Equally divided in market perspective

With only one more trading day left before the month of July is to end, I thought it was both interesting and gainful to determine where the market could already be from its current cycle of movement or activity considering how it performed all along during the month.

The results may just explain why even seasoned investors are now equally divided on what to do next, for the market appeared to be already at some turning point.

July performance

In the first week of July, the market ended with a weekly gain of 120.13 points or 1.76 percent at it settled at 6,962.28. It started out with a daily gain of 2.16 points or 0.03 percent on Monday. This was followed on Tuesday by a loss for the day of 17.7 points or 0.26 percent. The market recovered on Wednesday with a gain of 23.09 points or 0.36 percent. This was followed by another gain of 48.71 points or 0.71 percent on Thursday, and went up higher on Friday by another 62.97 points or 0.91 percent.

Notice that at this closing point of the week, the market was within striking distance from the resistance level of 7,000. To be exact, the market was just 37.72 points or 0.54 percent away.

As it happened, the market hit the session’s high of 7,016.71 on Monday of the second week. However, the market failed to sustain its advance. When it closed for the day, it was 17.61 points lower from its session high and 0.90 point from 7,000 at 6,999.10. On Tuesday, the market opened at 6.999.35. This was, however, the highest it did go for the day as it closed lower by 50.58 points or 0.72 percent at 6,948.52. The market further dropped on Wednesday and sustained a daily loss of 44.73 points or 0.62 percent.

After incurring a total loss of about 100 points in the past two days, the market recovered on Thursday and made a gain for the day of 33.42 points or 0.98 percent, as it settled at 6,937.21. The market closed lower on Friday at 6,901.09 with a day’s loss of 36.12 points or 0.52 percent and ended with a weekly loss of 61.19 points or 0.88 percent.

On the third week, the market continued to drop. It fell lower with a day’s loss of 70.72 points or 1.32 percent on Monday. This was followed by a recovery on Tuesday with a daily gain of 3.67 points or 0.05 percent.

Trading was suspended on Wednesday due to Supertyphoon “Glenda.” It resumed on Thursday as the storm exited the Philippine area of responsibility (PAR) in the early morning hours. The market further advanced on Thursday with another daily gain of 33.42 points or 0.49 percent. The impact of the typhoon seemed to only show on the results of trading on Friday, when the market fell by 14.29 points or 0.21 percent.  The market then stood at 6,853.07 with a loss for the week of 48.02 points or 0.70 percent.

Last week or the fourth week, something different happened. While the market still went through a sequence of advances and retreats or declines, the magnitude of changes became smaller. For instance, the market went up by 21.81 points or 0.32 percent on Monday. This sent the market to close at 6,874.88.  This was countered by a decline on Tuesday with a loss of 4.94 points or 0.07 percent, with the market settling at 6,869.94. On Wednesday, the market recovered and ended with a daily gain of 22.98 points or 0.33 percent. The market settled at 6,892.92.   On Thursday, the market fell. It closed at 6,889.89 with a daily loss of 3.03 points or 0.04 percent, followed on Friday by another daily loss of 0.03 point and the market settling at 6,889.56. Nonetheless, the market ended with a weekly gain of 36.49 points or 0.53 percent.

Bottom line spin

The market’s performance since the beginning of July can be characterized by a movement of small daily gains and losses. Last week, all these changed.  Advances became smaller but losses even became smaller.  In particular, the market ended on the upside last week because while registered daily gains were small, declines even became smaller.

This happened even if the market was again within a hundred points away only from the 7,000 resistance level.

There are two major reasons why this was could be happening. First, investors inclined to sell are slowly diminishing. Second, there could now be more investors willing to enter the market and buy at higher prices.

Also, daily value turnover had remained consistent within its regular threshold. This has sometimes spiked substantially because of strong foreign buying transactions or block sales, which, in turn, is indicative of strong liquidity and positive investors’ outlook in the market. In addition, all business sectors seem to be doing great. Based on latest reports, earnings are turning good and prospects are getting better.

As to present external threats, all cannot be allowed to go on unresolved much more than the short-term. By their nature, it is to everyone’s benefit to resolve them as quickly as possible. Either geopolitical or financial, individual economies and governments the world over will be again at risk—and in great difficulty as everyone was five years ago—if big powers and contending parties will not sit down together to resolve these concerns soonest.

Due to the foregoing movement of the market and anticipated events, a good number of market participants see the market’s position at the end of July as an equilibrium point toward breaking out into higher levels. Yet, a good number also continue to contend that the market remained overbought (overpriced) and whatever developments that are to happen, it may still take the next two quarters before we see their impact along with the possibility of the market challenging the 7,000 resistance level.

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