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Miko's Blog for May 2011

May 31, 2011 (11:50 p.m.)

The market is now the wild, wild west! Plenty of things happening all at the same time this morning - Worst than expected GDP report, Congressional Hearings on the TEL-DGTL deal, MSCI re-weightings and Dow Futures up strongly. The result - some stocks are down significantly while some stocks are up significantly. Market was down by 50 points, yet, there were more advancers than decliners. Foreign funds from ATR were heavy sellers today, yet, new entrant Credit Suisse was seen quite aggressive on the buy side instead.

I have absolutely no idea where the market is going now and everything now seems like a toss of a coin. What may be strong now may not necessarily be strong tomorrow and what may be weak now may not necessarily be weak tomorrow.

I don't know whether to buy what's low or what's strong. Do you buy and hold or just play contra and get your 5% gain. Do you cut losses or do you just hold and pray that it comes back? Do you buy the blue chips or do you start buying basura? Do you even buy something or just let go and trade when the market becomes easier?

I sure hope we can get out of this range soon. I don't mind if we breakout above the range or breakdown below it. Just get the hell out of here!

May 30, 2011 (11:45 p.m.)

Although value turnover today was a mere P3.2 billion, foreign funds were net buyers today by almost P300 million. That's the good news. The bad news is, the market is losing momentum as it approaches its previous high at 4344. I think we'll continue to be range-bound for now.

Mining did a short-term u-turn today but it might just lead to a consolidation in the short-term. My beloved AT wasn't spared despite news that its Berong Nickel Mines would finally start full production by mid-June. Toledo Mining Corp., which owns 56% of the Berong Nickel Corp., was up by 32% in the London Stock Exchange last Friday. AT owns 25% of Berong.

There was some activity in ICT today. Don't tell me they'll put this back on the MSCI Index.

Some basuras are quietly moving. I miss those days when basuras go to the ceiling price. It's now a thing of the past as the PSE has made it an SOP to investigate all stocks that reach the ceiling. Market players are now purposely avoiding letting the price go the ceiling so as not to get investigated. Notice how BC almost went to the ceiling last Thursday but did not. If only you can short-sell here in the PSE, just short-sell any stock that goes near the ceiling price.

May 28, 2011 (3:30 p.m.)

Just two days ago, I was almost certain that we've already seen the end of this three month rally but, after what happened in the last two days, I'm no longer quite sure. I guess this behavior simply describes the market this whole year - erratic. Don't worry, even the foreign funds are as clueless with the direction of the market as all of us are.

I'm speechless with URC. I saw TEL climb even higher than its price before its ex-cash but there was an underlying reason why it did that. For URC, profits are down significantly for the quarter, yet, it still managed to climb above its price before ex-cash. There has got to be some good news forthcoming on this one.

A buying frenzy occurred in PX today primarily because of its announced property dividends in PX Petroleum. I knew prices would go up but a 9% rally doesn't seem justified to me, that is, if the stock is merely rallying because of the property dividend. Why? Because the number of shares that you will get is just so little and PX Petroleum isn't really worth that much, if I'm not mistaken. Anyway, congratulations to all those who followed my newsletter and bought PX the other day. I myself bought PX the other day but sold all of it yesterday on the spike. I used the proceeds to buy more of my beloved AT! :-)

I went to Boracay last weekend to attend a wedding of my former colleague in HDI Securities, Mr. Aaron Lee. If you want to see the prime movers of HDI Securities when I was still there, below is a picture of them while we were at the reception of the wedding. From left to right: the dashing, Mr. Aaron Lee; the debonair, Mr. Mike Chua; my former boss and Mr. ACR himself, Mr. George Cheng; myself; and, the Playboy, Mr. Rey Roxas.

The Whipsaw Kids 

May 26, 2011 (8:30 p.m.)

Finally! After 5 days of hell, there is light at the end of the tunnel. The question is, is the light that you are seeing the light leading up to heaven, or, is it just the flashlight being held up by your mother-in-law?

I salute Gokongwei in URC. He certainly made a lot of people very happy today. This is one of the very rare instances wherein prices continued to climb even after the ex-cash date. Congrats to all believers!

Except for PX holders, I bet a lot of people got quite disappointed with mining today. There was a disclosure on PX today regarding a 5 centavo cash dividend and a property dividend. At first, I thought it was nothing, then, I realized, the property dividends are actually shares of Philex Petroleum, which will be listed by way of introduction in the PSE. Congratulations to all believers!

