For real or just temporary jitters

After the small trading uptick of 61.53 points or 0.78 percent last Monday, the market just found it difficult to advance for the rest of the week.

As a long market player who has seen developments considered innocuous but later on turned into something inimical to the market’s vitality, I wonder if last week’s market downtrend could be for real or just a matter of temporary jitters.

To review, the market fell the following Tuesday with a day’s loss of 25.36 points or 0.32 percent. This was followed by additional losses on Wednesday, Thursday, and Friday. Curiously, while the market was up last Monday with a total value turnover of P7.09 billion accompanied by a total volume of 1.32 billion shares, foreign investors were net sellers for the day.

On the alert for changes in the market’s dynamics, the trading results last Monday appeared, to say the least, confusing: The market moved up notwithstanding the fact that foreign investors ended as net sellers. Since the difference between their selling and buying transactions was only P165 million or was not that big to make any meaningful impact, this could possibly explain why so. However, trading results even became more confusing the following days.

On Tuesday, the market had a total value turnover of P7.08 billion and total volume of 1.34 billion shares. This was almost exactly the general trading results for Monday. This time, however, foreign investors were net sellers of P374 million and the market fell. That should have settled the puzzle. But the market fell further on Wednesday even if total value turnover was higher at P8.14 billion and total volume was relatively smaller at 1.07 billion shares. Above all, foreign investors were again net buyers for the day. They had a selling transaction of P4.06 billion and buying transaction of P4.4 billion, ending as net buyers of P337 million.

Adding more to the confusion was Thursday’s trading results. The market fell again by another 28.03 points or 0.36 percent on a total value turnover of P8.7 billion on a total volume of 2.8 billion shares. Foreign investors were again net buyers—with a very big net buying transaction of P0.673 billion. On Friday, total value turnover was down to P6.89 billion and total volume was relatively high at 1.77 billion shares. Foreign investors were net sellers for the day and the market fell further by 44.17 points or 0.56 percent.

All throughout the week, block transactions were limited only within the P300 million range except last Friday when it amounted to P645 million.

Bottom line spin

There are many more elements that are actually working to influence or determine the market’s status and direction. They are not just the aforementioned internal market variables like its trading depth and breath, price behavior and dynamics, or trading patterns made up by a type or class of investors. The additional elements are those that comprise the market’s external or fundamental variables that arise from the economy’s situation, status of the political system or that of social trends and outlook.

Many times, the market’s status and direction is dictated by the combined play of these internal and external elements. On this basis, the market’s fall last week could safely be called a result of investors’ jitters out of very short-lived, ephemeral, passing incidents. At times, though, just the impact of a single element among the internal or external variables could affect the market’s balance and direction. This is the time when stock investing just simply turns difficult to anticipate or figure out. It suddenly defies logic.

On this basis, last week’s market fall and displayed weakness could just be as real as it looks and it may serve us better to assume the worst is about to happen in the coming days. At the risk of being wrong about the market’s status and direction, it is better to adhere to the market adage that “instead of making forecasts, just simply manage your investment plays based on available information and make decisions based on probabilities.”