Pardon I skipped the market wrap up yesterday. I was fixing things on personal matters. I will have to leave later afternoon (again for personal matters) as well so I’ll just give a market wrap earlier. Views are mine alone.
PSEI Scenario is dependent on large cap movements #TEL, #SM,#ALI, #AC and #URC which will largely dictate how the index will move. With #TEL at resistance at 3,200, #URC at resistance here at 180 and the rest looking for more support at lower levels (#AC at 650 possibly and then #ALI at 32-30 levels), bias is for the market to go up and down in see-saw fashion. My stance is we are going to be sideways from 6800-7200 for the next six months. What we largely know is that 7,150-7,200 are the resistances for now. Any drop can possibly take it either 6,900 or 6,800. I don’t expect a huge drop to 6,600 unless all earnings for the 3Q disappoint. Positive liquidity (speculative fever) stemming even from the weirdest of sources such as (#AR and #IS) help fuel possible bargain hunting and fishing as long as speculative money allows people to exit safely instead of getting burned. Nevertheless, I see positive signs example on #MER forming a bottom. I see retailers forming a bottom from the likes of #RRHI, #COSCO, #PGOLD. #SSI’s IPO is oversubscribed. This shows me any positive #SSI movement on November 7 listing date will likely cascade to other companies in the retail sector. Casinos remain well supported such as #BLOOM and #PLC. Despite possible technical correction, I view this more as a re-entry opportunity for leaders with fundamental bias. Just be mindful of resistances. We have a large trading range. If the boxes breakdown, that’s when we range lower, else we stay in this consolidating market.
Opportunity? Or Reversal? Measure it Via Risk/Reward
As we speak, nickel miners are getting clobbered. #MARC tanked to as low as 5.60, #NIKL to 38.45 but have recovered a little from the drop. The drop may have been excessive but the volatility is strong on nickel miners that we have to essentially stay on the sidelines if we’re using technicals as our barometer. We see two resistances 6.40/7.00 for #MARC and 40/42/45 for #NIKL. Supports however are pretty near from 5.60-5.00 for #MARC, while #NIKL at 38.65/ 35 shows a strong support (measured from the distance of 45 to 40.)
These are technical in nature and has no fundamental takes. For all intents and purposes, fundamentals for all nickel miners remain in place and earnings are still expected to report 300-400% growth in earnings for this year and possibly 50% higher despite the high base this year for next year. While nickel prices abroad have tanked on global growth slowdown concerns specifically China reporting a 7.3% GDP rate, it’s still a “wait and see” for investors who will likely buy on dips (ultimately 35 if it happens?). Investors have all the money and time in the world to pick up the shares and wait for 2015 deficit scenario to unfold. With the charts looking bleak, a sideline stance is recommended for investors who still rely more heavily upon technical charts. Lighten down on rallies near 40-45 resistance levels. If it doesn’t fall that low though, then it’s just going to consolidate near the 40 levels until catalysts come to propel the chart higher. Nickel miners will correlate highly with nickel prices abroad so it will move depending largely on world prices. It’s currently $6.63/lb.
The lack luster volume in the market reflects that most are in the sidelines in anticipation of how earnings will unfold for 3Q and 4Q other than their 2015 outlook on the company’s growth. To a certain extent, we are moving in a rectangular consolidation. Leaders consolidate near their highs while laggards are staying still in their floors. Other than that, the market has done nothing much except to play with speculative third liners and some casinos (#PLC, #BLOOM.)
Since #IS is the top traded stock surpassing #TEL, you can clearly see that no one’s essentially trading the blues. The market’s just hovering and playing with speculatives intraday while the overall market is just at a stand-still.
Bank Leaders #SECB & #BDO will likely traverse in a consolidation. Near term support and resistances are defined as follows:
#SECB is consolidating in a large box from 130-145. Currently P143
#BDO still a leader, currently P95.75. Considering it traversed from 88 to 98, any retracement can find itself supported either at 94/88. In any case, with fundamentals only getting better – picking it up on any opportunistic downturn is still okay. Selling it near 140 above and 97 above is also okay. The ranges aren’t that large but we take what we can get.
