Common Sense Trading - A Blue Jeans Approach to Philippine Stock Market Trading

Tsupitero, a technical analyst, said last March 10 that he'll only be bullish when we see the PSEi break 3333 at high volume. Sounds like a dream. It's bear market. Technically, a bear market is a drop of 20% from the most recent high. The PSEi went up to around 3900 recently and is now moving around the 2900 level. That's over 25%. However, I think this is a good buying opportunity. Off the top of my head, here are a few reasons why: 1) Good fundamentals (i.e. strong private sector, tons of dollar reserves, lots of dollar earning economic activity, stronger peso, the list goes on!) 2) Political uncertainty is on the wane 3) The U.S. stock market isn't so bad as only the Nasdaq entered what is technically called a bear market. (CNBC) I mention U.S. stocks because for some reason, our market likes to follow theirs. 4) The U.S. FED is working hard at preventing a recession or at the very least, keeping its ill effects at a minimum. Investors the world over are worried t

I don't like looking at the market's numbers. I saw GEO at 1.14, Meg at 2.18, BPI at 51, BDO at 47 and MER at 80. I don't like them not because they are low but because they are low and I'm not as liquid as I want to be. I'm still willing to bet on the Philippine economy and I think we're beginning to see some really excellent entry points for very good stocks.

If the market's trend is about to turn, there is no apparent sign of it. Philippine Stocks have been on a downward path since around November of last year. That was the time the harsh effects of the mortgage crisis were being seen in concrete figures. Political Uncertainty & the Falling Dollar Even after a banner year for our economy in 2007, our good fundamentals could not withstand the global financial market's jitters and caved in under the pressure. Early in the year, Philippine companies were reporting left and right about how much their profits increased. This news was eclipsed by Political uncertainty and the falling U.S. dollar. Politics brougth the infamous ZTE-NBN to light then the questionable north rail project, now the spratlys. Higher Oil Prices One of the greatest overall benefits of the falling dollar was that the relatively higher peso shielded us from feeling the effects of rising oil prices. Even that benefit however is being eroded as oil producing count

Let's call a spade a spade. The opposition is using words like "blunder", "sell-out", and even "treason" citing the 2005 tripartite agreement for seismic undertaking over the spratly islands with the Philipipnes, Vietnam and China. I think they are being too harsh this time. While I'm not a big fan of the administration, I don't think its as bad as they say for the following reasons: 1) Joint agreements for exploration are not inherently bad. From an economic standpoint, they are good. Other countries have done it and have reaped handsome rewards. In our case, China is willing to "shelve" their claims on the spratlys and cooperate on how to exploit the resources and agree on the sharing later on. 2) Without considering legal issues and for the sake of argument, it is arguably a good policy to cooperate with China . Some say the sleeping giant has awoken. I don't think it has yet, and I think China's policies say so as well. A