Most haven’t realized that these are signs of a seismic buildup in stressors or a symptom of intensifying price instability. It’s either we’d be seeing a breakout above 7,400 or a plunge to 6,500 in the near horizon. Or we could even see both.
See Phisix 7,270: More Signs of Price Instability, JKSE-Phisix Correlations and the Global Reflation Trade March 26, 2017
The manipulators finally succeeded in their mission to break past the May 15, 2013 7,400 barrier.
It took them almost three months of rampant afternoon delight pumps and marking the closes to finally attain this goal.
Yet these actions have only magnified price volatility, as seen via the vertical prices, as well as create sharp divergences in price performances of issues comprising the PSEi 30 basket. Of course, such fragmentation has signified a function of the concentration and rotation of trading activities.
Yet what had been true then was equally true today.
Though PSEi 30 issues were mostly up, the biggest gains accrued or gravitated to the 7 of the top 10.
In fact, 4 of the top 5 had gains of more than 1%.
Since the market cap weighting of the top 5 was 39.07%, with an average gain of 2.07%, 7,400 was in the bag—especially after Monday’s setup.
The idea of pumping the index beyond 7,400 has not only been to boost the headline index but also to generate a ‘herding effect’ where the greater fools join in the stampede!
Today’s breakout comes with outstanding volatility!
19 firms or 63% of the PSEi basket had price changes of 1% and more, 9 issues or 30% had 2% and more and 2 issues had over 3%.
All told, to hit 7,400 required systematic vertical pumping mainly in index sensitive issues while the others were levitated as a manifestation of the herding effect syndrome.
The roots of 7,400 (or exactly 7,392) was in May 15, 2013.
Two breakouts from 7,400 preceded today’s action. The dates: January 14, 2015, and May 13, 2016. Both raced to 8,100, then crashed to bear market levels.
I call this the jumping rope with 7,400 as the pivot point.
Now we seem back to the third cycle.
Because many follow charts, breakouts are important. Breakouts ride on the tailwind of momentum. And this has been one of the objectives which manipulators have targeted.
Technically speaking, breakouts must be accompanied by extraordinary volume to signify power and resilience.
At Php 11.941 billion, today’s peso volume was 7.47% less than 2016’s Php 12.9 billion and 11.22% smaller than 2015’s Php 13.45 billion. The gist: diminishing returns in volume.
But such aggregates don’t reveal the entire picture. Today’s special block sales (courtesy of 2GO wherein SM bought 30% share of the firm) was a huge Php3.84 billion. In 2015 and 2016, special block sales were Php 23 million (only) and Php 566.1 million, respectively!
In short, net of special block sales, peso volume was ONLY a measly Php 8.104 billion!
Stunning smoke and mirrors!
I noted in the chart above that the top 20 most active issues which have all been PSEi, with the exception of Shell Philippines, was only Php 5.628 billion (see below pane). This tells us that the biggest 20 issues had trade volume accounting for 79% of the peso volume net of special block sales. 21% was covered by 11 PSEi and the broad markets.
And today’s breakout was helped by “foreign money”.
I am not sure if they really account for as genuine foreign money. They could be satellite/s of local firms overseas. At Php 4.08 billion of foreign buying, this signified the largest one day inflow since September 30 2016 (Php 3.86 billion)
Though 3 of the top 5 issues (SM, SMPH, JGS) had been bolstered by foreign buying, the net of the top 5 was a Php 43.3 million net selling.
This suggests that foreign buying was more about the special block sales. And this is where I suspect that special block sales could be about international satellite offices.
More factoids on the three 7,400 breakouts.
2016 had the largest one-day gain at 1.52%, today was next at 1.43% and 2015 was at 1.24%
Today and 2016 had almost equal bullish breadth (114 advancers 79 decliners; 112-78). In 2015 it was 97 to 87.
As previously noted, the thrust for the present breakout was via a few issues experiencing vertical price actions or forcing prices up.
Here are a few examples…
It has been a rotational vertical pumping for most of the top 10. For instance ALI, SMPH and BDO were recently pushed higher (the latter two forged a record) but these backed off. Then the focus went back to the above. Today they were higher in synchrony.
This hasn’t been a normal market. Instead, it has been a market that’s being forced up!
Yes, do enjoy the show!
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