Transcript STOCK MARKET WEEKLY PRESENTATION

STOCK MARKET WEEKLY
PRESENTATION
30 April 2015
PSEi down by 2.92% week-on-week.
Review: The PSEi (7,714.82) fell significantly as worries in the US economy translated to
a stronger dollar, weaker peso and net foreign selling in the Philippine stock market. It is
also suspected that foreigners have been selling in the Philippine market as their
confidence for a repeat of good 4Q14 corporate results maybe waning for 1Q15 results.
Forecast: Technically, the PSEi favors a rise, as can be seen by the bullish crossover of
the stochastic indicators. Also, the 6-sector indices average technical outlook
number has improved a little to a bullish 0.833 from a 0.677 in the previous reading.
This statistic therefore favors a rise. However, the technical outlook for the peso forex
rate has bearish implications for the stock market. As such, these mixed signals warrant
a tad more caution.
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May. 1 holiday
RECENT NEWS (FOREX RATE)
• Average daily forex transactions
– This week: $514.8m (down 9.09% WoW)
– Last week: $566.3m
• Foreigners in the stock market
– This week: net sellers, 1:1.212
– Last week: net buyers, 1:1.003
– Average daily number of stocks foreigners
bought (62.2) and sold (52.8) vs. last week’s
(60.8) and (51.2).
The Philippine peso forex rate (P44.52 as of Friday) weakened due to a
combination of net foreign selling in the Philippine stock market and renewed
worries on a US rate hike. The rate has gone above the upper end of the 44.33
target set in the previous week. It will likely build a new band with 44.33 on the
lower limit and 44.60 as the upper band limit. A weaker peso could push the rate
nearer the 44.79 resistance. However, we expect the BSP to step-in to provide
some stability.
The forex rate’s RSI indicator is above neutral. It seems to have momentum.
The DJIA (18,024.06 of Friday) was only moderately lower by end of week as it
managed to recover some points lost during the week. The culprit for the dip were
poor economic news. The main driver for the rise were the better-than-expected
1Q14 corporate results. Going forward, technically, the stochastic indicators have
reversed to a bullish trend. Expect a further gain, much of the rise will likely be due
less worries on a interest rate hike. US reported that its GDP almost did not grow
in1Q15. Analysts expect US listed stocks’ net income to grow only 0.6% in 1Q15
(M. Craft, AP).
The RSI of the DJIA is above neutral and a trend has not been set.
The PSEi (7,714.82 as of Friday) fell significantly as worries in the US economy
translated to a stronger dollar, weaker peso and net foreign selling in the Philippine
stock market. It is also suspected that foreigners have been selling in the Philippine
market as their confidence for a repeat of good 4Q14 corporate results maybe
waning for 1Q15 results. Going forward, technically, the PSEi favors a rise, as can
be seen by the bullish crossover of the stochastic indicators. Also, the 6-sector
indices average technical outlook number has improved a little to a bullish
0.833 from a 0.677 in the previous reading. This statistic therefore favors a rise.
However, the technical outlook for the peso forex rate has bearish implications for
the stock market. As such, these mixed signals warrant a tad more caution.
Chart of PSE index and stochastic indicators using weekly data show that the
short-term outlook for one month is tending towards a consolidation and
eventually a gain by a month’s time. The strategy implication is to buy on dips.
The RSI of the PSEi (using daily data) is neutral and still declining.
6-sector indices average technical outlook. Below is a table that has a technical
impression / indicated recommendation for each six sectoral indices of the PSE. The
recommendation is based purely on technical analysis and mainly as suggested by
the stochastic indicators. The initial choices for the recommendation are: (1) Near
Buy, (2) Buy, (3) Neutral, (4) Sell, and (5) Near Sell. For clarification, “Near Buy”
means that the stochastic indicators have not yet but approaching a bullish trend, or
it also means a recent bullish crossover that is threatened for a bearish reversal.
“Near Sell” is the reverse. “Neutral” means that the trend of the indicators is not firm
for a buy or a sell. Starting November 8, we assigned points (2 for Buy), (1 for Near
Buy), (0 for Neutral), (-1 for Near Sell) and (-2 for Sell). Then we got the average,
which indicates also the general view based on sectoral views. For the coming week,
the average is 0.833 from 0.667 in the previous reading.
Sector Indices
Technical impression and indicated
recommendation for the coming week.
Finance
Near Buy (1)
Holding
Neutral (0)
Industry
Buy (2)
Mining/Oil
Neutral (0)
Property
Buy (2)
Services
Neutral (0)