Miko's Blog for May 2010

PSEi was the strongest market in Asia today and has been like that for quite some time now. Thank God foreign funds are trend-followers. Even KLSE and JKSE, which looked to be as strong as us, also gave way in the last few days. In fact, we are one of only a handful of markets that are still trading above its 200-day moving average up to now. Is this bullish or bearish? The bulls would probably say that it is bullish because it means that we are immune to the problems of the world. The bears, on the other hand, would probably say that it is bearish because, if the PSEi will "catch up" later with the rest of the world, our market will probably fall a lot greater than everybody else. By the way, I'd like to thank Mr. Manny Villar for our 7.3% GDP growth in the first quarter.

We have a very, very critical week ahead of us next week. If the drop that we saw in the last few days is really just a correction within the overall uptrend of the market, we should see the bulls fight in the Dow by Tuesday or Wednesday. If the markets don't rebound by then, you can kiss this bull market goodbye.

We had quite an amusing day in the office yesterday as ABA closed the day at a new 52-week low. Normally, ABA would be force closed at the highs of the day but, today, something very different happened, it closed the day at its lows for the day and with a huge seller posted at the asking price. A lot of our traders in the office began thinking that this might be bullish and began buying at the run-off. As I have been telling everyone ever since, the worst stock that you can trade is a stock that is not behaving according to the natural forces of the markets. What's worse is to trade a stock that may just be dictated by a few persons, if not just by one man. The bearish thing about ABA is, someone is obviously trying to get out. The bullish thing about it is, aside from being extremely oversold and undervalued already, that someone who is trying to get out could still probably have a lot of shares to sell. I can't wait to see what happens to the fate our traders next week. Only my idol knows. :-)

May 27, 2010

I don't know why but of all the recent downswings of the market in the last 12 months, this current downswing was the most stressful and the most pressuring of all. It's not that I lost a lot of money, it's just that I was such in a dilemma of whether this current drop was really a chance to buy or the end of the world. I just found myself laughing at the end of the day cause I am both scared of losing money and getting left out of the move. I bet everyone is feeling the same way. Anyone has a tablet of Bonamin? (haha)

May 26, 2010

Finally! The markets have found a bottom! :-)

May 25, 2010

Just as I suspected, everybody has been bottom-fishing this market for the last few days, thinking that the drop was just a correction within the overall uptrend of the market. Unfortunately, what we are seeing now may already be the real thing.

The only thing that can save the markets now is another intervention by the EU and/or the FED. The problem is, why would they intervene and waste taxpayer's money once again when they know that their intervention would only last for a brief relief rally in the markets? Their job is to keep the economy afloat, not to save the markets.

May 24, 2010

I guess the question in everybody's minds right now is, is this just a correction within the overall uptrend of the market, or, are we looking at the start of a much larger correction? Your guess is as good as mine.

I used to joke around and say that, when OM starts to move, the market is at or near a peak already. Let's see if it's applicable this time around. :-)

May 22, 2010

For the last few months, I have been warning people here in my blog that "the end is near". Recently, if you've noticed, I haven't really warned people anymore. I am very much aware of how markets work, yet, I still fall for the same trap that everybody else falls for, which is to get fearful when the market is climbing and be complacent when the market is dropping. For the last few weeks, our market has been very strong compared to the rest of the world. That was ok when the markets were climbing, however, when the markets started to drop, I felt that it became a hindrance to me. I continued to buy the dips despite world markets collapsing already. When the Dow failed to hold above 10200 and closed near 10000, I had a sudden realization, everybody was long and was also buying the dips. The Dow didn't rally because people were cutting losses and no one was short. The Dow did eventually rally last night probably due to bargain hunting but I'm afraid that the damage has already been done.

As for our very own PSEi, prices did close the gap at 3150. This is not a good sign for the bulls because it enabled those who would like to buy at lower levels to enter the market. The effect is that there will be a lot of people looking to take profits when the market starts to rally.

