Tuesday, November 25, 2014

Phisix: Marking the Close: A dose of own medicine

Someone or some entities decided to give stock market “bull” operators the proverbial dose of one’s own medicine 

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The ritualistic modus to massage stocks higher after the lunch-break or what I call the ‘afternoon delight’ was in motion once again.

For most of the AM session, the Phisix had been down by about the same degree as with the session’s end.

In the PM session, the massaging of the domestic index peaked at the last minute, which was the highest level for the PM session and second highest for the day.

Then, I expected the Phisix to close by at least 7,350 given their previous actions.

To my surprise, someone or some entities unloaded a huge amount of index issues, not only to reverse the gains, but importantly to drive back the index to the session’s low. 

Today’s volume was at a hefty Php 15.9 billion based on PSE’s quote with a miniscule of special block sales. 

Today had been a reverse of marking the close...in favor of sellers! (chart from technistock)

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During the index guidance 'afternoon delight' phase only the holding and the property sectors were in the red (marginally). By the session's close, all sectors, except for the mining and oil, in losses.

What’s even more remarkable has been the conduct of the index management.


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BDO Unibank BDO took the biggest load of the push, gained about an astounding 4.5% at the peak. 

BDO’s share of the index at the close of the session has been at 5.47%  (chart from colfinancial)

The unknown seller/s simply disgorged BDO’s record high shares to erase the bulk (80%) of today’s gains. BDO still closed up .92%

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Complimenting BDO had been the  two consumer favorites (and two of the most expensive issues) Jollibee Foods (JFC) and Universal Robina (URC).

Ironically, what went up came down fast. Both shares made a round trip to close significantly down by 1.16% and 1.55% respectively.

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And the show won’t be complete without the participation of the biggest property company, Ayala Land (ALI). ALI rallied from the depths but stayed down (.28%) for the day. ALI wasn’t a participant in the rare seller incited “marking the close”.

All four companies accounted for 22.45% of the Phisix basket (based on today's closed).

This is interesting because the last two days marked the fourth attempt this year (since September) by the bulls to infringe into the 7,300-7,400 territory only to be pushed back.

This won’t likely be the last though. Given the global risk ON environment, I expect more attempts to be made. Expectations, for instance, of the 3Q GDP figures by the week’s end will likely spur such activities.

Whether or not a successful breach occurs isn’t the issue. This isn't about boundaries. Rather the  primary concern is the degree of risks from overvaluations, overleveraging and overconfidence—in short, a mania.



As the BSP chief recently warned of irrational exuberance: “While we have not seen broad-based asset mis-valuations, the BSP remains cognizant that keeping rates low for too long could result in mis-appreciation of risks in certain segments of the market, including the real estate sector and the stock market as markets search for yield.”

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And as I have pointed out before, the past secular stock market cycles (1965-1985 and 1986-2003) have shown breakouts from major resistance levels from the most recent highs during market tops, had only been followed by collapses. This time won’t be different.

The lesson of which is: the higher the Phisix the greater the crash

Add to this manic phase has been the growing incidences to engage in market control, which signifies also a crucial sign of overtrading.

Nonetheless it’s a curiosity to see today’s index engineering scheme upended.

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