Wow, the DOW was DOWn quite significantly Thursday night but we managed to close higher. Amazing. But are these just pure technicals? The BSP has issued further inflation warnings yet the market is still making highs - we're touching the support level made during the last week of April.
The PHISIX
So far, there has been a new round of bad news in the US front - a big financial institution raising capital casting doubts about the end of the credit crisis, housing prices nowhere near a bottom yet. The only bright spot is that oil is falling, but it seems to me that it's not just a demand issue, but also that the dollar is going up (vs. the euro). To quote the report -
``The decline in oil was a critical factor,'' said Gregor Logan, the co-chief investment officer at New Star Asset Management in London, which oversees about $41 billion.
Let's see the chart of the Phisix once again -
I've attached the chart above, squint if you have to hehe, here are the highlights of this chart -
1. The technical indicator, is erhm, indicating to us that the market has been trying to reverse its trend (by crossing over the centerline) for the previous two times, only to fail. On the third time,
the performance of the market allowed it to go past the centerline and compared to the previous two times, the volume is actually higher.
2. We are now above the two moving averages - the 260 and 100 MA., and is reaching the 60 day moving average, which could prove to be a strong resistance.
So on Monday, you better watch out, you better not cry, you better not pout, I'm telling you why, Santa Claus is coming to town. Or so I hope.
I just have one problem with the chart, the price chart of Phisix is a breakaway gap, following an inconclusive price pattern (i.e. no visible triangle, etc). This could mean that there is still weakness in the days or weeks to come. So don't get overconfident and think that the bull has returned.
Oil, where art thou?
If my chart interpretation is correct, oil will go down for the next 3 months. I mentioned in a previous entry that oil was going to pop because it was a bubble in the making. I just didn't realize it'd be this early... and this deep. And this also means I may have to correct my assumption that the market will have a good 4th quarter rally.
My basis for assuming the 4th quarter rally was on the assumption that oil would come down sometime in September. But it's more likely that oil will resume its upward movement in the 4th quarter, when the winter season in Western countries kicks in. So far, the bearishness on oil has been due to the demand issue and the strengthening dollar.
But we also have to consider that trading oil, just like stocks, is forward looking. That means more investors and fund managers are expecting that global demand will weaken further. And if that is so, why are you bullish on stocks? Why are you also bullish on commodities? Wouldn't the slow down affect every major tradeable security?
So far the most important gauge for you will be the profit declaration, and profit warnings that companies will give. Locally, only a few companies have reported their earnings, and it's not as good as you'd expect. But I'm keeping my view open until I see the announcements of all of the banks and property companies. Ayala posted good numbers, I just don't know if it's ahead, below or at par with analysts' estimates.
So it's still a wait and see mode. Again, (stock) traders/buyers beware. Caveat emptor.
Do not go long unless you are an investor.
By the way, I'd like to celebrate my BLOG'S FIRST YEAR ANNIVERSARY. Exciting things are in store once my plans are underway. I've been delaying them because I haven't had time to focus on it, but watch out soon! Let's take a trip down memory lane and look at our very first post - The Guerilla Economist.
I'll write something about the property investing next week. See ya!
I've been adding subtle tweaks. Expect more in the weeks to come! See you again in my next entry.
``The decline in oil was a critical factor,'' said Gregor Logan, the co-chief investment officer at New Star Asset Management in London, which oversees about $41 billion.
Let's see the chart of the Phisix once again -
I've attached the chart above, squint if you have to hehe, here are the highlights of this chart -
1. The technical indicator, is erhm, indicating to us that the market has been trying to reverse its trend (by crossing over the centerline) for the previous two times, only to fail. On the third time,
the performance of the market allowed it to go past the centerline and compared to the previous two times, the volume is actually higher.
2. We are now above the two moving averages - the 260 and 100 MA., and is reaching the 60 day moving average, which could prove to be a strong resistance.
So on Monday, you better watch out, you better not cry, you better not pout, I'm telling you why, Santa Claus is coming to town. Or so I hope.
I just have one problem with the chart, the price chart of Phisix is a breakaway gap, following an inconclusive price pattern (i.e. no visible triangle, etc). This could mean that there is still weakness in the days or weeks to come. So don't get overconfident and think that the bull has returned.
Oil, where art thou?
If my chart interpretation is correct, oil will go down for the next 3 months. I mentioned in a previous entry that oil was going to pop because it was a bubble in the making. I just didn't realize it'd be this early... and this deep. And this also means I may have to correct my assumption that the market will have a good 4th quarter rally.
My basis for assuming the 4th quarter rally was on the assumption that oil would come down sometime in September. But it's more likely that oil will resume its upward movement in the 4th quarter, when the winter season in Western countries kicks in. So far, the bearishness on oil has been due to the demand issue and the strengthening dollar.
But we also have to consider that trading oil, just like stocks, is forward looking. That means more investors and fund managers are expecting that global demand will weaken further. And if that is so, why are you bullish on stocks? Why are you also bullish on commodities? Wouldn't the slow down affect every major tradeable security?
So far the most important gauge for you will be the profit declaration, and profit warnings that companies will give. Locally, only a few companies have reported their earnings, and it's not as good as you'd expect. But I'm keeping my view open until I see the announcements of all of the banks and property companies. Ayala posted good numbers, I just don't know if it's ahead, below or at par with analysts' estimates.
So it's still a wait and see mode. Again, (stock) traders/buyers beware. Caveat emptor.
Do not go long unless you are an investor.
By the way, I'd like to celebrate my BLOG'S FIRST YEAR ANNIVERSARY. Exciting things are in store once my plans are underway. I've been delaying them because I haven't had time to focus on it, but watch out soon! Let's take a trip down memory lane and look at our very first post - The Guerilla Economist.
I'll write something about the property investing next week. See ya!
I've been adding subtle tweaks. Expect more in the weeks to come! See you again in my next entry.
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