Another day of market volatility where PSE index declines 200 pts ending the week @6975.09. Again, we can't emphasize it more than enough that the signal has now been translated to actual lose for Philippine stocks value not seen for sometime. As the divergence we called earlier between US stocks making record highs and PH stocks are much lower; indeed at a cross divergent trend direction for now has been VALIDATED.
As the PHP is well above the 49.00 while closing the day @48.85 to this writing. Which the PH Central bank left rates at their current levels as a reason to negative implication drawn from the US election. The type of reasoning that we find difficulty to accept at this junction. This only proves that there is really nothing that they can do especially seeing a 'Double-Whammy' in the markets. That is what it is! Although, we would like reiterate that there are other trading solutions that can be made to avoid tragic trade stock losses or the depreciating value of the PHP. Due diligence required!
PH main street investors & traders sits back and watch as price drops and wait for the closing session to see how much damaged have cost their individual account. Meanwhile, most major brokers continue to emphasize that 'Peso Cost Averaging' is the way to trade this market. A strategy that they claim works overtime until the day it doesn't. There are two sides of the coin as most experienced traders & investors would say otherwise based on real trading experience. Cost Averaging is NOT a strategy that could be applied in a serious declining market such as the PH stocks especially in this kind of market divergence that has been defined since the decline from the 8100 levels. So brokers now tend to move forward in getting new accounts from new investors as this is where they earn their revenues from. While new trader /investors are left hanging by their thread, so to speak!
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Even when Warren Buffet see it more positive for the US and the stock, the outlook remains to be uncertain in the PH stock market. As the continued weakness has been an internal outflow of investors confidence, FDI Post US Elections had no immediate effect on the market as it decline over 200 pts at the closing bell on Friday.
ReplyDeleteThis sentiment will remain until real changes would come out of the market unexpectedly. Media hype may no longer work to tame market sentiments.
As the PSEI declined over 200 pts closing below the 7000 mark; a lot of retail investors are in the red barely hanging on to dear life on their newly opened trading accounts. Most if not all brokers have claimed that these prices are the best entry levels to buy more. In other words, cost averaging to improve their market positions are commonly advised.
ReplyDeleteHowever, it maybe viewed by others as a strategy but it is actually not advisable to do so. With a high @8100 levels and now down below 7000, and broker analyst says that its not yet in a bear market? Over a 1000 pts drop and NOT in a bear market? Wow why are they called analyst then.
CAUTION IS ADVISED for all retail PH stock traders, especially for newly opened account holders. As broker agents would sway investors to buy more (cost averaging) which may well be a reversal of fortune when prices continue to decline along with the depreciation of the PHP versus the USD.
ReplyDeleteLearn to Hedge and get advise from independent analyst. Check your financial condition firs before engaging into volatile markets either stocks or foreign currency trading
Further weakness on both PH Stocks and PHP is expected!
ReplyDeleteFor the PHP, what to considered is the nearest correlation to which the PHP can be at least be hedge or have an offsetting value relationship as well as price swing for its value. The difference in value may not be as equal to it but the value moving forward can be protected. There are a variety of trading solutions that can achieve this goal, its a matter of Perspective and knowing how to do it.
ReplyDeleteWith that said, its either PH investors & traders with all their wealth of knowledge trading the market simply watch how their portfolio diminishes and watch it crumble to the ground; or do something about it by acting on the solution. Procrastination is NOT part of the equation in achieving trading & investing successfully.
ReplyDeleteAmple warning was provided with our shared analysis on the markets ahead of time on our website, Megatrade101 FB account and on our Blog-spot since Oct 26, 2016. Statement & views made have more value than simply stating the information. With all modesty, MegaTrae101 aims to be part of the trading solution ahead of the answer.
ReplyDeleteBest description between the US Stock market & the PH stocks in Two(2) words....'EUPHORIA & HYSTERIA' Markets.
ReplyDeleteAs no investors at this time would want to buy at high levels and sell at their new low levels.
The other way of looking at this 'Divergent Trend Angle' on our FB: https://www.facebook.com/megatrade101 and on our website link on overlay charts: http://www.megatrade101.com/index.php/component/content/article/72-latest-ll/920-an-inverse-market-perspective-comparison-adxy-us-dxy
ReplyDeleteThe resumption of the bearish market for the PSEI is current @6842.94 to this writing. For how long would retail traders act upon this conditions? For now Peso Cost averaging is NOT a strategy even to consider simply because it does not work. The divergent trend is well defined.
ReplyDeleteUpdate: PHP similar formation with USD on a technical perspective. Link: https://www.tradingview.com/x/Ut37Z7fY/