TEL’s Dump Flubbed GDP Day’s Maginot Defense!

I had been oblivious that today was GDP day. It took me almost the close of today’s trading session to discover this through international news.

Two reasons why I didn’t expect GDP day

One, pre-GDP days have usually been accompanied by huge volatility. The precursor to the 2Q 2015 GDP announcement had been an enormous dump. The next three “much improved GDP” were all highlighted by massive pre-GDP pumps! Pumps and dumps signified either heavy speculations on expectations of GDP outcomes or trades which emanated from insider tips or both. 

This time seemed unusually quiet. 

Of course, the irony appears to be that this bizarre tranquility emerged even as 2Q GDP has accounted for best number since 2013.

  

Perhaps the pump will come tomorrow. 

Two, previous announcements were done at the close of the month. For instance, the 2Q GDP was released in August 27, 2015, 3Q GDP in November 26, 2015 and 4Q GDP in January 28, 2016. It must have been a change of schedule which began in 1Q 2016 where GDP was released in May 19, 2016 

So this was unexpected on my part.

Nevertheless when the GDP was announced, like Pavlov’s dogs, panic buying ensued. Unfortunately, selling pressures reappeared and brought the PSE back to neutral. From here the headline index bobbed and weaved between marginal gains and losses.

But then again, since the Maginot 8,000 line has to be defended, thereby every session has to end with a marking the close. 

Unlike yesterday when losses were materially trimmed (about one third of pre-market intervention phase), today looked a lot benign. The PSEi closed with “humble” .08 gains 

Yet again headline numbers don’t tell of the story behind the scenes.

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There was a significant attempt to push the index higher via the marking the close pumps by three major sectors—holding, industrial and financials 

Unfortunately, some people decided to play the role of a spoilsport. That’s because the service sector had been dumped at the close! (lower right window)

While these issues were key to the upside move for the respective sectors, TEL was brutally sold. Tel’s 1.95% marking the close dump accounted for 60% of the day’s 3.26%! Had there not been a TEL selloff, the Phisix might have risen by at least .3%! Note SECB isn’t part of the PSEi 30. 

It’s truly amusing to see how Philippine stocks have been overwhelmed by violent price actions.

As one of today’s major PSEi gainers, URC (+3.15%) bounced off the bear market while TEL appears to approach the May lows. Pause for a rotation? Or Newton’s law in motion? 

Given today’s dump perhaps TEL will likely lead the winners tomorrow. 

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On the other hand, vertical price actions appear to have spilled over even to the bench players where ICTSI and LTG prices have also gone vertical! 

Again these are not normal times. 

Instead, such signs of escalating violent price actions or momentum combined by unethical behavior or severe overvaluations signify history in the making.