FGEN was such a disappointment. I still made money on the stock but I missed a lot by not being a Tsupitero. In our office in HDI Securities, everybody is trying to be like George, who is an excellent position-trader. However, no one can't seem to do it because to be like him would entail having no stops, willing to hold the position for a few years, and, be extremely diversified. Once in a while I get tempted to be him too like what I tried to do with FGEN but, I just have to honest with myself, I'm Miko, not George.

I was finally able to read something right about the markets - the Euro has indeed begun to rally strongly already.

May 20, 2010

Everybody ready for the massive rally on the Euro?! hehe

I'm betting that the gap on the PSEi will not close! :-)

May 19, 2010

The markets are being haunted by the weakness of the Euro right now but the Euro is now extremely oversold. I'm giving the Euro up to the end of this week to bottom-out. I'm targeting 1.19 as its low, after which, I expect a massive dead-cat bounce to occur. If so, could this be bullish for the equity markets?

The "grass" just wilted today (haha). A good friend of mine, longneck from FinanceManila, made an observation that Vicsal sold BPC and FGEN yesterday and transferred all the proceeds to FPH instead. Could he have made the right decision? Only time will tell. So far, he merely incurred transactions costs.

A Spoof of the Cookie Monster Song:

C is for Chucky, he's good enough for me.

Chucky, Chucky, Chucky starts with C!

May 18, 2010

People just can't seem to believe that Mondays are always up in the US. :-)

Vicsal against the world in FGEN. Please sell down some more! :-)

I've been buying VLL in the last couple of days thinking that its earnings were going to be great. Unfortunately, the company only reported a 16% increase in net income. Obviously, the market got a bit disappointed. I ended up selling my position in that stock at "same price". It's funny if you read their disclosure, "Vista reports a 50% jump in 1st qtr sales..." They couldn't boast their net income so they just highlighted their revenues instead. Sayang, I even wore my tangerine shirt to the office today (haha). Nevertheless, VLL is still one of the cheapest property companies right now in terms of P/E or book value. Technically, it's trending down though.

May 17, 2010

The market was quite funny today. I can just imagine people saying, "Buy, buy, buy!" when the market hardly dropped despite the weakness of the Dow last Friday. But when the Dow Futures suddenly plunged by 3 digits, people suddenly reversed and said, "Sell, sell, sell!" :-)

Aside from the strong earnings, FGEN got a big boost when the company announced a 300 million share buyback program starting June 1. The grass is certainly greener on our side! :-)

Ramon Ang just announced that it was going to buy a $2 billion power company that has a good cash flow and is related to PCOR. The primary candidates are probably AP, EDC, FGEN, PNX or maybe even PEC. Your guess is as good as mine. Who knows? Maybe it isn't listed (haha).

In the matter of politics:

I sure hope Corona does not accept his position as a matter of delicadeza. All I can say is, Grabe talaga si GMA. I'd probably vote for her as being the most annoying president of all time.

Hontiveros and Lapid are in a statistical tie at 12th and 13th place, if I'm not mistaken. Wouldn't it be interesting to break both of their skulls and compare the sizes of their brains? :-)

As investors/tsupiteros in the PSE, we ought to be concerned that Congress does not get controlled by the opposition. Otherwise, we are going to have a very choppy market ahead of us.

May 14, 2010

May 13, 2010

FGEN had its annual stockholders' meeting yesterday and reported US$36 million for its 1st quarter earnings. This is a 166% increase from its reported earnings in the same period last year. We can now finally compare side by side the three power generating companies. Here are their Annualized 2010 Price/Earnings Ratios:

AP - 8.53x

EDC - 7.42x

FGEN - 5.11x

While all of them are still relatively cheap if you compare it with the whole market, which is doing around 14x, if I'm not mistaken, FGEN is certainly way below the valuations of its peers. For FGEN to have a P/E of just 7x, which is still less than the valuation of EDC, the stock will have to climb to at least P15.50.

