November 3, 2014 – The Throwback Rally PSEI 7,312 is Nearing Resistance

PSEI + 97.12 to close at 7,312.85 with NFS of P268M.

Instead of typing what happened within one day, I will place instead the strong rally that has already happened.  Traders can comfortably take profits for those who are short-term oriented that has bought companies when they dipped and got into oversold conditions (considering my personal view is that we’re still in a range bound market.)

We’ve got the following throwback bounces.  With that said, I believe that you should be on a “take profits mode” and selling the rallies.  Your cash is going to find a lot of good risk/reward setups when they’re oversold which I will highlight below.

Cash Out In Tranches.  No one has to sell at the highest price nor buy at the lowest price.  This is the time to be taking profits, enjoying your short term gains if you’ve went offensive when the markets dropped. It is up to you if you’re trading for the short term or for the long term.  It’s clear that the leaders have rallied giving strong bounces and new highs, enough to warrant short term traders good returns even in just a small amount of time. 

Leader Board Returns Exceed At Least 10% from Lows

1.) #URC stands at a new all time high of 193, +3.76%

The low during the fear signal was P166 which was registered on Oct 14, 2014.  After 2 weeks, it’s now up 16.2%.  I believe this is one of the fiercest rebounds in the PSEI.  Expensive though so it’s not an easy momentum buy.  Most likely — I’d fade the strength and sell these new highs.

2.) #BLOOM closes at 15.58, reaching intraday highs of 15.72.  The lows during the index fear in the past “short term correction” was P13.06 or a 19.2% move.  Strongly trending but all of these also mean that if you’re only buying stocks now, you’re way way way off board and should instead be considering trimming.

3.) #ALI reached a high of P34.45 today.  Lows during the drop was P31.30.  That’s a 10% rally.

4.) #SECB goes 148 , low of P132.  Rally is 12.12%

5.) #BDO 93 to 98.2, 5.6% rise (hardly fell so the rally wasn’t fierce)

6.) #MEG reached highs of 5.02 from a low registered at P4.54 or 10.5% rebound

7.) #TEL goes 3,262 from 2,980 or 9.4% rally

8.) #EDC at 7.73 from 7.05 lows or 9.6%.

9.) #DNL at 14.30, new highs from lows of 12.42 recently or a 15.1% bounce

10.) #PLC from 1.59 to 1.97 or 23.8% rally since lows.

11.) #JGS 53.90 to 65 or 20.5%!

12.) #RWM rallied from 8.50 lows to 9.66 so far or 13.6%.  To put it bluntly, the casino sector really performed best in the correction.

Laggards Also Participated

1.) #HOUSE – This ain’t over and has just registered multiple buy signals on a break of P7.00 and a close above it at P7.20 after earnings came better than expected.  Low during recent drop was P6.74 so the rally is still new or just 6.8%.  It can possibly rally around 10-15% from lows or expect resistance to be met 7.40 to 7.75 coinciding with the huge 8.00 psychological resistance.

2.) #MBT rises to 85.80 after breaking 84 today.  Gets a +83/233 NFB today.  Recent low made was 81.55 or a bounce back of 5.2%.  Check 88-90 as possible resistance levels.

3.) Retailers

#PGOLD rallies to close at 35 and 11.11% from lows of 31.50

#COSCO rallies to close at 7.99 or 8.11% from lows of 7.39

#RRHI registered lows of P60.55 during the drop and is still up 4.87% at the close of 63.50

4.) Dividends #MER recent drop only took it to 255 (higher low) – and currently at P263 or a 3.1% rise

5.) #SM rises 6.5% from 750 lows to 799

6.) #AGI from 24.05 to 25.60 so far or 6.44% up

7.) #AC lagging behind recently with only a rise of 696 from lows of 670 or 3.8% up.

Nickel Rollercoaster – Rewarding Bulls so far – Fundamentals Also Favoring Bulls.  Technically Nearing Possible Resistance at 45 but Fundamentals Might Supersede any technical movements.

http://www.metal.com/newscontent/66325_nickel-ore-inventories-fall-310000-tonnes-at-china-major-five-ports

1.) #NIKL rises 3% to 42.85.  Recent drop occurred with a low of 38.45 or a rally of 11.44% so far.  With fundamentals still favoring a deficit, non-technical investors might actually be able to break 44-45 forcibly and still enjoy new highs by 2015.  (higher lows possibly implemented to nullify technical resistance movements)

2.) #MARC still oversold at 6.10, and rallied 8.9% so far from the P5.60 lows

3.) #CMT at 2.12 and 6% from 2 bucks low.

4.) #ORE has yet to rally and closes a mere 2% rally from 1.99 lows

5.) #BKR rallies 6.67% to close at P3.52.  Recent low registered at 3.28 or a 7.3% rebound from lows.  Much confusion stemming from what price #BKR purchased #MARC which made traders and investors – leave #MARC at bay today.

****

At a trader’s standpoint, Risk Reward is skewed in buying laggards that will likely catch up with the main leader boards’ movement since whether the leaders make new highs or not, the amount of risk on laggards that have fundamental merit such as #RRHI and #MBT at 63-64 or even lower as well as 82-83 levels provide little on the downside and moderate upside.  #HOUSE obviously has shown that any vomits below 7 are good entry buys.

Watch if other vomits can surprise on the upside (on earnings) – to get a sizeable bounce.

On some vomits- watch copper if they can rebound.  The problem with some base metals is that they might get dragged down if gold is on a strong downtrend.  Copper however is currently 3.10/lb and 11.90 has been holding for #AT (admittedly this will be a weak stock without catalysts.)

It’s safe to say that most of the leaders when they dip will be bought but for now and will create new highs or rally the fiercest.

****

To be well positioned in  a consolidating market requires very strong fundamental orientation such that you will buy the dips, sell the rips in the next six months.  You don’t want to go long expensive even if the momentum is strong in them.   Not all vomits will rebound if there’s a bad earnings and not all consolidation of stocks will rise if there’s no adequate reason or catalyst for it to go up  Focus on thinking which are good investments that will provide 20% returns for next year and have downside of say 3-5%.  For that reason, whether the index is 7,300 or 7,000 or 6,900 will not matter.  Look at individual stocks yourselves and decide accordingly.  Basuras have relatively low volume and are dropping with 10% moves to the downside.  Although anything can happen on #IS and #AR, best to be on the sidelines on the basura market and see if they can still ascend. Most likely, they’re in a distribution phase and it is best to be taking profits.  Pressure coming at 7400 will help the basura sector’s expectations but a lot of people have already been trapped in several basura stocks such that it’s not presumed to be as strong as before.

For the basura stocks, it’s best to let the pattern unfold, trail your stops and as much as possible – you’d have had to trim and partition no matter how strong the breakouts or rises have been.  They’ve had a sizable run and it’s best you hold a lot of cash for any possible drawdowns and volatility coming.  Whether the volatility is a Christmas present brought about by earnings will depend largely on the company, technicals will follow concrete fundamental surprises (positive or negative)

– Faceless Trader

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