Miko's Blog for June 2010

So, is the market going to breakout or not? That's the million dollar question right now. There were hardly any window-dressing today despite being the end of the semester. Maybe that's because prices are already too high that they don't need to bid prices up, or, the foreign funds are already out of the market. Dow has been quite disappointing. I would have expected it rebound already by now but it hasn't. I'm giving the PSEi up to the end of the week to breakout or else...

Mark your calendar Tsupiteros - July 26, 2010 will be the start of New Trading System of the PSE. It will now be a whole new different ball game starting by then. The first ones who learns the New Trading System wins! :-)

Thanks for heeding my call JAP. I think I saw a glimpse of the good ole JAP today. I hope you can keep it up. Good luck to you HE Bennett! :-)

AJO was also a highlight in the market today as prices dropped by a whopping 30% as some private placements at 0.012 took profits today. There were a lot of huge cross transactions today and value turnover ballooned to a huge P73 million. The question now is, how many shares are still to be sold and up to what price are these people willing to sell. Obviously, they will no longer sell near 0.012.

I was surprised that LC continued to climb up today. There were some rumors that First Pacific was the buyer in a huge block transaction last Thursday in the stock. Unfortunately, First Pacific denied it and I heard that it was simply a transaction between Metrobank and First Metro, if I'm not mistaken.

The market is now on the brink of breaking out of its resistance at 3367. Will our market finally trend up? Tomorrow will be the day before the inauguration of Noy. I wonder if the GFIs will do a "show of strength" in support of the new administration. Let's see. Furthermore, tomorrow will also be "window-dressing" day once again. I'll be damned if the Dow drops by another 3 digits tonight.

I heard that you were with our common friends last Thursday night and that you are getting pissed with my blog. It's nothing personal JAP. I'm just airing my frustrations on your stocks. I guess I'd like to speak in behalf of all your fans who got stuck in your GEMINI or Magnificent Five at the highs. I would also like to speak in behalf of someone like HE Bennett, who recently bought ORE at 2.30 and ended up selling at 2.16, only to find out later on that the stock was going to climb back up to 2.46.

Your stocks used to be my favorite stocks to trade as I've even recommended them numerous times in my newsletter and in my website. Recently though, for some reason, you just changed your trading style and are even "targeting" Tsupiteros like me. If I'm not mistaken, your trading style changed when you put up your Market Mirror. Just look at what you are doing in ORE right now. You are turning off everybody who wants to buy and hold your stock. How can anyone buy and hold a stock that goes from 2.38 to 2.12 then back to 2.46 then drop again to 2.28 all in a matter of three days? Now, people just want to "trade" your stocks. Just look at the broker information data of ORE from June 16 'til today. The only broker who has a big position in this stock other than Angping, of course, is Citiseconline (the public). The rest are square as of yesterday. This year, I lost money in your stocks so I just tend to avoid it completely. Gone are the days when your stocks would double in one month's time. This time, you would be buying at 2.20 when Tsupiteros start selling and sell at 2.30 when you see that Tsupiteros start buying. Do you really want people to just see your stock as a "trader's stock"? What you may not realize is that Tsupiteros like me can become investors as well if they see a "clean" uptrend in the stock. For those who prefer to be pure Tsupiteros, what happens is that they buy, sell higher but tend to buyback much higher that where they originally sold them. This is my experience in AEV this year. Do you really want to turn off Tsupiteros like me who could potentially buy higher? Do you realize why no one is trading ATN anymore? That is what could happen to your stocks if you would continue to trade them like what you are doing right now.

You may hear a lot of praises from people around you but what you don't hear are the grievances of people who lost money in your stocks. I am probably the only person that you know who is man enough to tell you what the real sentiment in your stocks really is. My point is, I miss the old JAP and I think everyone misses him too. I have nothing against you personally cause we hardly even know each other. I hope you did not misconstrue the postings in my blog. You have done great things to this market and I couldn't even imagine the PSE without JAP, however, I think everybody wants the old JAP back.