In terms of the technicals, I think all those who wanted to sell the stock at its major resistance of 11.00 has already done so with P500 million worth of trades changing hands today, therefore, there is just no one else left who will sell this stock at current levels.

I'm normally a Tsupitero but, in this instance, I made an exception. I was actually a buyer again in FGEN today.

VLL surprisingly was very strong today, despite the continued onslaught of these foreign funds that are selling. If I'm not mistaken, the company will report earnings anytime now. I wonder what these foreign funds will do if the company suddenly declares a huge profit. Who cares if Villar lost the elections? It's the bottom-line that matters. I bought some VLL today.

You would probably hear some Technical Analysts saying that the market will not be able to climb up further unless it fills the huge gap that it left at 3150. I don't know where that "superstition" came from but that is a fallacy. The more that the market doesn't fill that gap, the more that this market is going to trend higher as all those who are waiting for the gap to get filled will get frustrated and will be the ones to buy higher.

May 12, 2010

I pity all those who "voted" for Villar and got stuck in VLL. I can't understand why these foreign funds, who are selling right now, still waited for the outcome of the elections before selling. Wasn't it too obvious since two weeks ago that Villar would lose? If you remember, I did say that Villar will win only if VLL breaks 2.16. :-)

I think most people have already guessed that the stock that I was referring to yesterday was FGEN. Why am I bullish on FGEN? No, I'm not bullish because it is a "Noynoy" stock but because it is the "cheapest" power generating company that is listed in the PSE right now. When I say cheap, it is with regards to its market capitalization. Consider the market capitalizations of the following:

AP - P121 billion

EDC - P101 billion

FGEN - P34 billion

Furthermore, consider the charts of the following:

Aboitiz Power Corp. (AP)

PNOC Energy Dev't Corp. (EDC)

First Gen Corp. (FGEN)

These charts are all weekly charts are all displayed from July 2007. Which stock do you think has the most potential to give the biggest rate of return from now until the end of the year? I'm not trying to hype FGEN here but I'm merely expressing an opinion. Yes, of course, I do have a position in FGEN right now.

May 11, 2010

I'm not really a Villar fan but I highly admire him for conceding already today. Had he been someone else, he would probably have even protested. Because of my admiration for him today, I tried to be cute and buy VLL. I'm thinking, with everybody already knowing that he lost the elections, all those who bought VLL because they were betting on him, have already sold. Thus, there should be no one else left to sell. Unfortunately, for the VLL fans, the stock was still very weak as the foreign funds seems to be the ones long in this stock and they are now the ones selling. I ended the day selling it with a one fluc loss.

So, with Noynoy winning, what stocks should be bought? Obviously, it ought to be the Lopez stocks. You only have a few choices: FPH, EDC, FGEN and ABS. Among these stocks, one stock really caught my attention today and it is one of the most hated stock among these Lopez stocks. It is also a Power company that has lagged all the other Power companies in the last couple of months. Can that stock finally play catch up with the Aboitizes?

The problem of Greece appears to have finally been solved (at least temporarily) and the elections seems to be going smoothly. So, does this mean that we are out of the woods already? The markets seem to be responding positively but, somehow, I don't want to be complacent.

May 10, 2010

The Bulls have been saved by the bell, so to speak, as the European Union along with the IMF has decided to give Greece an unprecedented US$1 Trillion in loans. The negative sentiment last week in the financial markets will most probably be abated for now, however, borrowing in order to pay off debts does not really solve anything but merely transfers the problem. I really hope these bailouts in the US and Europe work, otherwise, there might come a time when everything just implodes and it'll be our sons and daughters who will pay the price for all this mess. In my opinion, Capitalism itself has already failed.

Tonight, I wouldn't discount the possibility that the Dow climbs up by 400 points or more as all those who are short, buyback and, maybe, even reverse positions and go long. However, what happens next? Do the bulls rage on or will this just be a dcb?

