The market slowed down last week and closed lower at 7,299.03, shedding 137.76 points or 1.85 percent. This came on the heels of the market making a huge advance of 444.92 points or 6.36 percent just the week before.
Looking at the daily trading results, the market continued to climb with a net advance of 74.95 points or 1.01 percent on Monday. It continued to move further up on Tuesday, although tempered, at 13.10 points or 0.17 percent. The market’s climb further slowed down on Wednesday, advancing with a mere 9.46 points or 0.13 percent.
On Thursday, the market fell sharply with a day’s loss of 106.97 points or 1.42 percent. The market fell lower on Friday with another day’s loss of 128.30 points or 1.73 percent.
Analysis
Using technical terms, the market hit a psychological turning point or what is called a price resistance level on Tuesday. This did not become immediately evident and confirmed only on Wednesday and the following trading sessions on Thursday and Friday.
It was the same pattern on Wednesday. The market continued to advance but the gain was limited. This was confirmed on Thursday and Friday. The market fell and slipped by 106.97 and 128.30 points lower, respectively.
The downward action of the market was precipitated by profit taking. Investors chose to play safe rather than risk losing the value of their money.
On a nontechnical plane, the market’s fall last week may have been triggered by unfolding developments at the local front rather than by outside factors. Regional markets and the Wall Street last week all ended on a positive note, unlike ours. Of the local factors, it was the unfolding developments on the political front that surely affected the market’s movements. Again.
During the campaign period, the market slipped lower due to unexpected developments like the emergence of Davao Mayor Rodrigo Duterte as front-runner in the presidential race. He was an unknown factor and the market treated his controversial countenance with some suspicion and skepticism. Market positioning was, at that time, limited to very short-term time horizons. Most market participants continued to exercise the same investing style up to today. Investors remained in short-term trading rather than long-term positioning strategy.
The pronouncements made by the incoming President in connection with the selection of his Cabinet obviously had a strong impact on the market’s direction last week. The market especially reacted—positively or negatively—to his choices. His decision to appoint former North Cotabato Gov. Emmanuel Piñol as agriculture secretary and Las Piñas Rep. Mark Villar as public works secretary were met with mixed reactions. Both have no previous experiences in those capacities. The same reaction was elicited by the market in the appointment of former Immigration chief Andrea Domingo as head of Philippine Amusement and Gaming Corp. Although the market was more kind in its reaction to the appointment of Duterte’s close associates and friends, the market still weakened.
The market further weakened, and somehow disillusioned, with the appointment of lawyer Salvador Panelo as presidential spokesperson. The objection was visible on social media. Panelo was criticized for his role in the defense of the Ampatuans and former Calauan, Laguna Mayor Antonio Sanchez, among others. Many decried Panelo’s brazen stance in court accusing relatives of the dead media workers of lying about their testimonies against the Ampatuans.
Bottom line spin
These were the reasons why not even the good news about the economy’s very strong first-quarter performance didn’t have any positive impact on the market’s trading results. The economy expanded by 6.9 percent. The Philippines’ growth rate was even higher than China’s 6.7 percent, Vietnam’s 5.5 percent, Indonesia’s 4.9 percent and Malaysia’s 4.2 percent.
Leading the skeptics in the market were foreign investors. They again ended as net sellers last week. The impact of their trading movement was very strong since they controlled 55.05 percent of total market transactions.
Thus, the market may test its technical support level this week. Expect the market to remain volatile.
(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.)