharp tumble of DJIA stocks as of late. This caused profit-taking in the local market to occur which, in the process, undermined investors’ confidence, forcing more sell-off.
If the market at this time had failed to retest the record high of 2,62-point level, it is very likely that stocks would be heading downward to test the next support below the 2,400 levels. (See table above.)
(You may reach the Market Rider at marketrider@inquirer.com.ph or directly at densomera@yahoo.com.)
