Down, but not out
EXPECT a sideways movement, a slow downward slide, or a wild ride from sharp gains to sharp losses to characterize our market’s behavior in the coming days. But apart from this obvious pattern, a different trend may be shaping up.
Notice that when the market closed at 6,654.45 last Friday, it ended the week with a net loss of 110.68 points or 1.64 percent. Year-to-date loss at that point was 297.63 points or 4.28 percent only.
Three weeks earlier, the market’s year-to-date loss was 744.03 points or 10.7 percent. In three weeks, the market was able to regain as much as 446.40 points or 60 percent of losses. In other words, it has picked up pace and has since gone up.
A combination of external factors contributed to the market’s recovery in the last three weeks. The first was the move of the Bank of Japan (BOJ) to cut interest rates to negative zero and introduce the -0.1 percent deposit rate for banks.
On Thursday, this move was followed by Sweden’s central bank. It cut the key short-term interest rate to “a new low of negative 0.5 percent.”
In her testimony to the US Congress last Friday, too, Fed chair Janet Yellen reassured lawmakers of the solid and improving status of the US economy. However, she took cognizance of the disappointing labor force participation and anemic wage growth. Due to these, she expressed willingness of abandoning the idea of another interest rate hike in June.
Though convinced that the US may not need to push short-term rates into negative territory, Yellen admitted her agency is still “taking a look at the idea.”
Again, these developments were regarded by investors across the globe as positive moves to boost economic activity, enough that they sparked market rallies around the world, including ours.
Next is the recovery in oil prices. West Texas Intermediate (WTI) crude “registered its best one-day percentage gain in about seven years” of 12 percent to $29.44 per barrel last Friday on the back of developments that may curb excess supply. Just a day earlier, the price of WTI crude was down to a 12-year low of $26.21.
Behind this sharp jump in oil price was the news from the US Energy Administration confirming that US oil rig count has been falling significantly and that shale oil output from seven major domestic shale plays are expected to further go down in March.
The jump was further aided by news that coordinated efforts to address the global supply glut may soon happen following remarks made late Thursday by the minister of the United Arab Emirates that the Organization of the Petroleum Exporting Countries (Opec) may cooperate in this plan along with Russia.
With these leads, people are divided as to where the market will go next. It has climbed back and recovered much of lost ground since three weeks ago. This makes the market to have probably already reached bottom that its direction, from now on, should only be up.
On the other hand, skeptics believe the market has yet to go through more volatility that it may have yet to hit bottom.
More islands and going
I don’t want to miss this chance to make you know that the Philippines is made up of 400 more islands than what we have been taught in school.
Last week, the National Mapping and Resource Information Authority (Namria) confirmed it has discovered 400 more islands in the country. The discovery was the result of a mapping operation “conducted in 2013 using the interferometric synthetic aperture radar (Ifsar) technology.”
Namria is the agency responsible for providing map-making services to the public. It is “the central mapping agency, depository, and distribution facility for natural resources data in the form of maps, charts, texts and statistics.”
The official count of 7,107 islands, as reflected in school books, was made in 1945 and published in the Gazetteer of the Philippine Islands.
To be considered an island, Namria says it should be a landmass that must be above sea level and high tide at any given time. It can support either plant or animal life, or both.
The Philippines is divided into three main geographical divisions, which we all know as Luzon, Visayas and Mindanao. The majority of the newly discovered islands are mostly located in Mindanao.
As disclosed, Namria has completed ground validation in Luzon and is currently working on the ground validation in the Visayas. Ground validation work is targeted to be completed by the end of the year.
According to Namria, of the 7,107 islands in the Philippines, only about 2,000 islands are inhabited and 5,000 islands still have no names.
Bottom line spin
Too bad, market tops and bottoms only become obvious on hindsight. They don’t show themselves coming.
But looking at the market’s average asset price levels together with the general chart pattern it has so far created, it looks like the bottom may not have been hit yet. However, if the good fundamental leads that had been unfolding will continue to prevail, the bottom may no longer be that far.
The writer is a licensed stockbroker of Eagle Equities, Inc. You may reach the Market Rider at [email protected], [email protected] or at www.kapitaltek.com
