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The Cold Hard Truth from the Absolute Traders
By Alcuin Papa
June 29, 2008


In these trying times when the market keeps going down, many traders are looking for guidance. And Absolute Traders (AT) was only too willing to provide this direction.

Unfortunately for traders, whatever ray of light they might have been looking for in the June 24 Absolute Traders Chart Analysis Forum (CAF) was erased by the cold, hard truth: that the downward spiral of the Philippine Stock Exchange Index (PSEi) is bound to continue.

The program started off with a gracious welcome from Jay Penaflor of the PSE’s Market Education Department. He recognized Absolute Traders as one of the groups helping the PSE in its drive to educate the investing public. He also told AT the PSE would support any and all its events.

Mr. Alexander Gilles, a renowned CFA in the business community, also gave his insights on the PSE from the fundamental side of the picture.  Sandy, as he is known, sees the PSE rising back to 3400 or even 3600 by 2009 based on fundamental cycle he has observed.

Since Absolute Traders has been known to teach technical analysis, many were probably wondering why fundamental analysis was entertained. This borne out of recognition by AT that many traders also look at fundamentals in their decision-making and that AT has made a commitment to address this need.

Mr. Edward Lee, chairman of Citiseconline.com was also present and gave important advice to traders on what to do in bear markets. He advised everyone to not only stick to what they know but to broaden their knowledge to be more informed in their decision making.

Next up was a presentation of Mr. Antonio Tiu, CEO of Agrinurture, Inc. (ANI), an agriculture company aiming to list in the PSE soon. Mr. Tiu gave a glimpse to what the company is currently doing and what their plans are.

After ANI’s comprehensive overview, Absolute Trader Bonner Dytoc was given the duty to deliver the cold, hard truth about what was going on in the market. And to understand the market’s movement, we needed to look at where the Dow Jones Industrial Average is headed.  The short-term downside target given was 11,700 with the possibility of dropping to 11,300.  Since the DJIA affects every stock market in the world, this also reflected what would possibly happen to us. 

Our market is also descending and currently, the resistance is pegged at around 2700. Since the resistance couldn’t be broken, Bonner presumed that the downtrend would continue. In fact, he said that there is still no reversal signal. He also mentioned the support levels at 2407 and 2175.  Bonner advised that those who are liquid stay liquid while those who have holdings to sell on rally as things could get worse.

By this time, many had sad sullen looks on their faces.  To try and uplift their spirits, AT junior instructor Mikey Macainag, a licensed broker, was called to give his own two cents worth on stocks that could still be considered even while the market is dropping. He mentioned ATN, ATNB & PX.  But he also mentioned to play it cautiously. If people were already losing, he said to not take our profits but to cut our losses.  For some individual stock analysis, Absolute member Sherwin Chan, a registered financial planner and has a column in one of Manila’s broadsheets, gave his own view of specific stocks that were being requested by the audience.

Finally, it was time for the portion that everyone was waiting for, AT Chairman Fitz Aclan’s fearless forecast. Initially, Fitz showed us that the oil rise and the dollar weakness were tied together with how the US market would behave. To compound what Bonner earlier said, Fitz was even looking at a lower level for the DJIA to 10,000 to 10,500. Later on, he showed how the PSEi’s performance is compared to previous years.

The first half of 2008 is now comparable to the drop we experienced back in the 2nd half of 1997, which was the year the Asian financial crisis happened. He confirms Bonner’s view of 2100 as the next support area after 2400 is broken. He also showed how certain stocks have performed thus far with a majority declining. He also advised people to sell on rally as he also sees the level of 2700 as a resistance that the market has a hard time breaking. Lastly, Fitz gave his suggestion to diversify holdings and concentrating on the telecommunication companies and holdings companies.

To answer the question of the CAF’s title “Has the PSEI found its bottom?” Bonner and Fitz gave an emphatic NO.

Last but not least, Danny Go reminded all chartists present to look at the bigger picture, not only looking at longer time frame but also look at the sectoral indices to give us guidance on what specific issues to trade. 

In conclusion, most sectors are still trending downwards except for the Mining & Oil sector that is currently going sideways.  Danny’s suggestion was to try and see if there are any stocks in that sector that could be worth trading.

After this event, people left with more information that they could use in a bear market.  Hopefully, this could give them the proper guidance that they were looking for.

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