MANILA, Philippines – Traders who follow trends when making their investment decisions find great difficulty when the market is moving sideways, that is why they “stay on the sidelines.” This was obviously the reason behind the CycleReader’s decision, being a cycle-trend follower, to fully divest and completely get out of the market last week. The market had been breaking into small upward and downward swings, which somehow have not fully matured into a discernible trend.
Some best stock buys, however, can be found at this time. This could be what motivated Trader28 when she chose to open up two more positions last week, having no exact method of trading, as declared earlier on, except for her “impressions” on the state of market psychology and knowledge on the fundamental values of her stock picks.
Trust Me has a similar affectivity of the market as that of Trader28. But, he has a more concrete technical grasp and judgment on the market. To him, the market is on the accumulation phase. Therefore, it’s one of the good times to pick up stocks. He did just that as the virtual game opened up for week five this week.
But whatever the situation is (except when on the doldrums, of course), there are just stocks that can really beat the market. And we don’t have to go far to find out. We have a bunch of them in the stock positions held by our virtual players.
Week 5 at the virtual game
Trust Me said in his note Monday night, “We can see the market to have a technical rebound after a dull trading last week which we saw on its volume … A better-than-expected inflation data will give the BSP a room for a rate cut and will push stock market prices a little bit higher this week. Still, investors are cautious as we saw in the low volume of trade and investors are looking for safe-haven investments like the ROP’s (new issue will be in the market this week) and bids on short-ended tenor (91-day T-bills) are a little bit higher compared to the last auction. Overall, we see equities moving sideways this coming months as what they called ‘ghost months’ are getting nearer … before a rally will be seen (support level-2350 and resistance at 2500).”
He gave two trading orders for execution for Tuesday’s trading session. These were: “Buy 20,000 shares Ayala Land Inc. (ALI) at P8.20 and 2,500 shares of Aboitiz Power Corp. (AP) at P5.80 per shares.” All orders proved to be valid.
His buy order on ALI was actually an add-on to an existing open position. ALI opened up at the day’s high of P8.30, made a low of P8.20 and closed at P8.20.
As for AP, it opened up higher at P5.90 but sunk to P5.80 and closed at this price.
Aside from a fine market read, it looks like a whole team is now behind Trust Me. The rest of the market riders should take their cue from this development – you can have outside assistance as you do in real trading, for winning your trade is the object of stock investment and trading.
Bottom line spin
Based on his team’s reading of the market, ALI is “at a consolidation stage, (it) may break-out at 9.00/share before the ghost month come … (while) AP is on an accumulation … seen (to soon) break a new high.”
The contest has been apparently a race between Trader28 and The Oracle with each of them clearly following their own theme of stock picks, market timing and money-management algorithm.
Trader28 is holding on to as many stock positions as those fully invested. But she is outperforming everyone else because aside from having picked the better performing and/or more stable stocks, she is maintaining a high degree of cash position against the current market weakness. Also, she is mainly into the better performing market sub-sectors, namely power utilities and banks. Her stocks are Manila Electric Co. (MER), First Gen Corp. (FGEN), Bank of the Philippine Islands (BPI) and Banco de Oro Unibank Inc.
In contrast, while The Oracle also had his sights on the power sector through Aboitiz Power Corp. (AP), he is clearly relying on the performance of the commercial-industrial sector through Pepsi-Cola Products Philippines Inc (PIP). However, both stocks are quite neutral in market performance. He is saved by PX, which is currently hot. Putting in more money in Philex Mining Corp. (PX) would have made him zoom past Trader28. His big cash position, similar to Trader28, remains to be his main saving grace.
Trust Me could make the exception. Despite being fully invested, his investment position grew. This means that he has some of the right stocks that can beat the market. More money-management fine tuning could put him in the lead.
(You may reach the Market Rider at marketrider@inquirer.com.ph or directly at densomera@yahoo.com )
