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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 34_August 23 to 27, 2010
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LOOKING AHEAD: ISENTIMENTS REMAIN BULLISH, BUT PULLBACK IMMINENT

WE ARE BOUND to hit it right eventually. For the past two weeks, at least, we have hoisted the flag of caution, anticipating a pullback in share
prices following an extended advance. We got it right the first time, with the week-ending August 13 slipping -1.3% to 3,469.52. We had thought that
wasn't enough. Citing the commencement of the Chinese Ghost Month and the unwinding of the earnings season as our backdrop, we had
expected the market to slide further to support levels last week. But for five straight sessions, it denied us “bragging rights,” as it defied not only
the odds but its peers and neighbors as well, rising +3.6%.

We can only look to the domestic front for the possible source of this optimism. Yet, even such has posed a challenge. Last week, the market
ignored the BIR's reported 5.3% shortfall, opting to factor in the year-on-year 7% increase and the agency's optimism on raising the full-year target by
php30 billion. Further balancing the equation was the boost exporters got from a WTO directive to the European Union to eliminate tariffs on
electronic products, our primary export product.

Also set aside were the technical suggestions which showed early signs of the market entering overbought territory. The market is, at present,
even deeper into that area where selling pressure is seen to intensify. Here are some key points:

The PSEI is trading at end-2007 levels, roughly a time at which investors


were hanging on to bullish sentiments, despite a 6.5% drop off the
3,873.50 peak. The possibility of a recession was the subject of debate
then, as much as the pace of the recovery is today.

As such, the market lies just 7.2% under the bull peak, alternatively
erasing 65% of the aggregate 2,169.09 points lost to the bear.

Furthermore, the market is in theory, a bull twice over. In the chart,


we have noted how the market has broken two 20% upside marks both
off the bear low and the 2010 low. The first was broken as early as May
2009, but with global recession still unfolding, nobody dared call a bull
market. The second, a 20% upside from the current year's low (which,
in neighboring Thailand and Indonesia merited a bull tag from
bloomberg.com) was breached in the first week July.

Adding perspective to the strength of the present market is that the 110% rise over the last 22 months from the bear low matches the index' 32
month advance fromJanuary 2005 to October 2007, which, undoubtedly was a bull. All things considered, the 2008-2010 pace is even steeper than
the 2005-2007 run.

The two widely used guidance for overbought or oversold conditions,


RSI(14) and STO(10,3) puts the market in the former. RSI(14) breached
the 70-line after Friday's trades, something it has not done since April
14, 2010 when the index was stopped at 3,299.69, one of its failed
initial attempts to break the 3,300-level. What ensued was a 5-day 4.6%
pullback with RSI(14) dropping to 44.78. Prior to the April RSI(14) level,
the indicator has consistently topped along the 70-line to as far back as
August 2009. It's highest point is at 84.76 last July 29, 2009 with the
index at 2,803.39. The only other time it rose past the 80-line was
when it peaked at 81.18 coinciding with the bull market peak at
3,873.50.

STO(10,3) has been a more consistent guide, topping at the 97-98 band
and bouncing off the 20-line thereabouts. In the two recent instances
the indicator reached 97-98, the next four sessions translated to a sell-
off dragging the index lower by -1.92% and -3.95%, respectively.
However, even as the STO(10,3) extended its drop to two more
sessions to the 20-35 band, the index, on both ocassions, climbed 0.25%
and 1.8%, respectively. At last Friday's close, the indicator read 97.11.

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 34_August 23 to 27, 2010
2 of 3

A third indicator is less pessimistic however. MACD (12,26.9) has


generally supported and/or validated the market's advance. Yet, it is
not short of the cautionary signals evident in the earlier indicators. In
the accompanying chart to the right, we first note for reference,
MACD's failure to support the market's initial attempts to make a
sustained break of the 3,300-3,330 range for even as the index
successively topped within the band (line 1), MACD headed lower,
drawing support away from the advance. Nevertheless, it did not
induce a bleeding in share prices, only preventing the main measure
from making a sustained breakout. A similar situation is developing
(line 2) where the index reaches to new closing highs but the MACD
failing to even match a preceding top. This can be interpreted
generally as investors' growing concerns on the sustainability of the
advance but, on the other hand, remaining optimistic enough to re-enter or increase positions as the index pulls back. Over the short term, the bull
cross of the trigger line may induce momentum trading which must necessarily be met with profit-taking.

Finally, the index has traded in the upper half of the “price-envelop” of
the Bollinger Bands, even as it breaches the upper limit after last
week. While this is a testament to the pervasive bullish sentiment in
the market, it likewise draws our attention to recent movement vis-a-
vis this indicator. While it could be merely a function of its
construction, it is worth noting that the index has not made a
sustained break of either the upper or lower bands regardless of the
time frame. This adds to the cacophony of advice to favor the
liquidation of positions and wait for fairer price levels. The indicator
likewise draws a picture of a range-bound market with a defined
positive bias. Except for the usual knee-jerks to the Dow's
movements, which of late, we have seemingly ignored particularly on
the downside, the index is expected to keep this trend going for much
of the balance of the year – at least until further proof on the domestic
economy's strength comes out.

Value turnover last week was a tad weaker than the prior period at php18.735 billion vs. php19,426 billion. While all, except the Service sector, rose,
only the Financial group saw increased value flow to php4.306 billion, over a fifth of the market's aggregate. The rest of the sectors saw a decline in
their “attractiveness.” It was in fact the increase in Financial value turnover that prevented a bigger slump in the totals.

