Longest, strongest bull market
DEN SOMERA
With its recent sputtering movements, the present market run is starting to cause some concern. And the discussions are getting more widespread. They have even reached the crowds of various social gatherings like in the wedding ceremony of a relative I attended last weekend.
One good thing, though, the banter is still limited to people in the know and not shared yet by any Tom, Dick and Harry who are remotely involved in the business of stock investing but have started to look into it, having found the subject fashionable.
Not to sound superstitious, when the discussions about the market were taken up far and wide into everyone’s subject, it’s time to pack up. This is taken as sure sign foreboding the end of the bull run.
The concerns discussed were: “Is the market losing steam? Could this sputtering be indicative of the market’s coming fall? What are the telltale signs – technical and fundamental?”
If it is not, “How will the market manage to sustain its current run? We have some restiveness growing increasingly in the political scene. If not tended properly, this could escalate to create instability that will undermine existing economic gains.
“How high would the market climb, if ever?” As we are aware of, the present bull run is entering its 10th year or so.
So far, this is “the second longest and third strongest equity bull market since 1970,” market records show, too.
Searching for answers to these questions, I have turned to watching the movements on the increase in open interest and find out if the increases are accompanied by higher prices (that is, if the market is a net buyer as per the day’s report of the exchange). If they do, this is a sign that the market is still willing to keep paying higher prices – that, in turn, is a good sign of the market’s health.
The way I look at things, I still feel confident about the market’s outlook. However, because average daily total value turnover has gone down, I maintain a vigilant attitude.
Since an uptrend has been under way for some time, just like our market, it is advised that open interest must be viewed in a different light.
When the absolute level of open interest is substantially high, this could be indicative of very large public participation. In this case, the market could be vulnerable because there are now few buyers left on the sidelines who have not bought yet. As such, there is little chance for open interest to increase further.
Also, the general public has no holding power to foil orchestrated selling moves by big interest, as they do happen even in our local market. You have heard of tales about the “Black Ninjas” and their likes who lorded the market once upon a time, and which some present-day market players are trying to duplicate with the aid of their followers.
Week 26 overall results
Four of the seven players in the game succumbed to the market’s latent weakness while the other three somehow managed to defy the fate of the four.
Actually, the market ended with a weekly gain of 89.24 points or 1.15 percent only when it closed last week at 7,855.71. But average daily turnover has noticeably maintained its relatively more robust level of P7.05 billion, which could very well be the result of increased open interests.
None of the gains made by the three, however, were big enough to dislodge frontrunner Pixiu in the game. But like in the case of stock trading neophyte Play Hard, his investment grew by 1.53 percent for the week, enabling him to make an exciting comeback and wrest control of the number three spot in the leaderboard with a return on investment (ROI) of 99.83 percent.
Pixiu’s performance slid to 124.30 percent ROI, down by 3.44 percent from the previous week as almost all of the
stocks in her investment portfolio lost value owing to the market’s latent weakness. The dip in the value of her investment portfolio by 3.44 percent was the highest ever had by any of the players during the week.
Lucky again with his investment in Manila Electric Company (MER), HRB2015 maintained his number two position in the leaderboard with 101.98 percent ROI, up 0.42 percent for the week. The price of MER shares closed higher last Friday.
Dondee Prime landed fourth in the leaderboard to effectively dislodge and push back Small Time Trader to fifth place last week. Dondee Prime ended with a 97.29 percent ROI, down 0.79 percent, while Small Time Trader only managed to register a performance of 96.62 percent ROI, down 3.03 percent.
Still in sixth and seventh places are St. Michael and Dud67 with performances of 96.22 percent (down 1.37 percent) and 59.17 percent ROI, up 0.96 percent, respectively.
As reported last Friday, the week was practically a battle of trading wits between Pixiu and Play Hard. Play Hard drew the first move with five trading orders last Tuesday, Aug. 28. Pixiu followed suit with eight trading orders the following day Wednesday, Aug. 29.
With his guards up and not to be outdone, Play Hard submitted three more trading orders on Wednesday.
Both took it easy on Thursday then resumed trading shuffles the following day, Friday. Pixiu submitted only three trading orders, with only one “Done” but Play Hard blasted with six trading orders with only one “Done.”
Below are the details of their overall transactions for Week 26, covering the period Aug. 20 to 24, 2018:
Bottom line
Most are unsure of what may happen next especially that the government is now confronted with politically charged protests for its aggressive program to bolster economic development. Consumer prices are rising while some government heads and their agencies are, at the same time, fumbling.
These developments are driving investors to wonder of the market’s future. Economic development can only happen when the political front is stable and the government has the money to support its development programs.
However, like how Warren Buffet finds himself believing in the prospects of iPhone maker Apple without clearly going into specifics, I believe the government will likewise succeed in materializing its development plans in the next two years.
When this happens, the market would be on its 12th year of bull run with stocks possibly hitting price levels many times over today’s prices.
Den Somera is a licensed stockbroker. The article has been prepared for general circulation for the reading public and must not be construed as an offer, or solicitation of an offer to buy or sell any securities or financial instruments whether referred to herein or otherwise. Moreover, the public should be aware that the writer or any investing parties mentioned in the column may have a conflict of interest that could affect the objectivity of their reported or mentioned investment activity. E-mail address of the writer is den.somera@manilatimes.net
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