Market internals reflect on the highly volatile bubble conditions.
The steep gyrations in both directions over the past two weeks had been equally reflected on market internals in the US or in the local markets.
Those stubbornly insisting that stock prices are about ‘earnings’ should explain the deepening unorthodoxy of the price actions in the equity markets or the growing discrepancy between price actions and ‘fundamentals’.
Current price actions in the local or in the US markets increasingly reflect on tidal flows[1] which are symptomatic of boom bust cycles.
Market breadth has been lopsided during downturns and in as much as in upturns.
Sectoral performances reflected on the same patterns. The meltdown a week ago which exhibited a broad based decline, had been reversed last week.
Bizarrely despite the furious volatility, foreign outflows remain limited.
Such dynamic appears to be reflected on the Philippine Peso which curiously still remains at the mid 43 levels despite the current turbulence. On Friday, the Philippine peso closed at 43.72 which was little change from last week’s 43.58.
Finally, there has been a huge spike in the weekly average of total number of issues traded even as markets moved sharply in both directions.
The extreme signs of volatility suggests of a very emotional state of the markets, which again highlights boom-bust conditions.
[1] See US Equity Markets: More Signs of Tidal Flows, September 29, 2011
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