Once again, despite the big drop in the US markets, the PSEi still managed to close today with a gain. We were the only market in Asia, along with Jakarta, that went up today. The market is now in "the calm before the storm" and my bet is that the market will breakout above its consolidation by next week, thus, I went all-in today. See you at 3600! :-)

There's some interesting action going on in AJO right now as the stock has been sold down in the last few days in anticipation of some private placements at 0.012, which would be saleable on Monday. The thing is, if the stock is really bearish, why are there still people willing to buy this one at 0.034? Hmmm

Talk about a confused market as some stocks are breaking down while others are breaking out. I don't know but, somehow, I haven't given up yet. In fact, I even added positions in the market today. I see the Dow going up big time tonight or tomorrow night and possibly even climb up to as high as 10900. Crossing my fingers and toes right now. :-)

Jap seems to be having the time of his life in ORE this morning. The big question is, are these wild movements a sign of accumulation or distribution? I have no idea but I'm certainly not going to give JAP any of my money. :-)

Another highlight of the day was DGTL, which was sold down aggressively by the foreign funds. Could this be an opportunity to buy or is the stock now a "sell on strength"? I guess that would depend on whether there are a lot of people who got stuck at higher levels. If there are a lot, then, the stock has nowhere else to go but down. But if it were the people who bought at the top, the ones who sold today, then, you will no longer have any overhang at the highs and prices can now freely move higher. Thus, the critical question is, are the foreign funds the ones that bought at the highs or not? Of course, if you can wait 'til the year 2012, I don't think you need to be worried one bit. For Tsupiteros, I think you might have a bit of a problem right now.

Bought back some positions in the market today. Once again, our market is the strongest in the whole region as foreign funds were heavy buyers today. Cross your fingers that we can convincingly breakout above our previous high of 3367. My forecast of 3600 for the PSEi is still on.

I was able to buy SCC early today but, stupid me, cause I just day-traded it. I made a measly 4% on the trade. Congratulations to BDO Securities as they were the top buyers of the stock yesterday!

Did the Dow do what I think it just did last night - a one day bearish reversal?

A few days ago, I was thinking that the basuras would finally start to move. While some of them did move, the behavior was certainly far from what everybody was expecting. If the market still isn't going to go to the basuras, where can the market go?

I don't know if I made the right decisions today but I sold a lot of my positions today, even those that weren't making money. I'm thinking, I'll just conserve my gains for the last two weeks and lay low first for now. In my opinion, the pendulum has now shifted back to the other side, wherein everybody is once again bullish. Incidentally, Dow futures was up 120 points because of the news on the Yuan yet the only thing our market could do was go up by 22 points. I wonder if there would be courageous people who would be willing to bid up tomorrow if the Dow climbed up by 300 points tonight. The question is, would there still be buyers at Dow 10700? I was very bullish at Dow 9800 but, from this point on, I will be very cautious already.

I'd like to congratulate all those who attended my recent seminar. You are now one step closer to finding the holy grail. :-)

The market was more vibrant today compared with the last couple of days but the problem now is, there's just so many stocks that are moving all at the same time. What's the problem with that? Money is not concentrated, thus, no jackpot in this market. Notice that while a lot of stocks are moving, you'd be lucky if your stock went up by more than 5% today. Of course, Kobe Bryant also had something to do with the luckluster trading at the beginning of the day.

After hibernating for a couple of months, JAP is now on the move. It's basura time again!!! Yehey!

The whole market was luckluster today but a race is now on between the cheapest telecom stock (DGTL) and the cheapest property stock (VLL). Both stocks are now trading at the 1.72 level. DGTL is currently trading at 8x PE while its peers are trading at 10x PE. VLL, on the other hand, is trading at 5x PE while its peers are trading at 10x PE. This will be a race to the psychological 2.00 level. :-)

I'm very sad today because two good friends of mine had a misunderstanding and ended up fighting at the board. If both of you are reading my blog right now, here's what I have to say, while one of you may actually be the guilty party, he (the guilty party) never had any malice in what he did. He was simply being a trader. As to the other party, relax lang my friend. I know you feel bad about what happened as situations like that has happened to me also before but I don't think it's enough reason to destroy a friendship as he did not do it intentionally to make you lose money. I pray that everything will be alright between the two of you by tomorrow.