Consumer – URC still at the helm but will likely consolidate
#URC’s uptrend is intact but could consolidate between P160-P180 despite good news of joint ventures et al. Even the leader can rest despite the Danone joint venture disclosure that propelled #URC to go above P180, to trade currently at levels of P182-183. The fact that it hardly got sold down and stayed afloat means it has an indistinguishable leadership quality that’s not easy to make it fall. It will still be a buy near P160 and a sell near 180 levels.
#DNL is still strong but most likely a leader in the consumer will still have to consolidate. After breaking out of P10, the stock never looked back. Any volatility in the market however will make everything susceptible and this might have a possible visit back to P12.00 if external markets rattle the Philippines.
#EDC is best positioned for opening its Burgos wind farm(150 MW) this coming November, has secured loans and bagged new contracts for solar and 6 wind energy projects from the DOE. From a fundamental standpoint, any dips offered by external shocks are welcome opportunities for investors.
#EDC is the world’s largest integrated geothermal producer and one of the leading renewable energy companies in the Philippines with a portfolio of 1,150 MW of geothermal, and 132 MW of hydroelectric power generation. The chart has reversed from sideways to uptrend after showing that its Bacman plant is fully operational with a capacity of 130MW next year before the expected power supply shortage in Visayas for 2015. Note that this reversal was a 3 year breakout. 7 gap is going to be retested if a drop ensues. Any break lower will see 6.50 as well as possible support. Fundamentally though, we need a lot of bad news other than external shocks to make this fall. (Same case for all other Lopez companies – #FPH, #FGEN, #LPZ- all consolidating.)
Preferreds are going into new highs. That’s a safety play. But is #ABS going new highs because of upcoming elections?
Dividend Yields Offer Flight To Safety. Consolidating In a Range.
#MER, #TEL, #GLO,#AP
#MER is forming a bottom and the break above 260 was a sign of more bullish support. Any dip is constructive near 250-260. Arguably 14 peso cash dividends, low oil prices and stability of that 5 year support with a P235 Gokongwei Placement price is enough for bullish people to continue supporting #MER. Earnings came in line with expectations.
#TEL holds its ground above 3,000. Currently at 3,196
#GLO held the 1,600 area and is currently 1,656
#AP has consolidated at 38-41 levels and is at 40.35
Conglomerates – Correction Ongoing
#AC will find support near P650 levels. Currently 677.5
#JGS consolidating near highs but support at 54-55 to be retested. Currently 58.65 (looks more like a resistance)
#GTCAP – correcting near psychological P1,000 – Currently 1,010.
#MEG still above 4.50 – consolidating in a box where 4.50 is support and 5.00 as resistance
#ALI in a box as well with supports at 32/30 and resistance at 34
Retailers Looking to Retest (Either Higher Lows or Retest Lows)
#PGOLD – Current low is 31.50, check if supported at 32 levels. It’s currently doing 32.90. Everything rests on 3Q. If earnings are in line, this has a chance to rise back to resistances at 36.
#RRHI – Currently stronger and possible higher low retest at 62
#COSCO – Same thing with #PGOLD. Low risk at 7.39-7.60 levels to accumulate while resistance hovers at 8.00
All of the retailers might get a boost if #SSI gets a good lift upon opening debut.
Casinos (PLC and BLOOM doing well despite this market’s corrective phase)
#PLC above 1.65 placement and followed through – Pullbacks likely to retest this placement and create higher lows
#BLOOM above consolidation breakout of P14, then P15 as higher lows.
Amazing Basura Moves. Theoretically, Php4,700 just became P75,000 and more in this run up. That means 100,000 pesos is now worth P1.5M pesos.
Value Traded has consistently been relatively soft with speculative stocks hogging the ticker tape. This shows most people are just waiting on the sidelines or playing with third liners until the market finds a decisive direction either due to earnings or some external movement (positive or negative.)
Chances are high too that net foreign selling dominates with #AC and #ALI on the selling blocks perhaps with P100M selling on both.
Most retail seem positioned with their #IS holdings anyhow so they don’t seem negatively affected by this correction. With the speculative leader hogging the headlines, any correction will likely fuel more speculative issues rallying within days unless we have a concrete direction worldwide.
Special Edition (Vomit Illustrations)
(picked up some vomits, I know bears don’t try to pick up vomits but value too irresistible for #COSCO at 7.40 and #PGOLD at 32.50)