Miko's Blog for December 2012

1. The chart below is my proprietary Tsupitero index. Notice that, after the big surge in the early part of the year, the index just moved flat for the rest of the year. The vertical line in the middle of the chart marks the beginning of 2012. The chart is actually a two year chart starting from Jan 2011. Of course, a big reason why the chart is flat is because mining dropped a lot and actually went into a bear market. The drop in the mining stocks are being offset by the rally in other sectors.

2. The volatility of the market for the most part of the year was very low. The chart below shows the average true range of the market on a daily basis for the whole year. Notice that except for the months of February, May and the latter part of the year, the indicator was barely moving at its lows. Notice also that the market was trending upwards despite the indicator at a low level. So what if volatility was low? Tsupiteros die when volatility dies. Whipsaws and transaction costs will kill Tsupiteros. Those who just bought and held survived.

3. Will you still buy when prices are already overbought and are already trading at very high multiples? Will you buy a business that will let you break-even in 20 years? Both from a technical and fundamental point of view, the market is already very high. Still, prices continue to climb and those who didn't join the party got left out. I guess I'm one of those who opted not to drink. Below is the chart of the PSEi index from the 2008 bottom.

4. Managing trades this year was very difficult for Tsupiteros. It was very easy two or three years ago. You buy, place tight stops and try to run it. If it doesn't work, you lose a little. If it works, you make a lot. This year, to make money, you need to place wide stops and wait for it to move. Placing tight stops will just kill you from too much whipsaws. However, by placing a wide stop, you run the risk of getting hit big time. Furthermore, running your winners isn't exactly such an easy task to do. If you don't take the small profits, 75% of the time, you will regret for not having taken it. So, profits are actually small, yet, the market is forcing you to place a wide stop. Not exactly the recipe for success.

5. I didn't know how to follow the trend. Being a natural contrarian, I opted to buy those issues that have yet to move and are possibly forming a bottom. The problem is, those that went up are the high ones and those that are seemingly bottoming-out continued to stay low. In hindsight, being a contrarian was actually buying those high flyers that continued to climb higher like most of the banking issues.

I have no idea how to play the market in 2013. If the market continues to climb, will you still be willing to buy at such lofty valuations? But, maybe that's the more contrarian thing to do. I assure you though, the higher that this market climbs, the more choppier it will be. If, on the other hand, the market begins to drop, 2013 might finally mark the end of this 4 year bull market, thus, it might also be dangerous to buy as you might be buying a falling knife. There should be an opportunity in the mining sector somewhere but trying to time it is very difficult, it not impossible. Gaming will always be in play, I suppose, but you need to time it correctly, otherwise, a 20 to 30% drawdown is not impossible. I'm also looking at the Oil sector as well as the Power sector, more specifically the small cap power sector. As for the blues, the only group left that totally did not participate in this bull market were the RSA stocks. Maybe it would be their turn in 2013. But, again, that might already be what the majority is thinking. One thing that I learned throughout the years is, when I buy the low ones when the market is high, they tend to drop as well once the high ones starts to drop. Thus, buying something like SMC right now, we be no different from buying SM, which is currently trading at 25x P/E. Some people view the P38 billion net foreign buying in our market this year as bullish as it means that foreign funds are confident of our economy. The thing is, it could also mean that P38 billion of foreign funds could suddenly reverse and sell out of our market.

Happy New Year Tsupiteros and Good luck in 2013!

December 27, 2012 (9:30 p.m.)

Finally! We are down to the last trading day of the year tomorrow. The big question in everybody's minds now is, will there be window-dressing? I'm sure there will be on some select issues but finding them might be a bit of a challenge. Tsupiteros might want to skip the whole day and just open your computer by 3:19 p.m. tomorrow.

Aside from the usual suspects, one stock that I have been noticing in the last couple of days that is currently being "dressed-up" is CHIPS. Who knows? 30 by tomorrow? Too late to get in now, if you ask me.

