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WEEK 51 - To December 23, 2010
WEEK 51 - To December 23, 2010
GF EC-058B East Tower, PSE Center, Exchange Road, Ortigas Center, Pasig City, PHILIPPINES 1605 (632)687-5071 (trunk)
Outlook for Week 51_December 20 to 23, 2010
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3/8201
8/201
/2501
2/150
3/2901
4/1920
5/102
5/3120
6/210
7/120
8/2301
9/1320
10/42
12/60
10/25
1/520
considered warnings of an impending reversal in favor of the ADL's
direction.
The divergence is most pronounced from late September as the index made its successful and sustained break of the 4,000-level. (chart above)
The ADL topped on September 27th with the index trading between 4,079.31 and 4,129.26. Succeeding record closing highs for the index were
accompanied by the ADL dropping to even lower levels. By the time the index closed at its highest point at 4,397.30 on November 4 th, ADL had
declined by -103 points. In percentage terms, the index gained 6.66% versus the ADL's -11.44% slump. Note that the PSE Index is a measure of a
composite of the stocks of 29 companies and thus, heavy concentration of buying on these issues will push the index higher, even if the majority of
traded stocks, which includes non-component counters, are being sold.
At least on this score, the Santa Claus rally, if it unravels over the two shortened-trading weeks, is an opportune time to SELL the market. Re-entry
is subject to the occurrence of a divergent move in the opposite direction, e.g. the index heading south, with the ADL picking up – or at least,
moving sideways.
FOREIGN FUNDS FLOW: THE movement of foreign funds over the 90.00
last two months has added to investors' apprehension, translating to 80.00
n
s B
ilo
first two stretched between July and August, with net positions 20.00
10.00
narrowing by 18% to php13.648 billion. Nevertheless, the flow -
reversed aggressively in the next two months, with purchases nearly JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
1.5x sales proceeds. By the first month of Q4, net foreign position had BUY SELL ACCUMULATED NET
grown to php56.836 billion. Although this continued through the the
first week of November trades, peaking at php57.369 billion, the succeeding weeks saw a discernible shift in bias that by Friday's close, their net
position had dwindled to “just” php52.766 billion. This, however, represents but a -8.2% depletion from the end-October levels.
The shift in direction in the flow of foreign funds can be explained by a combination of, but not limited to, the following reasons. First, admittedly,
local equity values had inflated substantially throughout the year. The composite measure alone, shows a year-to-date return of 32%, more so if
we stretch the period back to the October 2008 bottom. At one point this year, the gains nearly topped 40%, as the Philippine market hovered in
2nd and 3rd among the best performers in the Asian region, behind Indonesia (JKCI) , and intermittently, Thailand (SET). Such margins, in the face
of an extended slump the growing uncertainties presented by regional giants China and Japan, not to mention Europe, may have been prudently
booked. And, for much the same reason, the plough-back has been relatively slow. Second, the consistent strength of the domestic currency vesus
the US dollar has squeezed, or at least tempered, margins or trading and investment gains. Thus, liquidating positions to protect margins becomes
a logical and sound portfolio management decision. Third, we can likewise attribute the “sell-off” to funds rotation, although evidence in this
regard is scarce from this end.
DISCLAIMER: THE MATERIAL CONTAINED IN THIS PUBLICATION IS FOR INFORMATION PURPOSES ONLY. IT IS NOT TO BE REPRODUCED OR COPIED OR MADE AVAILABLE TO OTHERS. UNDER NO
CIRCUMSTANCES IS IT TO BE CONSIDERED AS AN OFFER TO SELL OR A SOLICITATION TO BUY ANY SECURITY. WHILE THE INFORMATION HEREIN IS FROM SOURCES WE BELIEVE RELIABLE, WE DO NOT
REPRESENT THAT IT IS ACCURATE OR COMPLETE AND IT SHOULD NOT BE RELIED UPON AS SUCH. IN ADDITION, WE SHALL NOT BE RESPONSIBLE FOR AMENDING, CORRECTING OR UPDATING ANY
INFORMATION OR OPINIONS CONTAINED HEREIN. SOME OF THE VIEWS EXPRESSED IN THIS REPORT ARE NOT NECESSARILY OPINIONS OF ACCORD CAPITAL EQUITIES CORPORATION ON THE CREDIT-
WORTHINESS OR INVESTMENT PROFILE OF THE COMPANY OR THE INDUSTRIES MENTIONED.
ACCORD CAPITAL EQUITIES CORPORATION
GF EC-058B East Tower, PSE Center, Exchange Road, Ortigas Center, Pasig City, PHILIPPINES 1605 (632)687-5071 (trunk)
Outlook for Week 51_December 20 to 23, 2010
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Having said that, while it is understandable that recent (short-term) trends in this series do raise concerns, if not outright fears of a sustained
slide, or at least a weak rebound proferring at best a sideways movement on light volume turnover, the bigger picture is not too discouraging. As
had been pointed out earlier, the aggregated sales in the last three to four weeks erased less than 10% of the accumulated position through
October, substantially slower than the -18% erosion past the first semester.