Thus said, while it seems convenient to issue a call for the continuation of the present trend, as investors have seemingly ignored both macro- and
technical indications, there is a growing body of evidence as presented above to posit even more strongly the imminence of a decline – the long awaited
correction. More and more we find adherents to this proposition differing only in determining the magnitude and degree of such a corrective action.
Last Friday, in fact, the overnight slide in the Dow Thursday night strengthened our position. Yet, after shedding just 25 points in early trades, investors
rushed back in, sending the index to close even higher. Using the most recent defined low, 3,102.59, the first major retracement line lies at the 3,405
mark, positing a more than 100-points or 5% drop. However, over the shorter term, using the steep 5-day advance last week as reference, the first
retreat point is drawn at 3,545 with major support at 3,530, limiting the immediate downside to less than 50 points or 1.33%. The latter seems more
reasonable for next week. A correction of a 100+ pts magnitude may revive doormant fears and reverse sentiments – not to say that it isn't a healthy
one though. Bargain hunters will continue to be on the prowl and is seen to cushion the anticipated correction. Resisatnce initially at the 3,600
psychological level with major resistance at 3,640.

CORPORATE DISCLOSURES: (Friday, August 20, 2010)

The Philippine Stock Exchange [pse: PSE, php295.00, +3.9%]


The only Stock Exchange in the country confirmed reports published in the Manila broadsheets that it has executed a Letter of Intent with Thomson
Reuters that seeks the collaboration between them in promoting best practices in investor relations among listed firms. Both entities will provide
instructional and marketing intiatives to educate listed firms on the key principles needed to develop effective investor relations management
programs.

Although the stock price of PSE shares rose nearly 4% Friday, this is not attributed to the above news, as clarified. Nevertheless, it is an important step

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 34_August 23 to 27, 2010
3 of 3

towards the development of a more investor-friendly stock market and should redound to the benefit of the PSE, both as a regulator and as a traded
issue over the long term. Improved access to and effective dissemination of and relevant information to the investing public increases the likelihood of
increased confidence and participation in the trading of and investing in local equities. We maintain our BUY and HOLD recommendation on the issue.

Sta Lucia Land, Inc. [pse: SLI, php1.71, -1.2%]


The Company will pursue various joint ventures with General Milling Corporation (Cebu properties), Spouses Gloria Sulit-Lenon (parcels of land in
San Mateo, Rizal) and SJ Properties, Joseph O. Li et al (Alfonso, Cavite properties) with an area of 132.5k sqm, 34.7k sqm and 102.5 sqm, respectively.
Furthermore, it will commence a number of projects in the latter part of 2010 or early 2011, to wit: 1) Sta Lucia Tower (back of the Sta Lucia Mall,
Cainta); 2) East Belair Residences (along Felix Avenue, Cainta). Finally, it will enter into marketing agreements with Orchard Properties and Royal
Homes for the sale of its projects.

SLI share price has had a steep advance from below php0.80last month to php1.71 as of Friday, after peaking at php1.81 (intra) and php1.76 (close)
Monday. The last two days of selling however was at thin values, indicating a possible settling down . Immediate support at php1.64 Underlying
techinical indicators point to a SELL.

San Miguel Corporation [pse: SMC, php67.80, -0.1%]


SMC's 100% owned telco subsidiary, Vega Telecom, Inc. purchased stakes in three shareholders of Bell Telecommunications Philippines, Inc., namely
Two Cassandra-CCI Conglomerates (TCCI), Perchpoint Holdings Corporation (PHC) and Power Smart Capital Limited (PSCL) totaling 250k common
and 500k preferred in TCCI, 75k common shares in PHC and 3 ordinary shares in PSCL. The three companies hold a combined 10M shares of Bell. The
purchases were made in line with the diversifying conglomerate's investments in the telecommunications sector.

MUSX Corporation [pse: MUSX, php0.069, -1.4%]


The Company is exploring possibilities in less risky and lower capital-intensive businesses such as real estate, environment, mining and energy which
can provide near term benefits for both the Company and its shareholders in the form of profits and enhanced share values, respectively. This after
it reassessed its current semiconductor ventures as too risky and capital-intensive. It has decided to sell such business segment to the
semiconductor business Management led by Mr. Michael Burton, for a total consideration of php54M. Nevertheless, the Company will retain its
intellectual property rights over the development of its FLEXHARRP products (formerly FLEXCAM) pending the payment of php24.3M royalty fee.
Such matters as mentioned above are subject to shareholders' approval.

PHILWEB CORPORATION [pse: WEB, php15.50, +1.3%]


The Board has authorized the declaration and issuance of php125M cash dividends to its shareholders translating to php0.10 per share.
Stockholders of record date September 3, 2010 (ex date August 31) will receive their checks on September 20, 2010. This is the first dividend payout
for the Company since it listed in 2001. For the first half of the year, the Company earned php322M net income, 41% up y-o-y. Total revenues for the
period reached php508M, 40% more than last year. The Company is close to obtaining a gaming license in Cambodia even as it works on other
countries as well.

SECURITY BANK CORPORATION [pse: SECB, php77.00, +3.4%]


The bank declares cash dividends totaling php1.00 per share, broken down into php0.25 (regular) and php0.75 (special). The pertinent record, ex
and payment dates have yet to be determined, however.

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.

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