Market assessment Den Somera Philippine Daily Inquirer
November 05, 2009
AGAIN, THE TREND of the market has been very much sideways as before. Stock prices though are ostensibly zigzagging into a symmetrical triangle converging toward the narrow tip.
Based on experience, this market pattern could very well culminate into a turning point. Once arrested to the point at which it could no longer move on either side, stock prices will sooner or later have to break out or break down following natural market dynamics.
Seen under the present market circumstances, stock prices should be technically heading upward, which simply means that there are now more investors in the market who are willing to become bulls (buyers) than bears (sellers).
Take for example the recent uptick in Benpres, First Holdings, Meralco and Philex. Notwithstanding their relatively higher prices, they started to bolt higher. This is supported by the performance of other similarly situated stocks.
At present, therefore, the direction of the market is more likely to be heading north than south. The trading activity though may just be confined within the limits of the immediate support trendline at 2,848 and resistance level at 2,941. A break through the 2,971 level should be accompanied by leads with fundamental significance.
Week 21
A detailed statistical table on the breakdown of the investment portfolio of all the market riders in the virtual game for week 21 is additionally supplied to give you a better appreciation behind their excellent or poor performance.
For example, what stands out in market leader Trust Me is his heavy reliance in the property sector at 69.74 percent followed by a 30.26-percent investment in the service sector. Close rival and second placer The Oracle, on the other hand, put in more investments in favor of the industrial sector.
QB Trader chose to cast her lot with the financial sector. In addition, she is holding on to a huge cash equivalent to 51.17 percent of original capital. This only afforded her a far third place. She is certainly missing a lot of opportunity to earn more by not putting all of her money to work.
At fourth place, the Integrator placed his chances in the industrial sector in addition to the service sector like the Oracle. But unlike the latter, he is zero investment in the property sector.
Fifth placer Trader28 is also invested in the industrial sector with the mining sector as a complimentary investment. So far, this investment concoction has yet to pay off to reclaim her former glory.
The CycleReader is also invested in the more prospective property sector but is more heavily leaning on the performance of the holding firm sector. This makes her in sixth place.
Ponkan remains at the bottom of the contest for the longest time. She is holding on to more cash like QB Trader. Her lack of trading activity is not helping as well.
Bottom line spin
Assuming that the current market pattern continues, it is very likely that a market breakout toward the 2,971 will happen very soon, if it has not happened yet as this article comes to print.
Any price correction on some market favorites should be taken as an opportunity to buy. Thus, I would maintain my previous trading call to “Buy on Weakness.”
The mining sector together with some select stocks such as Megaworld, Benpres and Globe should be good targets for accumulation.
If you happen to miss this news:
The stock rights offering of Security Bank (SECB) will be listed on the PSE on Nov. 18. The rights issue had a ratio of 3.7:1 with the offer price of P28 a share. This will boost the capital of the bank by P2.5 billion and increase the bank’s core capital adequacy ratio from 14.5 percent to 16.5 percent.
Also, Energy Development Corp. declared a stock dividend equivalent to 25 percent for stockholders as of the record date Oct. 27, with date payable Nov. 23.
You may reach the Market Rider at marketrider@inquirer.com.ph or directly at densomera@yahoo.com