5.00
December-to-date's rather “slow” pace of php4.9 billion. Over the
three months prior, the average have stayed above php5.2 billion, net
4.00
of block sales, with September registering the biggest at php6.128
3.00
billion per session. The accumulated average at that point was
2.00
php3.61 billion. It is no surprise therefore that September booked the
1.00 biggest monthly gain (15%) since 2002. There have been only two
- months, February and July when the month ended with the daily
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC average below the cumulative average. July fell just 2% below the
MONTHLY ACCUMULATED norm. Thus, using this as a hint of “investor interest” we can
conclude that the attraction for local equities has not diminished
significantly. The slowdown in December, -10% vs. November, may be considered a hopeful sign that the drop in the index level is only temporary
driven mostly by “external shocks.”
STO (10,3,3) fell into oversold territory (daily - <20) at the close of
the week. This is an expected result considering the market has
retreated in seven (7) of the last nine (9) sessions. Neither the STO
nor its trigger line give off any indication of an immediate reversal,
although such in not being counted out, and further extensions of the
decline this week will serve to heighted expectations of, at the very
least, a technical rebound. The monthly view is worse, with STO just
about to break under the oversold line (>80), theoretically an intial
warning of an oncoming slump, and ergo, a first sell signal requiring
confirmation from either other indicators or from itself (a restoration
of the levels above 80 and an ensuing drop below it) The same period
chart shows it has slipped below the trigger line in the last two
months. Only the weekly STO offers some hope for a rebound as it is
poised to break above the trigger line. Nevertheless, it hovers in the
middle of the lower half of the STO range. It remains touch-and-g0,
from this perspective. It has not refuted, or presented a counter-
argument to the proposition of the MACD.
DISCLAIMER: THE MATERIAL CONTAINED IN THIS PUBLICATION IS FOR INFORMATION PURPOSES ONLY. IT IS NOT TO BE REPRODUCED OR COPIED OR MADE AVAILABLE TO OTHERS. UNDER NO
CIRCUMSTANCES IS IT TO BE CONSIDERED AS AN OFFER TO SELL OR A SOLICITATION TO BUY ANY SECURITY. WHILE THE INFORMATION HEREIN IS FROM SOURCES WE BELIEVE RELIABLE, WE DO NOT
REPRESENT THAT IT IS ACCURATE OR COMPLETE AND IT SHOULD NOT BE RELIED UPON AS SUCH. IN ADDITION, WE SHALL NOT BE RESPONSIBLE FOR AMENDING, CORRECTING OR UPDATING ANY
INFORMATION OR OPINIONS CONTAINED HEREIN. SOME OF THE VIEWS EXPRESSED IN THIS REPORT ARE NOT NECESSARILY OPINIONS OF ACCORD CAPITAL EQUITIES CORPORATION ON THE CREDIT-
WORTHINESS OR INVESTMENT PROFILE OF THE COMPANY OR THE INDUSTRIES MENTIONED.
ACCORD CAPITAL EQUITIES CORPORATION
GF EC-058B East Tower, PSE Center, Exchange Road, Ortigas Center, Pasig City, PHILIPPINES 1605 (632)687-5071 (trunk)
Outlook for Week 51_December 20 to 23, 2010
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The first three days will see the markets focusing on the micros of individual companies with economic releases light until Thursday. US markets will
be closed on Friday for the observance of Christmas. Forecasts for existing home sales, core durable goods orders, and new home sales are all positive
which should give investors enough reason to increase their equity exposures. Unemployment claims are seen to nudge marginally higher.
The PSE Index is currently sitting on the lower edge of its 4,050-4,070 support band. Although we expect trades to thin out as we move closer to the
holidays, and even as the technical biases indicated at the beginning of this report presents a negative outlook, we may see bargain-hunters providing
the needed push and support to hold the market at and from its present trading range. We still expect the market to close the year above the 4,100-
mark.
DISCLAIMER: THE MATERIAL CONTAINED IN THIS PUBLICATION IS FOR INFORMATION PURPOSES ONLY. IT IS NOT TO BE REPRODUCED OR COPIED OR MADE AVAILABLE TO OTHERS. UNDER NO
CIRCUMSTANCES IS IT TO BE CONSIDERED AS AN OFFER TO SELL OR A SOLICITATION TO BUY ANY SECURITY. WHILE THE INFORMATION HEREIN IS FROM SOURCES WE BELIEVE RELIABLE, WE DO NOT
REPRESENT THAT IT IS ACCURATE OR COMPLETE AND IT SHOULD NOT BE RELIED UPON AS SUCH. IN ADDITION, WE SHALL NOT BE RESPONSIBLE FOR AMENDING, CORRECTING OR UPDATING ANY
INFORMATION OR OPINIONS CONTAINED HEREIN. SOME OF THE VIEWS EXPRESSED IN THIS REPORT ARE NOT NECESSARILY OPINIONS OF ACCORD CAPITAL EQUITIES CORPORATION ON THE CREDIT-
WORTHINESS OR INVESTMENT PROFILE OF THE COMPANY OR THE INDUSTRIES MENTIONED.