Something peculiar happened today that hasn't happened for a long time - Basura moved! Some notable basuras that moved were BC, ISM, BHI, DIZ, MRC and NI. Could it finally be time to get naughty? Or is it a sign that we are really in the end?

May 25, 2011 (8:00 p.m.)

No place to hide in this market except in mining?

I don't have LC but I'm quite surprised that this is still holding above its support. Could it be that this is "the real thing"? I bought back some AT again today.

Can't understand why, after being quite weak yesterday, URC suddenly surged higher today, which is a day before the ex-cash of its P1.90 cash dividend. Why would people buy it at 41.50 when prices already climbed up by 1.60 today and 3.40 since the day when they announced the dividends. Surely, people know that prices will also adjust by 1.90 by tomorrow. Had URC not announced the dividends, the stock may already be trading at 35.00 by now.

After 6 months of consolidation, could it be that AGI has now finally broken out of the consolidation and is now in a (down) trending phase?

Could CEB be a "buy" now? Why? Because, with the condition of the market now, I bet a lot will now be going to Boracay (hehehe).

A friend of mine told me to sell in May and go away. Unfortunately, he went away but he didn't sell. :-)

May 24, 2011 (9:00 p.m.)

No more place to hide anymore as everything has begun to drop. We're still trading above support but, if the bulls are still going to stay alive, prices will have to hold right now.

Andrew Tan stocks were once again the highlight of the day. Yesterday, it was MEG that was sold down aggressively. Today, it was AGI. What's with Andrew Tan?

I thought LC was still going to be immune from the bloodbath of the market but, unfortunately for the bulls, some foreign brokers (not foreign funds), have begun to sell down aggressively. I wonder if those foreign brokers are actually Lolo himself.

SCC turned ex-cash today on its P10.00/share cash dividends. Some people were holding this one simply because of the cash dividends. Now that people got it already, who's going to be willing to buy higher? I was quite bullish on SCC a few weeks ago, thinking that prices were already trading at its medium-term support at around 206.00, however, with the stock unable to rally and is still trading at current levels, I am starting to think whether this stock will still be able to hold above its support or begin to trend down. URC is acting the same way - bullish until ex-cash only?

After scanning all the charts in the market this afternoon, I hardly found anything left that was still trending up. Most are now either trending down or moving sideways. Mining is the only sector left that is still trending up, however, given how much they climbed up already, would it still be a good idea to buy into the sector? How about if we just buy the lowest (weakest) sector of all - properties. Or, why don't we just buy nothing at all and wait for the market to drop to 3900? Your guess is as good as mine.

May 23, 2011 (9:00 p.m.)

I feel like a shmuck with the market dropping back down to 4260 after stating that it looked poised to trend towards 4600 already. I knew the market was going to make a big move soon and I kinda guessed that it was going to be up. Could I have guess wrong? I hope not because, if I guessed wrong, then, that means that the big move will be to the downside instead.

Although the PSEi simply looks sideways, there are a lot of stocks that are breaking below their support. Foreign funds were net sellers today by P600 million despite value turnover dropping to just P3.6 billion. Sell in May and go away?

Sold all my AT today. I was hoping that mining would be immune to the bloodbath because of the rise in Gold but, unfortunately, mining isn't exactly following Gold but is also getting affected by the general market condition.

OV and OPM is currently the flavor of the day but, in this kind of environment, would there still be anyone willing to buy higher?

MEG was the big victim of the market today. There might be others coming. I'm very concerned about all those stocks that are currently moving sideways and in a tight range right now because these are the ones that could potentially be like MEG today.

As you can probably sense in my writing today that I'm quite wary of the market. My best indicator is when I was very, very confident to say that prices will continue to trend up towards 4600 a few days ago, only to see prices fail to climb as I expected. That failure to climb may probably be a sell signal in itself. Objectively speaking though, still sideways as long as 4200 holds.

May 18, 2011 (8:00 p.m.)

Talk about an "Island Reversal" as ICT gapped down today right after gapping up yesterday. I heard that its inclusion to the MSCI index was reversed this morning. DMC, on the other hand, gapped up after gapping down yesterday but will it be included to the MSCI index? I feel sorry for DBP-Daiwa in ICT and all those who got stuck at yesterday's prices. Mr. AB Cap though did a very good job in shorting his position in the stock.

