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

U.S. is running out of options to stop recession. That's was the headline on cnbc.com. With the U.S. headed for more trouble, i'm wondering if the world economy is resilient enough to avoid being dragged down. I think it just may be. I was mulling over this today and it seems that with oil going down, countries like the Philippines have much better prospects even with a faltering U.S. economy. Many writers have already argued before that American consumption no longer takes so large a slice of Philippine exports and that ultimately we (the Philippines) are sufficiently decoupled from the U.S. so as not to be dragged down with them into a recession. In light of the growing demand of China and India for many goods and services we provide, that seems quite true. Another factor is that we may soon see countries like the Philippines tapping into the markets of rich oil producing countries. Anyway, it's a nice thing to think about. I haven't had much time to fully convince my...

Tsupitero of tsupitero.com believes that there's a chance for our market to begin a strong rally and the indicator is if the PSEi hold above 2632 for this week. He had a fancy chart on his site that I pretended to understand and he said something about a white candle. Anyhow, his magic has been hitting the bullseye so he has my attention. Though Technical Analysis (TA) isn't really my cup of tea, I know that a significant part of the market relies on TA. I'd like to know what they're thinking.

The Philippine Daily Inquirer noted that buying may have slowed do to the coming inflation data. Even after the large drop in U.S. oil and the big surge in U.S. stocks, we only saw the PSEi jump past the 2750 mark, up only about fifty points from two days before. Not quite the rally i expected.

We're likely to see the PSEi rally and track the expected large gains in the U.S. stock market, the dow currently at +2%, S&P at +1.85% and Nasdaq +1.36% in early trading, due to oil dropping over $8.00 to settle at the $108 level. The drop is reported by CNBC to be due to the easing concerns over hurricane gustav . The PSEi closed at 2708.25 monday, Sept. 2, 2008.

The forecasts for the end of 2008 have not improved. But for the meantime, we are enjoying a reprieve in the rise of commodities and even some rollbacks in oil. These are great things for our economy as a whole. As the "ber" months approach, what can we expect from the PSEi? Even the most sophisticated analysts cannot say with certainty. Tsupitero of tsupitero.com com sees the PSEi is in somewhat of a state of limbo. With that in mind, I'm still looking for good opportunities to buy. Compared to last year, many of Philippine stocks are discounted. Given that investors are spooked, and money has been consistently flying to safer havens like bonds, there is little attention being given to equities. Why do I like to against the flow in times like this? Well, as long as we keep investing manageable amounts that we're willing to leave over the long run, we can ride out the dips and cash in on growth which can be reasonably expected over the long term. Notice, our economy i...

Low trade volume over the first two trading days of this week indicates that the market is taking a breath. Tuspitero of tsupitero.com said last monday (18th) that he believed we'll likely see sideways movement or a correction. He discounts the likelihood of a strong rally before either of those happens. As we've seen some correction already over the past two days, it looks like he's right on the money this time. Whether the PSEi eventually ends up rallying up and beyond 2900 or comes down below 2500, in the meantime we've got a moment to decide where to place our bets. I don't bother crunching numbers much but considering the world economy and the mixed numbers as regards corporate earnings, I'm still bearish. But who knows, as the silver linning of the slowing world economy is emerging to be the drop in demand for oil we there may be a few more surprises in store for us.

Pablo Gorondi, a writer for the Associated Press noted that the oil price is going down and will be facing additional pressure because of the slowing world economy. Wasn't it the rising price of oil that was slowing the growth of the world economy? So which caused which? Was it some kind of a returning domino effect? hehe... At any rate Oil fell as low as $111.78. That's more than enough for a few more sighs of relief and smile to top it off. :)