DMN October 11

PSEi 4,218.79 |down -18.19 | -0.43%
Value (K) 4,836,716,268.00

Dow Jones 11,006.48 +57.90 (0.53%)
S&P 500 1,165.15 +7.09 (0.61%)
Nasdaq 2,401.91 +18.24 (0.77%)

An amusing thing happened last Friday. Worse than expected job loss data spelled bad news for the American economy, as any recovery is on pretty weak legs. But markets chose to see this as bullish, albeit if only for the short to medium term, as the continued weakness in economic data (or lack of strength thereof) may prompt the Fed to do more quantitative easing, and perhaps hold back increasing rates way further down the line.

Quantitative easing—or “QE” as it has become known—looks to increase money in the economy. For the Fed, the most prevalent tool is the cutting of its funds rate, which in turn pushes other rates lower.

But the Fed can no longer cut rates, as the funds rate is near zero. So it will have to use other measures. The most likely under consideration being the purchase of Treasurys and perhaps other debt-backed instruments, such as auto loans and credit card securities—in the interest of driving down rates and making capital more accessible for consumers and businesses. How dramatic the changes will be is unclear.

Wall Street takes a breather tonight as they celebrate Columbus Day.

Local stocks failed to build on our continuous rally, climbing only at early session before losing everything to the bears by the close.

Index gainers by closing bell were limited to 6, namely: AEV AP LCB AC SMC ICT, all totalling 11 gained psei points. But the losers capsized the boat, as ALI in itself dropped only .60 to 17.44 but gave out 10 points to the index deduction tally. Other losers were: SMPH PX URC MER MEG FPH FLI.

SCC DMC continue to climb intraday, but like the whole market, fail to hold on to their gains by closing.

Top overall gainer centers MK back in the stage, followed by ALPHA OM(ega), AT 17.50, ISM 4.32, MA/B (suspicious bid price strength right at the open), DMC AEV 28.95, SINO .32, AP 24.80, ACR 1.39 (smc buying into tampakan but is not part of the listed company ACR), LCB.

Top losers were PO 6.35 (high 7.31 today!), MARC 2.15 (change par, adjusted previous .023, or 2.30), AB APC .82, ALI, PX 14.74 (well, not getting tampakan is not good news).

LC/B bleeds further at early trading to .385/.45, but both recovered strongly at the close to .425/.495 for a classing hammer formation at the chart. If reversal is to continue on “regular market momentum”, I peg at least a simple 50% retracement return move to .52/.62. This does not take into account any future success or failure of the FSE deal with Goldfields of NZ, but if it does succeed unhampered, we could look back at CLSA’s study last 2007 saying LC can reach .80 while gold was only at $800.

Total # of Trades 15,876
Advances 46
Declines 90
Unchanged 35

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