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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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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:
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.
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.
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
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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.
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
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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.
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.
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.