It was quite obvious that hard core seasonal market players and contrarians tried to give a big fight last week against the market advisory that the seasonal trading strategy to “Sell in May and Go Away!” may not work this time.
Despite this deliberate move, the market still came out with a favorable weekly gain of 104.29 points or 1.55 percent as it closed last Friday at 6,847.26. Based on the daily trading results of last week, however, it seems the onslaught carried out against the market advisory seemed to have left some marks that cast doubt on the market’s ability to head higher or, at least, hold on to its gains. This reminded me of the similar situation Century Pacific Foods Inc. (CNPF) is faced with after its public debut in the market last week.
Market challenge
The offer price of CNPF was P13.75 a share. After listing on May 6, it closed last Friday at P15.30. While up P1.55 or 11.27 percent, its price movements during the week (like the market) seem to cast doubt as to its future price direction, too.
It opened at P16 upon listing. At midday, it fell to a low of P15.02. It recovered and closed at the end of trading at P15.20. The market, in general, was not as lucky against the action of market bears (market players more likely to sell than buy at this time). The loss was too small at 0.53 point or 0.008 percent to be of any significance or impact.
On May 7, CNPF’s share price went on a freefall to P14.62. The PSEi also fell 17.42 points or 0.26 percent for the day to 6,748.51. CNPF slightly recovered on the third day, like the market to close at P14.92 while the market gained 16.7 points or 0.25 percent. On Friday, May 9, CNPF managed to close at P15.30, up P1.55 or 11.27 percent from its offer price as the market also ended with a gain of 82.05 points or 1.21 percent as it closed at 6,847.26.
Volatility review
CNPF and the market went through a wave of selloffs day after day last week. Despite such onslaught, both still ended up with respectable gains, so to speak. How CNPF and the market withstood the selloff, however, continues to beg for explanation. What we may find out in the review of the market’s volatility movement may be the answer since CNPF is one type of stock that is directly linked and affected by the market’s general condition.
Let’s take note of the number of times the market has topped out and bottomed out since the start of the year. When the market resumed trading on Jan. 2, it was up 94.43 points or 1.6 percent from the market’s closing index of 5,889.83 on Dec. 27, 2013. Eight days later on Jan. 10, the market fell to its first bottom at 5,842.88, down 141.38 points or 2.36 percent. On Jan. 24, the market recovered and hit its second crest of the year at 6,191.60, up 348.62 points or 5.97 percent. At this time, the market on the average was up 301.67 points or 5.12 percent. After 11 days on Feb. 5, the market fell to its second bottom at 5,908.41, down 283.09 points or 4.57 percent. At this time, the market’s average gain slipped to 18.58 points or 0.38 percent.
On March 11, the market hit its third crest at 6,529.58 with a gain of 621.17 points or 10.51 percent. Along with this jump, the market’s average advance also improved to 639.75 points or 10.86 percent. On March 27, the market hit its third bottom at 6,315.69, down 213.89 points or 3.27 percent. Despite this fall, the market’s average net advance was 425.86 points or 7.23 percent. The market’s average advance was further pushed up to 699.72 points or 11.88 percent when on April 14, the market hit its fourth crest at 6,589.55, up 273.86 points or 4.34 percent. On April 23, the market was further up 179.97 points or 2.73 percent as it hit its fifth crest at 6,769.52. But on April 28, the market hit its fourth bottom at 6,604.35, down 165.17 points or 2.44 percent, pulling down the market’s average advance to 714.52 points or 12.13 percent from 879.69 points or 14.94 percent.
On May 7, the market hit its sixth crest at 6,748.51, up 144.16 points or 2.18 percent. This was followed by another climb on May 8, leading to the market’s seventh crest at 6,847.26, up 98.75 points or 1.48 percent. The market’s average advance also rose from 859.68 points or 14.6 percent to 957.43 points or 16.26 percent.
Bottom line spin
The market is definitely on the advance as you may realize in the foregoing review. More selloffs due to profit-taking are expected to continue. On the other hand, value turnover is observably growing and increasing. This is in addition to the market’s continuing preference to pick up second to first liner stocks with strong fundamentals and story lines.
The writer is a licensed stockbroker of Eagle Equities Inc.. You may reach the Market Rider at marketrider@inquirer.com.ph, densomera@msn.com or at www.kapitaltek.com