Phisix: Peeved Bulls Mounts Low Volume Meltup Counterstrike!

Visibly irked and frustrated by yesterday’s selloff and from the latest botched attempt to retake the symbolical 7,400 highs, bulls today mounted a massive counterattack to send the Phisix up by 2.15%!

In realization that casino stocks, current drivers of the correction phase had been oversold, stock market operators used the early momentum rebound as tailwind to unleash the 'afternoon delight' which climaxed again with another session marked by “marking the close”. 

About an astounding 33% or a third from today’s gains (see right window from colfinancials) had been from the last minute massaging of the index! (left chart from technistock.com).

Volume today was at a low Php 8.38 billion, but special block sales of mostly Max shares padded this up to Php 11.6 billion (PSE Quote)

The intraday chart of all the sectors reveal of where price actions had been. 

While the morning session showed significant advances for all of the above, in the afternoon, the index climbed higher based only on services (upper left window) and property (upper middle) plus marginal advances from finance (lower window right). The Holding (upper rightmost) and Industrials (lower left) basically traded sideways.

Yet except for the mines, all the above sectors had been “pumped” at the last  minute to generate the 2.15% comeback!

The broader market while exhibiting signs of optimism seemed not entirely convinced; advancers led decliners by 128-49 or 2.6 issues of gains for every issue of losses. This compared to yesterday’s carnage where 6.7 issues declined for every issue which advanced.

Today’s 2.15% erased most of the week’s losses. The Phisix has been down by a puny .09%

As one can see from the above, for the consensus, corrections are NOT permissible, stocks have been destined to go up forever, therefore the desperate attempt to manically bid up prices as well as to tolerate the managing of the index in spite of regulations

Leaders of the latest shakeout, casino stocks rebounded at varying degrees. Bloomberry’s 4.09% jump regained only half of yesterday’s losses and remains significantly down by 7.9% this week. Melco Crown soared 7.44% today to more than recover yesterday’s 4.92% crash. Melco has been sold down by a shocking 17.98% over the past 5 days! Since no trend goes in a straight line, the violent selling translated to an equally volatile rebound. Yet Melco remains down 4.46% over the week.

Melco partner PLC jumped 5.58%. Because of the absence of foreign participation, PLC posted a 1.96% advance over the week.

Lastly, Resorts World developer Travellers International only inched up .4% from yesterday’s 3.74% drubbing. Travellers closed the week down by 1.96%.

Except for Melco, today’s rebound for the casino majors comes with a lot less volume than yesterday.

With risk building up everywhere, (including BSP's marginal tightening and slowing  statistical growth in the face of a massive debt build up locally and signs of weakening regional markets), this reckless or frantic or hysteric bidding up of severely overvalued stocks are simply symptoms of overtrading, overconfidence and of the unfolding mania, brought about by easy money policies.

And like mindless zombies scaling up the wall from the sound of chanting humans, these manic buying represent the “pitfalls of chasing the markets” as the BSP chief recently warned. 

Such actions are based mostly on raw emotion centered on crowd following; particularly the fear of being left out, a rabid denial that artificial booms come to an end and or to pontificate on the perceived “righteousness” from mainstream political actions on the economy.

Yet as I wrote back in June of 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.

I am not a fan of technicals, but this line based chart of the Phisix exhibits what chartists calls as the bearish "double top formation".

The Malaysian KLSE’s head and shoulder breakdown seems on path to fulfill the portent of the pattern.

Will stock market operators egged on by bullish crowd and by bubble 'expert' apologists falsify the pattern? 

We will see.

Regardless of their success or non-success, history tells us that the obverse side of every mania is a crash!