2017 Welcomed with a Massive DUMP-PUMP and Marking the Close!

This 2017, many are hoping for a better outlook for the domestic stock market. Though I’d like the share the sentiment, I simply can’t.

There are many reasons but two stands out.

First, I cannot be optimistic when domestic stocks have been ridiculously artificially propped up by a rapidly inflating credit bubble.

 

Second, through the pricing system, markets are about resource allocation.  So when the pricing system is systemically compromised for the purpose of non-economic objectives, the repercussion would be an accretion of imbalances that eventually would have to be unwound—most likely in a disorderly manner (as history has always shown)

There is no escaping the law of economics. Therefore, it is not a question of IF, but a question WHEN.

Sad to say that today, the first trading session of 2017 was baptized with another deliberate egregious distortion of the Philippine stock market.

 

The Phisix was down by as much 1.33% in the early going. At lunch break, the early loss was whittled down to just 1.1%

And like ritualistic clockwork, OPERATION afternoon delight went in full throttle—post lunch.

The afternoon massive pumping brought the PSEi to merely .24% or 16.24 points at close of the transition to the market intervention phase. So down from 1.1% the Phisix was nearly but not enough to attain neutrality.

And at the runoff period (going to the closing bell), like magic, water turned into wine, the Phisix posted a .3% advance for the day!

As you can see, marking the close accounted for 36.91 points or .53% of which not only erased the 16.24 or -.24% deficit but delivered ONE HUNDRED percent of the day’s gains!

It’s price fixing, nonetheless.

We don’t need a stock market for this.

 

And just look at the outrageous size of the pumps. To cite a few: Ayala Land’s was colossally pumped—by +2.07%—back to unchanged for the day. URC and GLO, which ended the day up .92% and .33% respectively, were like Lazarus who came back from the grave (they were deep in negative prior to the runoff phase) with a 1.23% and 1.6% push. 

This tells us that when we have no respect for the markets or fundamental the law of economics, there surely will be a comeuppance.