"Election Spending" Theory Validated, Phisix 3,400 Next!

The Phisix ended the week with a bang (up 2.6% week-on-week)! It closed at its highest level at 3,364.61 since the latest February "Shanghai Surprise" that stalled the upside momentum. And it comes roughly 35 points away from our 3,400 breakout target.

Yet, the peculiarity was that Friday’s rally came amidst a severe correction in the US markets (Thursday), massive corrections in commodities and a rallying USD Index. To my mind, the latest underperformance (by the Phisix) has engendered Friday’s rare 'un coupling'.

Further, the week's rally came amidst the pinnacle of the election campaign period, where the CONVENTIONAL EXPECTATION was that elections would bring about “uncertainties”. Ironically too, the remarkable rebound flies in the face of “lackluster” forecasts by mainstream analysts in support of the conventional wisdom. We asserted otherwise.

In the past, we argued that foreign money and global dynamics are far stronger drivers to our markets than political events.

We likewise theorized that today's underperformance had been most likely prompted by election spendings or of political aspirants raising funds via the financial markets during the campaign season (and NOT JITTERS), where we audaciously forecasted that at the eve of this political exercise, the stock market would recover.

Our predictions had been premised on the grounds of divergences with the relative vigor of the financial markets of our neighbors and the US markets, aside from conspicuous dissonances of the Pesos’ strength vis-à-vis the US Dollar (the traditional safehaven for local investors) and higher bond prices relative to the weak stock indices.

Friday’s close appear to have validated our view with oomph. And most importantly, likewise proved the conventional wisdom as an ILLUSION--election jitters are a myth under today's conditions.

Apparently as the ticker says we have been proven RESOUNDINGLY RIGHT; our next paradigm would be the continuing bullish momentum towards our 3,400 target and beyond. Of course, this would be achievable depending on the external environment which means a continuity of the present upbeat trend barring any significant shocks most likely sourced from overseas.

The US market’s Friday rally which recovered most of its losses would certainly be an added booster for the Phisix for the earlier part of next week. With 35 points away breaking the 3,400 looks quite imminent.