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9:55 am  Monday  21 June 2010   Philippine Stock Exchange Index  3355.04

The S&P 500 index closed a touch lower on profit taking on Friday while the  DJIA edged higher.  The mixed close looks constructive to me because it hints of consolidation of the broader market while evidence of strength is building among the headline stocks.  Technical analysts think that stage is set for a steady to higher opening this week in the U.S. markets.  It appears to me that in the absence of discouraging news from the developed markets, things can start looking good locally.

It would not surprise me if people are in a buying mood at the start of the week.  MEG and AGI, for instance, are showing good trading opportunities.  I think MEG has gained some momentum and the anxieties surrounding the rights issue has been overcome.  What I think could break out this week is AGI whose price action looks like it has reason to move a level higher in the next couple of days.

A stock that may be worth the punt today is BPC.  I think with the major management moves going on in the company, there should be some new ideas being injected into the company.  Also, given that the Lopez family had lost control of Meralco, it would not be surprising if they try to consolidate resources in BPC which is actually the parent company of FPH.

One should also watch DMC this week because it is so close to its breakout point and with the rights offering of SCC being well subscribed, DMC may just take-off to the next level this week.  DGTL is also one idea that may be worth taking despite the sluggishness of the telco sector simply because it is the only one of the three major telcos that is showing growth through increase in market share.  Of course, enthusiasm remains with its parent JGS.  Having said that, perhaps GLO should be sold and TEL could be avoided.  Nevertheless, we should watch out for the next dividend declaration announcements because TEL has around 8% yield at these levels.

Among the power stocks, I was having a discussion with a broker friend of mine and he was accumulating EDC for the simple reason that it provides the main growth driver for FGEN and FPH.  EDC from a technical standpoint looks pretty much oversold at recent prices.

All told, I think the market is looking rather positive.  I feel constructive with the stocks I follow.  Some investors will likely go for the banking sector as a proxy for the economy which I think is on a firm upbeat.  This week will probably prove profitable for those who play from the long side.

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