Market trend

THE MARKET was unstoppable: It broke into its 8th and 9th record closes last week as it breached the 7,700 resistance level to hit 7,716.06 on Wednesday and at 7,728.18 on Friday.

As it climbed back from a two-day downtrend, the market posted the all-time high of 7,738.12 during Wednesday’s session, resulting in a daily gain of 102.91 points or 1.35 percent.

After Wednesday’s climb, the market went down on Thursday.  It succumbed to profit taking fueled by local investors’ apprehension of the market’s capability to withstand the impact of unfolding negative external risk factors.

One of these risk factors stemmed from the results of the parliamentary elections in Greece.  The Greeks voted for a government that campaigned against austerity measures imposed by its international creditors, which might lead to a possible showdown that could create new complications in the global financial markets.

However, the market climbed again on Friday, with the strong overnight gains on Wall Street’s major indices providing the usual incentive.

The Dow Jones Industrial Average on Thursday jumped 211.86 points or 1.2 percent to 17,884.88.  The S&P 500 rose 21.01 points or 1.03 percent to 2,062.52 and the Nasdaq Composite Index advanced 48.39 points or 1.03 percent to 4,765.10.

Concerns over Greece had also eased.  Greece is in a state of bankruptcy and the world business community knew that the anti-austerity leadership “cannot ignore the fact that Greece needs more foreign money, whether from the markets or from the European Union.”

The market was further buoyed by the announcement of the country’s inflation rate for January.  The National Economic and Development Authority  said that due to “ample supply of key food items and lower petroleum prices and electricity rates,” inflation dropped to 2.4 percent in January, said to be the lowest in 17 years.

Bull run

One stock that took the spotlight last Friday was Universal Robina Corp. (URC).  On news of its “double digit earnings in the first quarter of its 2015 fiscal year,” it opened at P203.60, sled to the low of P202.60, then hit the session’s high of P212.20—it’s 52-week high—and closed at P211.00 a piece.

With the market’s record close, too, talk about how much higher it may probably go like URC became an engaging topic.

One forecast that has gained ground is that the market will continue with its bull run, to hit 8,000 to 8,400 by the middle of the year.  Afterward, the market is seen moving sideways then downward to end the year 50 to 150 points below 8,000 on account of external economic and geopolitical realities that may weigh on the local market.

However, the market will resume its climb next year, to be propelled by the excitements arising from the 2016 presidential election in May.

After the May elections, the market’s direction may depend on who will become the new President.

Among the shares anticipated to do very well are those of holding firms, industrial and property counters.  These stocks have also been making it to the list of top 30 gainers.  To mention a few, these are Universal Robina Corp. (URC), SM Investments Corp. (SM), DMCI Holdings Inc. (DMC), Max’s Group Inc. (MAXS), Bloomberry Resorts Corp. (BLOOM), Alliance Global Group Inc. (AGI), Megaworld Corp. (MEG) and Ayala Land Inc. (ALI).

They will be joined by previously ignored stocks like Century Properties Group Inc. (CPG), Vista Land and Lifescapes Inc. (VLL), Aboitiz Power Corp. (AP), Aboitiz Property Ventures Inc. (APV), D&L Industries Inc. (DNL), Manila Electric Company (MER) and SSI Group Inc. (SSI).

Some mining stocks are expected to  provide additional boost to the market in the next 18 months.

Bottom line spin

Come to think of it, the market’s imagined storyline is not entirely new or different as described.  In the last four years, note that the market had always been starting on a lower level before rising quickly to some record highs by the middle of the year. And, depending on the year, the market goes on to series of retreats and advances but on a rising pattern.

This will go on in the next half of the year before the market will settle on a certain level by the end of the year—that is higher than the market’s lows—and serve as its starting point for the following year.

With this experience, the foregoing market forecast is invitingly credible.  The market is now on an obvious climb that will possibly enable it to post a maximum total increase of 1,000 points or 16.70 percent in the first half of the year.

The excitement from the coming presidential elections may add more points before May of next year. This will make the market realize a total return of 33.4 percent.

Unfortunately, because of smart phones, the Internet and the difficulty of raising interest rates to stave off global economic weakness, telecommunication and banking stocks in the next 12 to 18 months may not do as well as the other stocks earlier mentioned.

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