The PSEi, what now?

While the DOW recently made a new high Filipino stock market investors only made new sighs.

Thanks to the drama unfolding between two previous lovebirds - Former President Erap and Current Senator Panfilo Lacson - TEL was rattled and its price fell, bringing with its weight the PSEi or the Philippine Stock Market Index. Perhaps it was also timing because the market needed a breather first, a healthy correction so to speak. How long... and low it will get, only time will tell.

The basura stocks are making a comeback and for this I am worried. There are only two reasons why basura stocks go up, IMO even though I only started investing in late 2006.

One is that it is a bull market and speculators just want to make more money now that liquidity is back.

Two, the bull market is near its peak, so it's time to be defensive.

I'm no expert so I won't proffer any forecast. If you want a good analysis though, please visit the latest technical analysis of the PSEi by Mr. Dytoc here.

Some other stock market findings -

Meralco, a recent darling speculative stock has fallen by the way side.

Gold is above 1000 but PX is just there.

TEL is down. So is the index.

There was news recently saying that we will have a mining boom next year. I don't know about you but last year they said that about 2009. Oh well.

I miss the days when I would trade using Technistock. It was easy to trade using that terminal. It was connected to the stock market so you could see the buying and selling momentum of any listed stock. Unfortunately, I'm now back to being a career person and just trade from time to time.

I now rely on four things -

Charts
Gut feel
Speculation
Common Sense

The third is not recommended for investors, only for traders with a stomach for risk. For investors, I still suggest you take up a course in Technical Analysis. Fundamental Analysis is also important but do you have the time to go over financial statements?

The second one, gut feel, may not be common to everyone. I don't pride myself of having an innate super ability called gut feel. I only have a batting average of about 70-80%. Usually my gut feel is held back by fear only to realize that I should have acted on it. That split second of indecision has caused me countless lost opportunities.

The last one, common sense, is based on your understanding of the news coming out of your government (where ever you are in the world). If you believe the numbers and think that the economy will grow then pick the sectors likely to be the first beneficiaries. Otherwise, just put your money under your pillow (although this isn't recommended).

Anyway, next week will be an interesting week. Also, keep in mind that the elections are coming. Unlike the US, election years in the Philippines cause the market to move sideways if my memory serves me right.

Thanks for dropping by my blog. I hope my post today is able to satisfy the readers who patiently visit my blog every so often.