Mining is once again "in". I can't believe Lolo is still alive though up to now. I meant the stock. It's anybody's guess when this party will end but it certainly feels like it's getting more and more crowded everyday.

My beloved AT, on the other hand, was the weakest mining stock this morning as Deutsche Regis was a "killjoy". I guess this one is trading in a different cycle from the rest of the pack.

Banks such as MBT and BDO are now leading this market higher. Could we already have formed a bottom today at 4260?

Fearless forecast - Foreign funds will buy above 4400 ... 4600 coming!!!

I'll be out of town by tomorrow, thus, my next blog entry will already be on Monday.

May 17, 2011 (9:30 p.m.)

I bet there were as much people who were jumping for joy this morning because of ICT as there were as much people who were getting depressed because of DMC. A lot of people were expecting DMC to get included in the MSCI Index so, when it was announced today that it wasn't, people got disappointed and sold. On the other hand, I don't think anyone anticipated ICT to be the "anointed one". Interestingly, while there was heavy foreign selling in DMC, there wasn't heavy foreign buying in ICT.

There's been so many gap downs already this year - DGTL, SMC, AGI and now, DMC. Amongst those issues, only AGI was able to recover. I'm not sure about DMC because it obviously broke below a very important support level today.

Mining continued to dive today for a third day in a row. Even my beloved AT wasn't spared from the bloodbath. However, notice that MA and LC dropped by 4 to 8% today, PX dropped by 3%, and AT dropped by only 1.5%.

Aside from ICT, the only rose among the thorns was VLL. For the last couple of weeks, I've been noticing that, despite all the property issues dropping, VLL has continued to hold its ground and trade at its highs. No one seemed to be noticing it up until today. I guess Manny is really bent on making up his lost fortune during the elections in his companies. Its earnings came out this morning and was better than expected. Annualized P/E comes out to about 7.7x, which makes VLL the cheapest stock in the entire sector, if I'm not mistaken. 52-week high is pegged at the 3.68 level. Let's see if it can make a run towards that level. Didn't JAP used to play this stock?

Congratulations to all those who followed my newsletter and bought VLL! :-)

May 16, 2011 (10:00 p.m.)

The PSEi continued to be very resilient and doesn't seem to care about the world markets. Still, if you bought the wrong stock, you could have lost money today as decliners beat advancers by 7 to 5.

The big story of the day were the Oil stocks led by OV. I don't know what's up with these issues but "Bonita" does sound quite alluring.

First, there was AT. Now, OV. Could it now be the Fred Ramos show? If so, will VUL and UPM follow? I'm contented with the main event though - AT.

I have to admit, I'm quite surprised that LC is still holding above its ground. The behavior of MA today though was more within my expectations.

I still can't quite understand why FGEN is continuing to trade at its highs, yet, EDC is now testing its critical support at 6.50 to 6.55. I think someone is making a wrong call. Either the bulls of FGEN are too optimistic, or, the bears of EDC are too pessimistic.

May 15, 2011 (8:30 a.m.)

For the Nth time, could this finally be the end of the "once a year Lolo run"? The last couple of times that I have been guessing that the LC and MA run were over, prices continued to defy gravity and continue with its phenomenal run. This time though, there is something a bit different that is happening - metal prices are on the way down.

While most mining stocks seemed to have reached a medium-term peak last Friday, it might just be a short-term peak for but one stock - AT. The company declared P705 million net income in the 1st quarter. This is a big turnaround from its income last year of just P145 million. At this rate, P/E ratio of AT would just be a mere 7x and would now be the cheapest mining stock in the whole PSE.

Just to put things into perspective, PX has a market cap of P97 billion and earned P1.3 billion in the first quarter. AT currently has a market cap of P19 billion and earned P705 million in the first quarter. Thus, PX's P/E ratio is 18x while AT is 7x. The main difference between the two is that AT will not be able to declare dividends for now until it has wiped out its deficit. PX, on the other hand, has a cash hoard. Of course, if AT is indeed a turnaround story and continues to earn this much in the coming quarters, by the time it is able to declare dividends, the stock could potentially reach the market cap of PX as well.