While I did say that I am expecting the market to go to 3600, I didn't say when. At the rate we're going, we might get there in 5 years time (haha). Strange as it may sound but the market will need the Dow to drop for our market to go up strongly (wink).

A lot should say thanks to Macquarie for pushing up both ICT and MEG today. Both those stocks won't be at the top gainers today, if not for him.

I'd like to congratulate my officemate and my very good friend, Mr. Aaron Lee, for winning the Metro Independence Day Weekend Poker. He won P625,000.00 plus a seat in the prestigious FTP tour.

This just goes to show us, trading is no different from poker. To win the game, you need to learn how to bluff, you need to learn to play only with a good hand, you need to learn when to fold and you need to learn when to go "all-in". Of course, like poker, you also need a little bit of luck in trading. The best poker players in the world will most certainly be very good traders and vice versa. :-)

The search is now on for the next small cap issue to rise. Last Thursday, there was JOH and PRIM. Last Friday, it was FDC, RFM, SFI and NRCP. FDC isn't exactly a small cap but it certainly is not acting like a big cap at all. Be careful though, I don't know if you noticed but PRIM was the top loser last Friday.

My beloved DGTL is currently in a consolidation mode simply because UBS is scaring the shit out of everyone in the stock. A friend of mine, Longneck in FinanceManila, pointed out to me that UBS sold 43 million shares last Thursday and then sold an additional 7 million shares last Friday. The last two million that he sold last Friday was even a cross transaction. All in all, he sold exactly 50 million shares. Could he actually be done with his selling already? Maybe some people there in UBS knew that he would already be done with his selling and just "crossed" the last 2 million shares for themselves.

Finally, the Dow has bottomed-out. I guess some foreign funds realized this as well as they were net buyers last Friday by P140 million after being heavy sellers in the last four days.

I hope no one got stuck with PRIM and JOH. Those types of stocks go up by one or two days then hibernate for the next 6 months (haha). Congratulations to all those who made money in those two issues!

There's a very interesting war going on in my favorite stock, DGTL. It's UBS Warburg against the World. Who's going to win? I don't know but I'm definitely not for UBS Warburg. I sold all my DGTL yesterday. Today, I bought back some of it. I have a new trading strategy - Trade DGTL, don't look at anything else. P50 Billion market cap coming! hihihi

After the government reported a better than expected GDP in the 1st quarter, foreign funds began buying back in our market aggressively but since three days ago, they have begun to be net sellers once again. I guess they are as confused with the market as we are. All I know is that these foreign funds are generally trend-followers, thus, if you want them to buyback, the market will first have to break above its previous high of 3367.

For the first time in a very long while, the market has once again experienced a "ceiling play" with PRIM. I have no idea what's up with this one but Intra-Invest certainly appears to know something that we don't. Congratulations to DW Capital for successfully day-trading 1.2 million shares by buying at 2.80 and selling at 2.85 (hehe). I just want to remind everyone, PRIM has nothing to do with ABC-5.

The good thing about this "low volatility" environment is, when the Dow collapses, your position would be down by just 5%, at most. You're unlucky if your stock dropped by more than 5% today. Yes, we are in a low volatility environment but within a very wide range. When was the last time you remember that your stock was up by 10% in one day? It seems quite impossible already nowadays.

We have yet to conclude whether this market has indeed decoupled from the Dow already or not. Another very, very important question that we need to answer is, is this consolidation between 3093 and 3367 a continuation pattern or a reversal pattern? To be honest, I am leaning towards a bullish continuation pattern, given the relative strength of our market as against other markets, but I don't think I would dare put all my money in that statement yet (haha).

Below are the year-to-date performances of some select markets that I follow as of their closing prices last Jun 4, 2010. If you will notice, the PSEi is second only to Jakarta in terms of these markets' year-to-date returns. In fact, of those 14 markets that I follow, we are only 1 of 3 markets that are still up year-to-date.

