Mac Murray

Stock Market Diagnostics by Paris Murray: Sept 16 2009

In EMERGING Markets, PSE CURRENT Affairs on September 17, 2009 at 12:00 AM

Market Diagnostics

Chinese Blue Marble Half Slice

“The Market tells you where your market is, and you’d d••n well better listen.

–Jim Clark

Chinese Blue Marble Half Slice

Assessment and Outlook

Cautiously optimistic.  As of September 10, the NYSE Composite Index and the Nasdaq Index are at their highest levels of the year.  Emerging Markets are boasting the best year-to-date returns of the last 10 years, as are the ASEAN markets .  2009 is the Philippine Composite Index’s best performing year-to-date over the past 5 years.  All this suggests a strong 4th Quarter.

Although it is of general interest to monitor Index-wide activity, Philippine investors are better off monitoring individual stocks. Case in point, the Philippine Composite Index peaked at 2886.96 August 4th, 2009. Thus, pure Index watchers would have concluded the party was over 5 weeks ago.

However, Alliance Global (AGI),Benpres Holdings (BPC), DMCI Holdings(DMC), FilInvest (FLI), Nihao Mineral Resources (NI), Paxys Corp (PAX), Pepsi (PIP), Universal Robina (URC), and Vista Land (VLL), amongst others, all hit new highs in the 5 weeks after the Index stalled.

The lesson? The biggest rewards go to those who scrutinize individual stocks. This is known in the industry as “bottom-up analysis”.

In any case, the historical tendency is for market-wide momentum to taper off in September, with investor participation typically picking up at the beginning of 4th quarter. For this reason, a conservative approach is to take lighter positions if your stock of choice triggers a buy recommendation during September. Be watchful and think long term.

Chinese Blue Marble 4 Dots

Technical Spotlight

China Bank CHIB (8.33% YTD) :  CHIB’s attraction is unique in that in the past CHIB’s explosive upward price movement appeared to be nearly cyclical in nature.  t least until the onset of worldwide financial crisis, that is.  Hence the excitement surrounding CHIB’s much anticipated—if unavoidably delayed—surge in price.

CHIB bottomed at the same time as most stocks—mid-March 2009—but prices climbed above its 200-day moving average less than a month ago in mid-August.  The 200-day moving average itself turned northward a scant 2 weeks ago around September 1 2009 as the trendline had to be redrawn to reflect the acceleration in the rate of the rise in price.  CHIB has only experienced 3 upward cross-overs of its 200-day moving average in the last 10 years (including this one). The last occurred February 2005 followed by 2 year uptrend with a 167% gain.

Virtually all trendfollowing indicators confirm a high probability mid-to-long-term trend–highs have been riding the upper Bollinger Band consistently since July, with prices simultaneously rising above the 3 month exponential moving average. Consider entering in increments (to keep your risk low) as prices rise.

Chinese Blue Marble 4 Dots

2009 Returns by Sector (If you’re on the sidelines you may want to reach for some tissue…)

Financials

  • BDO (+40.81% YTD)
  • BPI (+11.11% YTD)
  • CHIB: See Technical Spotlight
  • COL (+101.92% YTD)
  • I (+2.27% YTD)
  • MBT (+51.52% YTD)
  • RCP (+61.54% YTD)
  • PNB (+65.52% YTD)
  • PSE (+134.04% YTD)
  • RCB (+75% YTD)
  • SECB (+104.8% YTD)

Industrial

  • AMC (+56.765% YTD)
  • AP (+69.23% YTD)
  • CMT (+287.09% YTD)
  • COAT (+53.61% YTD)
  • EDC (+111.54% TD)
  • EEI (+212.50% YTD)
  • FGEN (+131.25% YTD)
  • FPH (+134.29% YTD)
  • HLCM (+137.62% YTD)
  • JFC (+9.89% YTD)
  • MER (+229.31%)
  • MUSX (+8.33% YTD)
  • MWC (+20.37% YTD)
  • PCOR (+9.09% YTD)
  • PIP (+148.88% YTD)
  • SMC (+61.45% YTD)
  • SPH (+24.19% YTD)
  • T (+53.70% YTD)
  • TA (+46.67% YTD)
  • TUNA (+35.44% YTD)
  • URC (+66.67% YTD)

Holdings

  • AC (+45.45% YTD)
  • AEV (+21.67% YTD)
  • AGI (+144.74% YTD)
  • AJO (+48.81% YTD)
  • APO (+134.48% YTD)
  • ATN (-19.59% YTD)
  • BPC (+242.59% YTD)
  • DMC (+200% YTD)
  • JGS (+227.96% YTD)
  • LIHC (+222.58% YTD)
  • MIC (+160.64% YTD)
  • PA (+39.83% YTD)
  • SM (+60% YTD)

Property

  • ALI (+56.25% YTD)
  • BRN (+12.31% YTD)
  • CYBR (+168.18% YTD)
  • ELI (+53.13% YTD)
  • FLI (+152.38% YTD)
  • MEG (+113.70% YTD)
  • RLC (+93.40% YTD)
  • SMDC (+74.78% YTD)
  • SMPH (+36.36% YTD)
  • VLL (+140.57% YTD)

Services

  • GLO (+21.82% YTD)
  • GMA7 (+138.89% YTD)
  • ICT (+67.92% YTD)
  • IP (+88.14% YTD)
  • ISM (+64.17% YTD)
  • LOTO (+60.26% YTD)
  • LR (+141.39% YTD)
  • PAX (+600% YTD)
  • PEP (-23.53% YTD)
  • PLTL (+15.49% YTD)
  • TBGI (+14.55% YTD)
  • TEL (+10.73% YTD)
  • WEB (+400% YTD)
  • WPI (+27.66% YTD)

Mining & Oil

  • AT (+190.06% YTD)
  • BC (+27.54% YTD)
  • GEO (+88.89% YTD)
  • LC (+328.57% YTD)
  • MA (+246.67% YTD)
  • NI (+884.54% YTD)
  • OM (+35.71% YTD)
  • OPM (+88.89% YTD)
  • ORE (+71.15% YTD)
  • OV (+70% YTD)
  • PERC (+23.64% YTD)
  • PX (+162.50% YTD)
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