Let's not compare AT to LC and MA anymore because I am only talking of companies that are actually making money. By the way, LC now has a market cap of P38 billion but lost money in the 4th quarter.

Technically, LC and MA seems to be at or near a medium-term peak already. PX is also overbought but may still continue to climb higher after a pullback. AT, on the other hand, have just broken above its consolidation and may just be at the beginning of an uptrend. Refer to the weekly charts below:

AT

PX

NIKL

MA

LC

Technical Analysis (Weekly Charts)

* NIKL may reach 27.00 but prices must no longer break below 21.00.

Personal Disclosure - I am currently holding AT.

May 11, 2011 (10:00 p.m.)

Here we go again. First, there was DGTL, then, came SMC. Now it's LC/MA/PX's turn to get suspended because of a disclosure. I'm quite certain that the disclosure will be good news, however, I'm just not so sure how the market will react to it. For the sake of the bulls, I just hope this isn't another DGTL or SMC, if you know what I mean.

While everyone is busy trading either LC, MA or PX, no one seems to be minding AT, which has been the laggard in the last few weeks. Today though, AT was the star. Could this be the start of something big?

What do RFM, PIP and URC have in common? They are all in the food sector and all their earnings dropped significantly from a year ago. I guess the rise in commodities have something to do with it.

Someone in Nieves Securities must be very "pikon" with TKC Steel. He has been selling and selling for the last one and a half month. Today, he sold a whopping 7 million shares at 3.00. Could the stock have capitulated already?

There were three big caps that were very strong today - DMC, JGS and FGEN. What do they have in common? Answer - Deutsche Regis

May 10, 2011 (9:30 p.m.)

Was that it for SMC? Although the big seller in SMC is no longer selling, ATR wasn't a net buyer anymore today. I don't see the RSA brokers buying aggressively so who's going to buy higher? I wonder who's buying thru DW Capital though. He seems to be the only big buyer left. Can he absorb P10 billion worth of shares? I don't know but I'm just not too optimistic on SMC for now until all that overhang from the secondary offering has sold.

I think quite a number of Tsupiteros got caught flat-footed in LC today. Could the party be over? When stocks like LC or MA generates P500 million of value turnover a day, you have to be very, very careful.

Vintage JAP in GEO today. I miss those days.

The PSEi looked very, very strong today but 20 points out of its 45 point upswing today was simply because of TEL. Nevertheless, I think that low at 4170 was very well supported by the bulls.

May 9, 2011 (8:30 p.m.)

After mumbling all that non-sense about who's going to buy SMC above 110.00, ATR Kim-Eng, who was the big seller of SMC below 110.00, suddenly became a net buyer today. I completely forgot that, if there is anyone who's going to buy SMC above 110.00, it's going to be him. I wonder if the seller is the same fund as the buyer today. Can you just imagine what the fund manager of that fund is feeling right now? At 116.60, that fund just lost more than a hundred million pesos already today.

Lolo just keeps on going at it as both LC and MA continue with their parabolic rises. I don't think I even remember the last time that LC had a value turnover of more than P500 million. Lolo must be the happiest person in the planet right now. Congrats Lolo!

I've been wondering when JAP was going to make his move. I guess, after what happened with LC/MA, he just couldn't take it anymore (haha). A disclosure came out this morning regarding some P952 million worth of private placements in GEO at P1.00 per share. Believe it or not!

Another group of stocks, which are also on the move right now are the Gokongwei issues. Last Friday, it was CEB that was leading the move. Today, it was JGS. Could URC be next? Notice though that RLC continues to be very weak. The entire property sector is now the laggard in the market.

I was right in AP. Buy on bad news. PNX seems to be acting on the same psychology. That 15.24 high though will not be revisited anytime soon.

May 8, 2011 (8:30 p.m.)

Who would have thought that the "jackpot" was actually going to be in Lolo stocks? I have hesitated and hesitated to enter his stocks because of his reputation in the market. I made some money at the beginning of the move but I took profits way too early. I never re-entered again this past week, despite my technicals telling me to do so. Moral of the story - try not to have a bias with anything in the market. My hats off to Lolo. Congratulations to all miners of Lolo! ... my opinion on Lolo stocks now though - No more buying on dips. You either buy it right now at these prices or you don't buy it anymore.

