Stock Market: Revisiting our PH Equities Roadmap
Updated: Mar 30, 2018
Last 10 September, we sent you our roadmap for Philippine equities. The PCOMP Index was trading at 7581 after falling sharply from 8118 in July. We said that you needed to watch 7715 and that if we break below 7485 our baseline scenario would take the index close to 7093 with overshoot risk pegged at 6954. Today, the stock market is trading at 7174 up marginally after hitting a low of 7129 last week. Foreigners have continued to net sell our market partly because of negative expectations on earnings but also because of headwinds posed by the US presidential elections and a widely expected rate hike by the Fed in December. We think such uncertainties provide us with the best opportunity to buy the market cheap after being super cautious and long cash since September.
Anyway, I just wanted to make sure you’re able to take advantage of the on-going stock market correction and that instead you apply the correct strategy over the next two to three months. We believe that even if we find support at our buy range, the correct mindset would be to sell rally as close to 7564/7485 from hereon since it would take time to repair the technical damage the past two months. Our view is that we’ll probably establish an important low by late January to early February at which point we can start loading up on large cap index stocks again.
In the meantime, we prefer to focus on themes and special situation plays. We are super bullish on mining and gaming for 2017. We are looking at several special situation stocks that are going to be monster trades next year. Bottom line, despite the doom and gloom you’re probably hearing on-line with some stock market experts forecasting 6100 on the PCOMP Index by 2020, we remain bullish PH equities and we’re fairly convinced there’s plenty of opportunity to make money over the next six to nine months.
Good luck out there!