I have to give credit to the local bulls today for their tenacity to relentlessly push up the Phisix in the face of collapsing stock markets around the world.
From the opening bell right up to about three quarters of today’s session, bulls made a fantastic (nearly 1.5%) charge from the intraday lows to the highs of the session. (chart from technistock.net) Unfortunately the bulls failed to sustain the highs thus the pullback at the end.
Today’s upswing has largely been a two sector, three company affair. Bulls concentrated their "pump" on the services sector (+1.37%) particularly on TEL +2.8% and GLO +3.11% and the property sector (+1.07%), specifically on ALI +3.08%.
The combined share distribution or weightings of the three companies to the Phisix basket has been at 21.05% (based on the day’s close).
Moreover, the gains in the Phisix hasn’t been shared by most, as declining issues led advancing issues by nearly 2 to 1.
Neither does today’s run up seem about momentum, which has been interrupted this week by a sharp selloff, nor has this seem about “profits” from trade. Instead today’s pump look like more about ego or symbolism.
It is hard to argue that this has been about lack of awareness of the environment. US markets have been downhill since September and we seem to be seeing sharper downside actions. Yet 7-8 billion pesos worth of bids signifies hardly small change. I don’t think this eludes the pump operators.
And as of this writing, Asia has been in a sea of red (based on the Bloomberg website), with only Australia S&P/ASX 200 up by a measly .18% and Indonesia’s JCI also up by a paltry .24% and the Phisix as the odd man out with outstanding gains.
Moreover, today’s panic buying suggests that stocks as I previously noted will not only rise forever but will EXPLODE to the firmament soon. So it takes either deeply held convictions (this time is different) or other motives for such actions.
Bulls are by nature territorial. Having lost their grip on the 7,000 levels during the past few days which has apparently wounded the their ego may have prompted for today’s vicious and desperate thrust to retake the said threshold levels. Domestic bulls have essentially dismissed risks in order to attain a superficial goal.
As I wrote back in June 2013: “Denial” rallies are typical traits of bear market cycles. They have often been fierce but vary in degree. Eventually relief rallies succumb to bear market forces.
There is another possibility, this hasn’t about trading profits but about political symbolism.
Phisix 7,000 and 7,400 will have to be reclaimed as the 2016 national election nears. Rising stocks because of G-R-O-W-T-H may help spur chances for a re-election or for the election of an appointed representative. So much of these 3 company pump or massaging of the Phisix may have been part of the publicity machinery campaign to boost the political capital of the incumbent. If public pension money have been used, then pensioners may likely face future funding problems.
Sad to say economic realities have began resurface which should upend and expose all the delusions that has enthralled the public during the past 6 years.
The bottom line: the obverse side of every mania is a crash.
We are already seeing emergent signs of crashes (oil, stocks of some oil producing nations and Europe).
My “Black Swan” theme seems to have arrived.
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