Market	12/29/2009	6/4/2010	YTD Return
JKSE	2,534.36	2,823.25	11.40%
PSEi	3,052.68	3,357.05	9.97%
KLSE	1,272.78	1,294.39	1.70%
DAX	5,957.43	5,938.88	-0.31%
Kospi	1,682.77	1,664.13	-1.11%
Nasdaq	2,269.15	2,219.17	-2.20%
S&P	1,115.10	1,064.88	-4.50%
Dow	10,428.05	9,931.97	-4.76%
FTSE	5,412.90	5,126.00	-5.30%
Nikkei	10,546.44	9,901.19	-6.12%
All Ordinaries	4,882.70	4,472.40	-8.40%
Hang Seng	21,872.50	19,780.07	-9.57%
CAC	3,936.33	3,455.61	-12.21%
Shanghai	3,277.14	2,553.59	-22.08%

Furthermore, I have another chart below which shows the Relative Strength Comparative of the PSEi as against the Dow Jones Industrial Average. If you will notice, that indicator is now at its highest since 1997. This means that the PSEi is now at its strongest vis-à-vis the Dow since 1997. The last time that this indicator was trending up this strong was during the 1993 bull market.

Notice that it is the emerging markets like Jakarta and Kuala Lumpur that are outperforming the other markets. What's with these markets that makes them so special? My guess is that these markets are the markets with the least exposure to Europe and/or with the US and has a huge domestic market, which could sustain themselves without the need for exports. In other words, fund managers who are actually looking for the markets with the least risk are actually flocking to these markets, believe it or not. So, the big question now is, is the PSEi decoupling?

What do we do when the Dow looks bearish and the PSEi looks bullish? This the question that has been bugging me throughout this weekend. Do we just blindly follow the Dow and panic? Or, do we capitalize on these drops on the Dow to buy into our market low? It would be very, very interesting to see what the foreign funds will do next as they have been heavy buyers in our market for the last two weeks. Obviously, our market is going to drop by tomorrow, however, "bilib na ako" if the market only drops by 1.5% or less. This market is driving me nuts. It would have been a lot easier if the PSEi was tracking the Dow and was also trending down already as well so that I no longer get tempted to buy. A friend of mine, who is also a trader, told me that she no longer knows how to link the PSEi with the Dow anymore. In my opinion, the real challenge for traders right now is how to become objective. There are a lot of stocks that look overbought already as of last Friday, however, most of these stocks are certainly trending up. By the end of this week, we will know whether the PSEi has definitely "decoupled" or not.

One of my positions did go up today though, DGTL. I'm very, very bullish on this stock because this is a potential turn-around story. Here's how it compares with the two giants in terms of fundamentals:

For DGTL to reach the P/E ratios of the two giants, its price has to be at least P2.10. Take note, I'm assuming that its EPS growth is the same as TEL and GLO. Obviously, DGTL's EPS growth will be much, much bigger than TEL or GLO. If so, a P/E ratio of 10x for DGTL would still be considered cheap. I just hope Uncle Sam does not spoil the fun like what happened to FGEN.

By the way, I'm still bullish on FGEN in the medium-term. I would expect it to go up once all the weak hands have already sold.

That really is the way of the markets. When you are able to sell at prices where you'd like to sell, that's when prices go up. I was wondering why my comrades was able to sell with a profit in ABA yesterday and today. Was that JAP buying today? Could he have kissed and made up with Chucky already? Or, maybe, he is sensing opportunity while someone big is dumping at bargain prices.

Sometimes the market can just be quite irrational. How is it possible that MEG was very, very weak today and AGI, which is its mother company, was very, very strong? Obviously, someone is making a wrong call. Who ever said that markets are efficient?

I can't understand why people are still buying ABS-CBN and GMA7. Isn't it that the reason why those stocks are going up was because of the elections? If ABC 5 were listed, I would buy that one instead as they are now eating up the market shares of ABS-CBN and GMA7.

In the telecom sector, TEL and GLO are obviously in a period of consolidation already, not just in the charts but in terms of their growth. If you want a measly 5% dividend every year, then, buy those two stocks. But for those who are looking for growth, I would suggest that you buy DGTL instead. After so many years of being in the red, the stock has finally declared a net income last quarter. The spike in its volume today may indicate accumulation. By the way, LIB today is probably DGTL 5 years ago.