Trading with Caution Next Week

It's another long weekend this week coming from the Holy Week-end. For out of town trippers who took their long vacation last week, they should be rejoicing because soon, domestic travel will hurt their pockets due to the imposition of VAT. If Singapore is a fine city, then the Philippines is a taxing place to live in.

So if this is the case, then this will put a crimp on MPI, although not directly. I am recommending MPI as a long term buy but of course this is just my opinion. You should consult your own financial advisor. Investments have risks, whether you invest directly in a stock, or through mutual funds.

Recently, the stock market rose to a new high due to the increasingly bullish outlook... and supposedly an improving economy. The latter is hard to say but the DOW is going up so that could have been the inspiration for our stock market's recent incredible run. I'd still recommend taking a wait and see approach to buying any stocks at the moment for trading.

The blue chips having run up so much means that the first wave is almost over. The second wave and third wave is upon us so that means a lot of the basuras will be moving, along with the second liners. I don't know exactly what stocks can be considered second liners but I think these are stocks that don't have large capitalizations like the blue chip stocks like Ayala Corp, Ayala Land, SM Prime, etc.

In short, if you want to trade the local stock market, then you shouldn't be buying blue chips. Most blue chips are included in the PHISIX (index), so these are the stocks you will be staying away from in the near term.

If you plan to invest in an equity/stock mutual fund; then, now isn't the time to invest if you want to "time" your placement. Wait for a while further before you plunk down your money. Of course, this does not mean that you will be able to time it perfectly. In fact, it's better if you just invest and not think about whether if it's high or low as long as you utilize peso cost averaging.

If you are the type of person who has an account with a broker; then, if you want to earn a quick buck then look for basura stocks on the move. I don't give any hints on basura stocks because these are highly volatile stocks and you might have a heart attack just looking at the movement of their prices.

I think that the coming week will be a consolidation mode for the index or worse, a correction phase. If the index continues to go up, then there's the risk of "overheating" and thus set our market up for an even bigger correction. Tread (trade) with caution.