I'm still quite puzzled why these foreign funds sold their SMC shares below the 2PO price. I've heard a couple of conspiracy theories already but the best one I heard was because some funds decided to convert their shares to bonds. The bonds will be convertible on 2014 at P137.50 per share, if I'm not mistaken. They lose 2% by selling at 108.00 but still make a gain because of the higher interest on the bonds. If they get lucky, they can even sell above 137.50, three years down the road. By the way, can somebody tell me, who the hell is broker 311?

AP announced that its earnings dropped by 31% in the first quarter compared with its earnings in the same period last year. As early as last Wednesday, I anticipated that the company will report bad news simply based on its price behavior then. By tomorrow, the market would have fully discounted the news already. Could this be a buy on bad news?

Everyone was looking at the mining issues last Friday but did anyone notice that Gokongwei is now on the move?

I'm looking at all the commodity charts and it appears that they have all formed medium-term peaks last week.

May 5, 2011 (10:00 p.m.)

The big story of the day was SMC. To say that this went below expectations is a big understatement. Yesterday, I was even contemplating on whether I would sell at 125.00 or not (haha).

The big question on my mind is, why did these foreign funds sell below 110.00? Obviously, these funds did not buy on the board and only bought on the secondary offering. So what changed between two weeks ago and today?

The big problem now for the bulls is that there were so much people who bought the stock today below 110.00, P3.69 billion to be precise. Everyone who wanted to buy this stock were able to buy it today. So, who's going to buy higher than them? Will RSA spend the P12 billion, which he received from the offering to push the stock up and make everybody happy? That certainly will not make sense. Take note, the trading participants were only allotted P800 million worth. The rest of the P12 billion worth of shares were allotted to the foreign funds and some people who went directly to the underwriters to ask for shares. Foreign funds were net sell by only P2.4 billion today, will they continue to sell their shares below 110.00?

I really pity those people who got stuck at much higher levels. Unless a miracle happens, I don't think there will be any chance at all that this stock will go back to 150.00 anytime soon. I hope the PSE has learned its lesson in this 2PO. I know the PSE probably meant well by suspending the stock but, in this case, it probably did the public much worse. Had the stock not been suspended, some people would have gotten out of their positions before all hell broke lose.

Would you invest in a stock market wherein your positions could be suspended by the PSE and gap down by the time that it resumes trading. If I were a foreign fund and there is a risk of this happening, I would not invest in the PSE anymore.

My message to the PSE - Stop those damn suspensions!

Now, what do I make of RSA? He stated several times that he will do a secondary offering at 150.00 to 200.00 and even stated that he might do it at P250.00. The offering was set at 110.00. You be the judge.

May 4, 2011 (10:00 p.m.)

Despite the Dow trading at overbought conditions, it refuses to correct even as of this writing. Some Asian markets though have started to correct already.

Despite most mining issues dropping already today from the sky, Lolo stocks seem to be immune. Somehow, although the charts don't look bearish, I just couldn't get myself to buy those anymore at these levels. Good luck to all those who are holding.

Lopez stocks have been the darlings in the last few weeks but, in my opinion, targets have already been achieved for those issues.

I was very, very surprised when AP behaved extraordinarily weak today. After looking very strong already the last couple of days and, especially, yesterday, I was thinking that prices would just correct a bit today and continue to trend up going towards its analysts' briefing on Friday. Obviously, based on its behavior today, there might be some worse than expected news on Friday.

I don't know if you've noticed but all the "listings by introductions" last year seemed to have bottomed-out already in the medium-term.

Finally, tomorrow will be the much awaited listing of the SMC 2PO. I expect that to open at no less than P120.00 by tomorrow.

May 3, 2011 (3:30 p.m.)

Yawn! Not much going on in the market now as value turnover drops below P4 billion. I'm not quite sure where we are going next. I guess the market doesn't know what to do next as well. Big move coming up though either up or down.

A concern right now is Dow seemed to have peaked last night. I think Gold is at or close to a peak as well. Anyone saw Silver?! That one may have gone ahead of the pack already.

Some market movers are trying to jumpstart ANI and CPM. I want to see if people "other than them" will follow.

Confusing behavior on LC today. Could they be "distributing" already? I wouldn't be surprised if the play shifted to MA instead.

For those who are trading LR, I suggest you watch GERI. And for those trading GERI, watch LR. Look at their charts. They are twins.