Oct 20, 2014 – Speculative Fever – Does This Mean We’re Heading to Doomsday?

Despite upbeat overall markets abroad, the Philippine market’s 54 point increase to 7,057.53 masks a lot of bearish signs underneath.  We have more reasons to be bearish on the blue chips.  In fact, we only had a traded value of P2.2 Bil in the first morning session which shows most people are on “sell on rally” modals and if there’s anything to get “sentiment” into anything bullish as of late, it has only been the speculative market.

The cupcake king of this speculative fever for the day is none other than the 7 year bespectacled #IS.  While we have no idea at all what the company does, and every mom and pop have happily day traded or kept some shares in case of a follow through, the 50% ceiling move from 29 cents previous close to 43 and a half cents change shows us that the people are willing to bet their P100K bets with 3,083 exchanging hands.  With 203M pesos value traded and net transactions for the day of P60M pesos, we see that 2000 out of the 3000 trades have already flipped.  That said, there was a significant changing of hands at the ceiling price of 0.435 as 100M shares traded between 43-43.5 cents.  Volatility is an ingredient of speculative stocks.  What we do know about tomorrow is that you will definitely have wild gyrations.  It could be up, it could be down.  It could be anything.  The uncertainty and possibilities have made people to generally expect the unexpected.

Our verdict?  We have no clue, but we do see 35 cents as first support and the 30 cents (to critically hold), else the basura is stripped naked and gets distributed in whatever fashion possible.  Probability though of a cliff dive is unlikely to happen when the entire market is going nowhere and there’s enough money (liquidity) who wants to keep playing.  Anyone who sold 40 cents above could view any dip towards 35 cents as round 2 or round 3 or round 4 buying.  With market doing nothing, speculative gets more fuel.   Watch if possible shakeouts near 35 cents would happen, for possible “tsupit” entries with lower downside.  If this gaps up, watch the resistance at 45 cents and 50 cents.  (usually round numbers happen to be resistances.)  It’s too difficult to tell so just look at ticker and bid/ask table as well as value being traded.

Biased- upwards (with 35 cents as first short term support.)  Note though that the risk of a wrong entry is huge as there’s a 20% slippage downside which will make everyone’s emotional right nauseous should it do a cliff dive upon possible exhaustion.

IS

*****

In truth, the speculative market shows a lot of quiet setups.  There seems to be more bullish signs in the speculative market rather than in real companies.  Sign of the times.

#WIN gets a good amount of push and pull with buyers in control.  Frankly however, there’s nothing much to bet except to see that 25 cents held.  The bullish picture is intact but it could dwindle into consolidation, set up into a bullish flag for continuation or continue breaking out (but it’s hard to break out when there are many other basuras flying.) Unless there’s too much liquidity and the market can handle two speculative stocks and trade with 50-100M value traded each.

This however might continue higher. P30M pesos was value traded but net long is P9M pesos.  Not so shabby.  Prefer to see profit taking pullbacks towards 25 cents for any possible entry, else wait for setup.  If you’re in it, 25 cents is also your trail stop.

win

****

#WPI is getting noticed because of the way the setup was constructed.  It sleeps, it breaks out and then it consolidates.  The rise in volume shows possible breakout in the making. This can also just sleep.  Watchlist. One problem with my charts, is I don’t have 10 -20 year charts.  I cannot see the resistances of old companies (so please share 20-30 year charts of these basuras) for guidance.

wpi

*****

Lone Blue Chips At Play

#DNL – strong +38/114 to close at P13.52 and touching 13.70 intraday.  There’s no significant news disclosure.  Perhaps it was driven by momentum.  Recent all time high registered at P14.00

#EDC – one of the few blue chips that mustered a good rally and is the top traded value today.  It closes at 7.60 which is middle ground (it can go back to 8) or just go back to 7.  It’s in the middle of nowhere.  You can tranche sell your early support buys, or you could sell higher when it goes back up to 8.  Whichever way it goes, there’s no trade setup here at 7.60 levels.

+57/410

Recurring Income and Insulated Developers

#MEG – was volatile but closed up. +51/318.  Despite BSP curbing lending of banks for homebuyers, there might be some people who believe that some properties are less affected due to its high 50% (high down payment requirements) and relatively lower reliance on bank financing.

#SMPH +108/198 – Maybe some people believe that mall rentals are the main barometer of this company’s profitability and hence not as affected as other property developers.

Oil – Low Prices Bode Well for Airlines

#CEB held at 70 and +6/75

Two Banks Still Strong

#BDO and #SECB continue to stay afloat with comfortable foreign buying.  Either they take other banks along with them in their resilience or they fall (amidst entire PSEI’s relatively sleepy corrective nature.)

****

Everything else relatively down.

Tomorrow most likely speculative fever.

Does this mean we’re heading to doomsday?  Not really, but we do note that the rise of speculative stocks only shows the toppish levels of PSEI which needs a long overdue correction or consolidation in order to make headways for next year’s new highs.  Times may change come November when we have upcoming IPOs like #SSI and earnings season to look forward to.

– Faceless Trader

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