First a note to my valued Email Subscribers
Only a maximum of 3 blog posts can be delivered to your mailbox per day. But since today I have done more than three, they may be truncated. The messages sent I think are published based on Last IN, First OUT (LIFO)
Nonetheless here is the complete list of post for today aside from the below:
Now back to the regular program.
As I said yesterday: No walls would stand in between the zombies and their victims…And similarly no walls will stand in between yield hungry bulls and the 7,400 or even 8,000 levels.
Well the May 15th 2013 intraday high of 7,403 had been breached at the early session. Today’s high was at 7,413.
Nevertheless, the bulls lost ground and gave way to profit takers, thus the –.83% close.
The intraday chart from Technistock.net shows of the 119 points (almost 2% swing) rollercoaster ride.
I discovered that the property sector contributed mostly to yesterday’s awesome “pump”. This had been seconded by the Industrial and Holding sector.
Interestingly, the failure to hold the 7,400 levels came with a seemingly broadbased selloff. Yesterday’s major gainers gave back 30-50%, while financials and services produced negative returns after two days.
In short, the Zombie like stampede had been concentrated to a few big market cap companies, and hardly signified a rising tide lifts all boats.
This Pavlovian manic stampede has not just been a Philippine phenomenon, Thailand’s SET and the Indonesian JCI shares almost the same trait.
Thailand’s SET looks very much like the Phisix chart, except that the bulls has still some 3+% to work with, for the Index to reach the May 2013 highs.
Meanwhile, Indonesia’s JCI reached the May highs early September, has fallen back marginally twice. At the moment the bulls have been testing those resistance levels anew. Will the third attempt clear the hurdle?
On the other hand, the recent milestone highs in Malaysia’s KLSE seem to be losing ground.
For the Philippine stock market, for me, price levels are not the concern right now, financial stability is.
What I understand is that given the intense degree of overvaluations and debt buildup, which comes in the face of a radically changing monetary environment, the higher the price levels of the Phisix, the more intense the manifestations of imbalances have been.
So regardless of what happens over the interim, history teaches us that the obverse side of every mania has been a crash. This has been true, for the last 49 years--as seen in 2 major secular or generational cycles as with their respective intra-cyclical trends. The 2003-2014 is the bull phase of the Third generation or the latest stock market cycle. And I don’t think this time will be different.
In May 15th 2013 when the Phisix reached the first 7,403 highs, the peso which was on a firming trend, closed at 41.20 against the US dollar.
How today’s conditions have been a stark opposite of 2013!
Today, as the Phisix set a new intraday high, the Philippine peso, which has been on a weakening trend, was WALLOPED!
One can say that this has partly been a regional thing. But what has been striking has been that among regional currencies, where losses were at the .20+% range, the peso felt the brunt of the meltdown. Today the peso lost .7% against the US Dollar!
And between the two Phisix highs of 7,400 in 2013 and 2014, today’s peso has been down by about 8% against the May 2013 version! That's an example of divergence.
The mainstream can babble blindly about G-R-O-W-T-H, but if the local currency is to take more beating, then expect G-R-O-W-T-H to shrivel as a weak peso will add to the price inflation pressures AND aggravate on the debt servicing burden of the many foreign denominated loans as discussed last week.
So the bulls are in essence grasping at the straws.
Manias are about popular delusions which is why when reality sets in, a rude awakening always prompts for a disorderly adjustment or a crash. Since people hardly ever learn from previous mistakes, the consequence of repeating previous mistakes has been to make history rhyme. And that's why they are called cycles.
English writer Aldous Huxley nailed it when he wrote
That men do not learn very much from the lessons of history is the most important of all the lessons that history has to teach.
Hi Benson. Just want to know. Now that the PSEI is at the top, how busy are brokerages taking buy and sell orders?
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