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Massaging of the index has really become almost a daily affair.
I wrote two weeks back…
Moreover, the recent rebound amidst swooning volume comes in the visage of support from undefined or unidentified stock market operator/s. These faceless entities appear to have been responsible for most of the rallies over the past two consecutive weeks…Nonetheless, the common trait in the massaging the index, either via intraday “pump” or “marking the close” have been to massively push up prices of at least 3 issues with combined market cap weighting of 15-20%. In panic buying episodes, (September 24 and October 16), the kernel of these activities transpire after lunch break.
Well today’s version of index management has been another fantastic marking the close.
Unlike most in past where momentum aided the last minute push, today’s action was in absence of momentum. The Phisix has been significantly down by about .52% a minute prior to the runoff when operators “pumped” the index to erase 65% of today’s losses. The Phisix ended the day off by only .18%. (charts from technistock and colfinance)
The same modus has been at work; the pump involved three major heavy weights from 3 industries.
BDO’s push has been less evident since this has been strongly up for the day (first breakout among the majors?). BDO soared 5.86% today. On the hand URC was down .58% for the day, but this came from a lot deeper decline until the pump. Meanwhile, AC seems as the star of the day, where most of today’s 2.31% gains emanated from the last minute pump.
BDO’s push has been less evident since this has been strongly up for the day (first breakout among the majors?). BDO soared 5.86% today. On the hand URC was down .58% for the day, but this came from a lot deeper decline until the pump. Meanwhile, AC seems as the star of the day, where most of today’s 2.31% gains emanated from the last minute pump.
Nonetheless here is Monday November 3rd's spectacular intraday afternoon delight pump PLUS marking the close.
As I have been saying the implicit objective of the stock operators has been to push the index back to the 7,400 by moving 50 or by 100 points. Yet Monday’s thrust towards 7,400 came with unimpressive volume.
Instead of an afternoon delight, yesterday (left window) turned out to be a Tuesday ‘down in the dump’ marked by an afternoon ‘dump’.
Mainstream experts had been quick to put a blame on PLDT’s lower than expected earnings. I understand that PLDT has the biggest market cap weighting in the Phisix basket but why should this drag the entire market sentiment down? In addition, PLDT remains profitable despite marginal downscaling of earnings.
Well here is the answer as I spelled out before: The market has been overpaying for PLDT!
The public has been buying into the promise for more “g-r-o-w-t-h”. Yet history suggests that PLDT’s EPS growth rate has been consistently within less than 5% rate (or less than statistical GDP). Over the past 3 years (2011-13), PLDTs EPS CAGR has been at 3.77%. If 2010 will be included, the 4 year CAGR drops to a negative (-9.83%)!PLDT’s prices have become disconnected with reality.
And it’s not just PLDT but most of the index issues has been absurdly overpriced! So highly distorted prices incited the market to react to unexpected bad news with vehemence.
But here is one seeming parallel; yesterday’s dump seemingly resembles the latest attempt to breach the 7,400 last September 25th—an early day push that melted away (right window)!
I would guess that given BDO’s ‘breakout’ the strategy for the stock operators now may shift to focus on a one-by-one push for a breakout for major caps for them to succeed a crossover beyond the 7,400. This banks on no bad news that will impede their desperate actions.
As a reminder, the obverse side of every mania (and market manipulation) is a crash.
While I am writing this it is fascinating to observe that European stocks has been surging despite a raft of bad news:
German Services PMI are down, Eurozone’s composite PMI are likewise negative, Europe’s PMI services also in red aside from a collapse in retail sales. (from investing.com)
Well the reason for the semi melt-up? The headlines says it all
From Bloomberg: This month’s data make for grim reading, painting a picture of an economy that is limping along and more likely to take a turn for the worse than spring back into life,” said Chris Williamson, Markit’s chief economist. “The combined threat of economic stagnation and growing deflationary risks will add to pressure on the ECB to do more to stimulate demand in the euro area, strengthening calls for full-scale quantitative easing.”
Markets have seen a string of bad news as signs for more steroids from the ECB. Bad news is good news.
Sad to see how markets have become depraved and has lost their function of price discovery.
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