Some traders in our firm still tried to day-trade this market today. So, I went to the drug store this afternoon and asked if they had a pill to cure over-trading. They said, the drug got sold out already. :-)

December 26, 2012 (10:30 p.m.)

Value turnover today was just a mere P3.5 billion. Obviously, a lot are on vacation and, most, are probably just waiting for the fireworks on Friday, which is the last trading day of the year. Will there be window-dressing as what most people expect? Every year, I keep on selling too early during December because I figure, if everybody expects the window-dressing to occur, then, maybe, it won't occur anymore. Every year, I am wrong and window-dressing still almost always occurs. With the foreign funds long by P35 billion worth in our market this year, I'm almost certain they would try to prop up their positions on Friday. I expect the locals though to take this opportunity to sell.

I still can't understand why CMT is as strong as it is right now. The fact that it no longer was able to sustain its ceiling price may indicate that the dividends or whatever it is that is propping up the stock, is already being discounted by the market.

Only two backdoor-listing plays still alive in this market - MMI and EVER. Let's see which one is the real thing.

Whoever was still trying to day-trade this market today are certified addicts in trading already. Let me know if I need to refer you to a doctor. :-)

December 25, 2012 (2:30 p.m.)

Merry Christmas Tsupiteros!

While the world continued to go around and the Mayans were proved to be wrong, Dec 21 may indeed have started a financial catastrophe with the US House of Representatives unable to find enough support to avert a fiscal cliff by the end of the year. The fiscal cliff is actually something that needs to be done in order to get the US economy back in shape, however, its short-term repercussions might spell doom to this four year worldwide bull market.

Congratulations to all those who were able to buy CMT. I can't quite understand though why it went to the ceiling. The cash dividend is worth a 25% increase in the price while the free treasury shares are worth an additional 17% increase in the price. Is my understanding merely incorrect?

AB is now surging quite strongly as some shares held by one of its major shareholders were sold to comply with the minimum public float requirement. Notice though what happened to VVT.

SMPH last Friday is ALI last Thursday.

Sorry, I'm a bit lazy to update the website. I'll try and update the entire website by Jan 2, 2013. My blog will continue to get updated though.

December 20, 2012 (11:00 p.m.)

Window dressing season actually begun yesterday. With four more trading days to go 'til the last day of the year, who knows where AC and ALI will be by the close of Dec 28?!

There are now three current plays in the market: window-dressing, which means buying the big caps; backdoor-listings; and, those issues which are able to remedy their lack of public float. Those stocks that dropped a lot because the market expected them not to comply but were able to do so at the last minute, should give very good returns. These companies have four days to comply.

VVT went to the ceiling today because they were able to comply. Notice the huge volume and foreign buying in AB today. They too were able to comply. Funny that these companies really waited for the last hour before complying. Maybe they thought the PSE wasn't serious. :-)

MMI, on the other hand, is rising on backdoor-listing speculations. I guess people thought ATR was an insider but, when he sold most of what he bought, the market figured that he was merely a speculator as well.

It's the last day before the end of the world. Be sure you are able to ride at least one ceiling play before you die. :-)

December 18, 2012 (11:15 p.m.)

Obviously, the market already peaked at 5866. The question is, was that just a short-term peak or could that possibly have been the end of the 4 year bull market? Another question that everybody is asking is, will there still be window-dressing on Dec 28?

TSI, is this just a short-term pullback before another run, or, is the play over? Who the hell is RS Lim? I don't think I ever saw him buying.

RPL peaked today at 11.88?

EVER, another backdoor-listing in the works perhaps? Our firm, Nieves Securities, has been the top buyer of this stock for the last few weeks now. Let's see if they really know something we don't.

Trust me, out of 10 issues that flies due to rumors of a backdoor-listing, only 1 or 2 will end up to be true. Thus, finding the real one like APM or MIH is like finding a needle in a haystack. As a Tsupitero, you just have to keep on trying and trying. You will realize that, at some point in time, rumors on backdoor-listings will all but disappear. It's the season for backdoor-listing rumors for now. Insiders as well as Tsupiteros better take advantage of this while it lasts.

