6:30pm    Monday June 22, 2009    PSEi – 2411.88     PHP/$  – 48.47

I think what is most revealing in today’s trading in Philippine stocks is the absence of volume.  Over the last couple of weeks, we were trading anywhere from 3 to 4 billion.  A bad day was 2.5 billion in volume recently.  So we ended up 13.58 points but that was after we had been down 12 points.   Uncertainty has surely set in to what was up to a few days ago was a market going one way.  Should we start getting nervous then?

I did mention that this time of the year, the start of the summer holidays in northern hemisphere, the markets slow down.  Fund managers and traders have to take a break and the best time to do it is when the kids are off school or the weather is bright and sunny.  That makes it more attractive to be at the beach rather than the trading room, wouldn’t you think?

There are bright spots other than the sunny summer weather.  I think that whatever legs our rally has had recently should be getting stronger.  Did you notice that stocks like TEL, ALI, FLI, BPI, MBT and a few others are not really getting creamed.  The market is up on light volume suggests that investors have become cautious again.  Why do I sound as if stocks did badly when the market is up?  Well, that’s because I’m trying to be very cautious, wanting to preserve whatever portfolio gains I’ve made and at the same time be in a position to ride the wave should we go on a roll again.

Some nearby markets are more convinced than we are;  Hong Kong is up 0.77%, Tokyo gained 0.41%, Korea surged 1.18% and Sydney rose 0.41%.  Others – Jakarta (-0.78%), Singapore (-0.28%), KL (-1.28%), and Bangkok (-1.14%) – were going the other way.   I guess the markets should be pretty mixed.  In strategist jargon, we are looking for direction.  Direction is really the way the critical mass is going and the mass can be fickle at times.

Another thing that makes me anxious is the firmness of yields in the local government bond market.  There will be a re-issue of the ten year Tuesday after stock trading closes.  While there is still a lot of investor cash sloshing around, the uncertainty may be keeping it away from both fixed income and equities.  There is also the fiscal position of the government which they will announce Tuesday morning.

So what are we looking for?  I’m looking for weak hands to sell.  I’m looking for smart money to take profits.  I’m looking for prices to come off a little bit more.  I like the market but my eyes are set on year-end 2009.  That being the case, I have a lot of time to be patient.  After all, we’ve seen people take profits and something tells me that they may be doing a bit more of cashing in.

I hope I’m right.  If I’m wrong, I can still bite the bullet and go with the flow.

Have a good week!


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