What’s driving the market to the bearish territory?
Don’t just blame it to the forecasted three to four Fed rate hikes this 2018 due to the rising inflation.
Other global issues such as the ongoing China-US trade war and weaker currencies all contribute to the jittery performance of bourses not only in Asia but also among first-world bourses.
As early as last week, I already informed my followers that PSEi is already in a bearish position. I am going to re-post what I published on my personal website at www.jayceedeguzman.com.
The longer-term Simple Moving Averages (SMAs) are above the shorter-term SMAs of PSEi. That puts the main index in a confirmed bearish territory as far as the alignment of the simple moving averages is concerned.
PSEi must break above the resistance levels of 8140, 8300, and 8500 to regain the bullish state it has temporarily lost.
If the index won’t sustain its 2-day ascent, PSEi might go down all the way to the 7000 level before 6640.
You can interpret what’s happening in different ways depending on your profile.
As a Long-term Investor
If you’re going to ask the long-term investor version of me, I will translate this market as an opportune time to buy more shares of my long-term stocks at a cheaper price. I will continue to invest 20 percent or more of my net income on my long-term stocks on a monthly basis.
As a Short-term Trader
On the other hand, the short-term trader version of me will trade with more caution. I will not make a buy or sell decision unless I’m fully convinced with what my top 10 players, price-volume distribution, foreign fund flow, risk level, volume charts and other proprietary tools tell me. This is not the season to carelessly decide based on luck. No way!
Foreign Buying was at P4.1 billion while Foreign Selling was at P5.09 billion, resulting to Net Foreign Selling of P963 million. The Holdings sector, followed by the Financials sector, registered the biggest foreign fund outflow today, 3 May 2018. PSEi has been on a Net Foreign Selling status for 10 days straight.
It’s a confirmed bearish market today with a market breadth (advances-to-declines ratio) of 0:2.56.
Here’s a snapshot of our Stock Ranking System.
5 Stocks with the Biggest Net Foreign Buying
5 Stocks with the Biggest Net Foreign Selling
So, Will “Sell in May and Go Away” Work?
This popular belief won’t work for a long-term investor whose buy case is still intact.
For as long as my buy case is 80 percent true, I will keep on topping up on my long-term stocks.
A buy case is a list of fundamental and technical reasons that made me invest in a company.
Why would I sell if my buy case is intact?
I’d rather buy more and take advantage of the cheap prices while they last.
But I’m talking about my long-term portfolio.
It’s a different thing if we’re talking about short-term trading.
I follow what my technical analysis tells me as far as trading speculative stocks is concerned.
I will still trade a few stocks where I have a high conviction call but not as much as I would on “normal” days.
I’ll be back on my normal short-term trading grind once the dust settles down.
Does “sell in May and go away” holds the gospel truth?
No.
An investment decision is based on your trading profile (whether you’re a long-term investor or a short-term trader) aside from your financial goals, investment horizon, and risk tolerance.
How about “Get a Mentor and Learn More?”
Because of the current unstable state of our market, there’s no better time to get a seasoned and experienced mentor than during times like this.
It is during this bearish season that I’m consulted the most. Many are interested to have a direct contact on me and my team. The majority of our clients are all praises as you can see on our testimonials.
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