The Bear Market End is Nigh, Market Going High?

I know, I missed my scheduled posting by one day, again. I loathe missing my scheduled tasks but my hands were tied this week. I wanted to use my feet, but they were only able to update this blog. It's also my second week to have missed my posting day :( Let's get right down to business.

I heard from someone that Jim Cramer called a bottom in the US market? Well listen to this guy's video and let me know what you think -



This has been an interesting week for the Philippine Stock Market as we ended up, yes you got that right folks, UP from last week's close. I checked out the PSEi chart and look at the line of the MACD indicator. What do you notice?



1.It's looking to break the center line!
2.Volume on the way up is higher, albeit not convincingly higher enough.
3.We're moving towards the 100-day moving average.
4.The 260 day moving average has bottomed and seems to have stopped its downward slope.


We might be in for a longer rally than we think. But is this really the absolute bottom of the market already? In my opinion, it's still not. The only reason we're rallying this big is that oil is still falling down. Case in point - the DOW closed down by triple digits Thursday night but we only closed down a few points as of Aug 1 1215pm, but oil also fell that night. So it seems right now, the PSEi is linked to oil prices, not to the way DOW is behaving.

The key resistance is 2650. That was the June 17 high, then the market just went downhill from there. But I can't remember if the PSEi composition now is the same as June 17th. So there should be some adjustments made. (Apologies, I still haven't perfected the image uploading process.)

This is a fundy (fundamental) view, but I think it merits some more thinking -
1. Interest rates are higher now, which means loans are more expensive, and demand for real estate might falter (although Megaworld still seem to perform well, as of a news report last May)
2. Peso will be in a tight range of between 44 and 44.50
3. Meralco rallied strongly recently, boosting the index.
4. I think someone told me that the Philippines is considered "cheap" versus other Asian countries. But you will have to verify that on your own.

So like I said last week, focus on the earnings. And for newbies in the stock market, buy IN ANTICIPATION OF THE CORPORATE EARNINGS. A lot of people (mostly traders) sell stocks right after companies declare their earnings, whether it's up or down (i.e. the earnings vs last year's). Some stocks manage to still go higher when companies declare special dividends or when earnings top estimates.

In the Youtube video above, I like what Jim Cramer said, "These stocks are strong even if the companies aren't." This is so true of the Philippine market. Veterans and people who have been in the stock market for close to three years will know what that means. Basura stocks! Some mining stocks have also been accused of behaving that way. Dragon, the moderator of Finance Manila, a forum mostly dedicated to the stock market, had this to say about people's expectations of mining stocks (90% of mining stocks = basura stocks, admittedly). Scathingly true.

Another word of caution, when basura stocks are going up and blue chip stocks are wavering or flat, be careful! It's usually a sign that the market has topped for the time being. It's still not the best time to go on a long trading position. And when I say long, a holding period of two to three months. If you are an investor looking to buy, well, like I said before, no time is the best time so it's anytime.

P.S. I know I focus a lot on the stock market. There's really not much you can invest in in the Philippines, particularly us small ones. There're the mutual funds, there're the UITFs, time deposits, and, *gasp* a regular savings account. But mostly these are for people who want to invest and forget about their money. There's also business, if you have the aptitude and entrepreneurial drive.

This blog is about investing in general, so we will get to those topics as we go along the rest of 2008.

During these tough(er) times, it's still good to stay liquid. It isn't time to be actively investing (i.e. if you were investing monthly on a fund, try to reduce the amount to the minimum investment requirement) unless you have your emergency fund intact and moreso when you have lots of debts to pay.

The stock market isn't for the unexperienced, at least from now until September or October. So if you absolutely just have to buy something just to appease your sense of greed, buy blue chips. In a worst case scenario, SM, Ayala Corp, BPI, Metrobank, San Miguel, PLDT, won't close shop overnight.

Be good.