PNB, while the talks with BDO or BPI may have bogged down for now, the bank will still eventually be up for sale to the highest bidder, just like most of El Kapitan's assets.

December 13, 2012 (11:30 p.m.)

The market has already gone up by 400 points just in the last 4 weeks alone. Is it time to get scared? Exactly 9 more trading days 'til the last day of the year. It's highly unlikely that we'll drop big at this time of the year, however, I'm just no longer quite sure if there is any upside left.

The market is ganging up on TSI and MMI now, which are possible backdoor-listing candidates. I'm going to bet, most of these so-called backdoor plays are just nothing but rumors being spread by holders of the stock so that they could sell at a high price. To trade these stocks successfully, you need to distinguish very, very quickly whether the play is for real or is just trying to pull a fast one on you.

Mining has been trying to resurrect recently. I have to say, I still don't trust any of them. The only one for me that may have a chance of really trending up is AT.

They say, you have to be scared of the market if the lousiest stocks in the market suddenly goes up. The rationale behind this is that the market can no longer find anything cheap, thus, are already buying the only ones left that still haven't gone up. Notice that all the Jap stocks went up recently.

December 13, 2012 (1:00 a.m.)

There are two plays that you'd like to look for in this market: those stocks that are doing parabolic spikes, which are normally one of the big caps stocks; or, those stocks that may be backdoor candidates, which are in the speculative issues. They are out there somewhere but it's very difficult to find them especially if you are always concerned that the market might already be at the top.

To all my subscribers in the newsletter and the Metastock data, I'd like to apologize for not being able to send them tonight. My computer crashed again and had it up and running just now. I expect to normalize by tomorrow.

December 10, 2012 (10:30 p.m.)

Just a correction or did the loss of Manny finally triggered the peak of this 4-year bull market?

Was MIH a sell on the news? Congratulations to Mr. Tower!

MIH appears to have triggered another round of basura plays as people began speculating on the next backdoor play. The market is now betting on either IMP, IS, PA or TSI.

I can understand a 4% drop on VITA or MRC but a 3% drop on AEV looks overdone to me.

December 6, 2012 (10:30 p.m.)

Parabolic spike in the works for the best performing market in Asia! Some big caps doing parabolic spikes today are BDO and MEG. I wonder who's going to be next?

The monster has re-awaken in MIH but maybe time to sell tomorrow?

Did TEL finally bottom-out?

Someone just make a big bet in SEVN today.

I bet the whole market is watching Thing-on everyday and is just making contra everything that he does.

December 6, 2012 (8:30 a.m.)

Not much to talk about today. Blues are still lingering at the highs and mining as well as the 3rd line sector are still very much trending down.

One stock that was quite extraordinary yesterday was EG. Could this be the start of another giant rally or could Chucky just be pulling our legs?

SMPH finally succumbed to profit-taking. I expect a higher low for that one somewhere.

Thing-On finally made money in AGI but got killed in everything else. Let's see what he does in PSE, the stock.

December 4, 2012 (11:30 p.m.)

What a move by SMPH! While some people are still looking at APM. SMPH is now the new APM.

What's up with GERI? Credit Suisse seems to know something we don't.

I'm still curiously watching this fellow from Thing-On. Lost money in STI and again in APM but may have found a winner in AGI. Let's see if Andrew Tan will let him pass.

Did LC and IP finally found a bottom?

PSEi is now at the 5700 level! Yehey!!! ....but how come I'm not feeling it at all?

December 3, 2012 (11:30 p.m.)

Quite a number of breakouts today on some big caps. Again, if you aren't in the big caps, you are not part of this bull market.

Try inverting the charts of most of the big caps and you'll notice that they are almost identical to some charts in the mining sector.

Actually, the bear isn't just in the mining sector, it is in most of the 3rd line sector. Did you see IP today? What do IP and EG have in common? They are both Gonzalez stocks and you don't want to buy both of them.

Thing-On was still at it today. Unless that guy is a dealer account, transaction costs will just eat him to death.