May 7, 2010

I had a bit of frustrating day in the market today, not because I lost money, but because I tried buying at very low prices and my buying did not get hit. I guess our market is more resilient than I thought.

Wall Street experienced one of the wildest sessions last night with the Dow dropping by almost 1000 points at its lows. I heard that the NYSE will be canceling out 60% of the trades between 2:40 am and 3:00 am last night because, they say, it was just a computer glitch. I would bet that those guys lost so much last night that they had to make up this "computer glitch" as an excuse to cancel their trades.

Some people who were able to buy ACN last night at the lows will be very, very angry at the NYSE today. For someone who bought ACN last night at the lows, their $1,000.00 would have turned out to be $4,100,900.00 had they sold it at the close. That's a 4,100% increase in your money in just one hour of trading. Wow!!!

By the way, I heard rumors that Chucky was seen in the floor of the NYSE last night (haha).

May 6, 2010

Ever wondered why DMC and FGEN were very weak and CHIB and MPI were very strong this morning? The Exchange announced yesterday a re-composition of the PSEi. They removed DMC, FGEN and PSE and added CHIB, MPI and ABS. I can understand why they removed PSE but I can't understand why they removed DMC and/or FGEN and replaced it with ABS?!

Did anyone notice I.B. Gimenez Securities (broker 180) selling across the board this morning? Could that be the Philequity fund selling? Is the Black Samurai bearish?

By the way, I'm voting Chucky for President!!! :-)

May 5, 2010

We just saw the perfect storm today with the Dow down by 225 points last night and we now have the threat of a failure of elections. Should we believe the saying, "Sell in May and go away"?

I lost a bit in my position trades today but, in order to minimize my losses, I day-traded. I was able to make one or two flucs in four issues. We all know that, at the end of the trend, everybody loses money. Hopefully, you were able to make money during the uptrend so that, even if you lose money in the end, you'll still end up with a gain. If you lost less than 3% in your portfolio today, you did well already.

May 4, 2010

The market was very boring today. I think we may be like this until election day as all those who wanted to position for a possible rally after the elections, have already positioned, and, all those who wanted to get out because the elections might be chaotic, have already gone out as well. Here's the dilemma on the market right now: If the elections turn out to be chaotic, those who are currently holding positions right now will be the ones to bring prices down, but, if the elections turn out to be peaceful, those who are selling right now will be the ones to push prices higher. Place your bets!!!

ORE was the only rose among the thorns today.

May 3, 2010

I'm glad that the PSE is finally revising its rules on the listings by introduction. Unfortunately, the damage has already been done and a lot have already lost money in IMI, EG, CPM and ANI.

I bet the traders in the Hang Seng market are losing their heads already in the last couple of days. GMA appears to have finally done something right after all - giving an unexpected holiday yesterday to spare us from the Dow's rout last Friday night (haha).

Europe has finally given the go-signal to bailout Greece from its misery by giving a massive $146 billion package. Let's just hope this finally averts the contagion.

I am saddened by the latest survey results on the upcoming Senatorial elections as I see the old guys once again leading the race. For heaven's sake, please vote for someone new. These old guys have already had their chance and they did nothing but play the role of the judiciary for entertainment purposes. What we need now are real Senators and definitely not actors.

May 1, 2010

I heard some "market makers" were in the party last night and they were treated like kings. Didn't anyone ask them why their stocks are trading at 52-week lows while the whole market was making 52-week highs? In the US, these people would have been booed and pelted with tomatoes but this is the Philippines and Filipinos are either too shy to voice out their opinion or too naive to know what's really going on. In my opinion, most of these recently held listings by introductions will never go back to their highs anymore. They are charades. For these stocks, you should simply trade them. I don't think they should be bought and held. Of course, the market makers will always tell you to buy and hold because the public who uses buy and hold strategies will usually buy at the highs, when the insiders are selling, and will never sell until it's too late. Open your eyes people and don't be a victim!