Weekend Stocks' Analysis

1. $ALT - Operators failed to push the price down to their target level with huge volume. It opened @ 2.40 but buyers pushed the price up and closed @ 2.48. Having a morning star looks positive to me considering the negative press release yesterday. This candlestick could be a reversal sign. Though the volume is not as impressive as in typical reversals, it is actually double the size of the volumes during the five previous trading sessions. I think today's volume shows that majority of buyers are still cautious.

The stock closed with an encouraging bid of 91ksh @ 2.48. The 604ksh in the ask side appears to me more of a psychological wall to intimidate holders/buyers. Orders like this aim only @ one thing, to depress the price only to buy back later @ the floor.

Trading decision: simply sit down.

2. $CAL - It appears that the stock is bullish. However, based on the historical behavior of this stock, it could have one more run before it corrects.

Trading decision: wait for next entry.

3. $ APX - Traders lost interest in this stock. $DXY is soaring and $XAUUSD is falling. Gold broke the 1200 support and touched 1170 as the new low.

Trading decision: avoid.

4. $PX - All internal indicators (OHLC+Ave+Vol+Value) are red. Price supporters (basec, bdo, angping, goldstar) stopped pushing the price up. Though MVP reports that weak Php is good for $PX, gold price remains the primary catalyst.

Buyers are simply waiting @ 8.14. Sellers are hesitant to sell and are looking for a higher price. Bid @ 8.14: 1Msh.

Trading decision: avoid not until $DXY corrects and $ XAUUSD breaks the 1200 resistance.

$ALT's Big Picture

For the past few weeks, I have been bashing $ALT due to its price action after lifting that 21 October suspension. However, reading an email about the importance of biotech sector, I got interested searching for biotech stocks in the PSE, and I found two: $ALT and $EURO.

After reading several news articles and company disclosures about $ALT, a big picture in my mind was formed about what's going on in the company. 

It all started with Mr. Navasero's dream of putting up the largest BPO in Asia for genomics. The challenge is for him to find a capital to fund Philab's business expansion. He's targeting a CAPEX of Php 2 to 3 B and included in that CAPEX is the plan to purchase the 20 hectares in UPLB and to create a healthcare mobile application. Once such capital is achieved, he is looking forward to a 4B revenue and he is expecting it to double into 8B the following year. In order to achieve this goal, he thought of backdoor listing Philab instead of taking the IPO road. 

Backdoor listing is a cost-effective way for a private company to go public in order to access the capital market. To do this, Mr. Navasero has to acquire an already publicly-listed company. In this case, he thought of $ALT as the way to go. And so last 12 August 2016, he purchased the 208,624,801 common shares of $ALT amounting to Php 362,324,961.21M or 1.74 per share.

Two months after, on 21 October 2016, $ALT obtained approval to acquire up to 361,390 shares of Philab or 100% of its issued and outstanding capital stock with a total price of Php 500M. Results of the transaction include the change in authorized capital stock of $ALT from 20M to 2B and the change in corporate name from Alterra Capital Partners Inc. to Philab Holdings Corp. Finally, on 16 November 2016, Mr. Navasero disposed 50M common shares @ 2.88 amounting to Php 144M.

Two questions come to mind:

One, why that buyer bought 50M common shares if the price of $ALT will continue to decline? I think that buyer contrary to the speculation of many traders that $ALT's price would drop to 1.74, was anticipating a higher price in the coming months and years.

Two, now that Mr. Navasero has disposed his 50M common shares of $ALT, what do you think is he going to do with that Php 144M cash in hand?

Remember 2008

One of the privileges in studying the Austrian school of economics is knowing how the business cycle works. Unfortunately, the mainstream media does not go beyond mere description of booms and busts. They just accept it as facts and an inherent nature in a "capitalist" society.

The two most recent examples of busts were the collapse of the 2000 dotcom bubble and the 2008 housing bubble. Those who have been trading and investing in the PSE for decades have a lot of experience to share how they survived those financial storms. As a PSE newcomer, the only thing I can do is to review the past.

If you were a long-term investor in 2008, I don't know how did you deal with a 58.27% loss in your capital in just 4 months, from September to December? In fact, entering PSE in January 2015, my original plan was to invest long-term. But after experiencing the huge drop in months of June and August, I changed my mind. 

I admire those who confidently say that they are not worried about busts and see them as buying opportunity. However, at the back of my mind, I am thinking that perhaps these people have no first-hand experience of market crash.

I have been warning people I know that the current market situation is ripe for a massive correction. However, since I am no market expert and have no finance-related credentials, my warning was just simply brushed off particularly by those who happened to be fortunate enough to start investing after the 2008 market crash. They thought that the "cyclical bull" that followed would extend beyond 2016.

Even as a newcomer, I could not avoid worrying about the potential financial loss of my friends investing long-term in PSE. I came up with a list of alarming events in global finance since 2008. Some of them are accelerating and others are coming soon in the next few years.

Here is the list: ZIRP, NIRP, war on cash, decreasing international reserves, SDR, rising USD, rising bond yields, European banking crisis, political promise of huge infra spending funded by fiscal stimulus, and global taxation using climate change as a convenient platform.

Determine if this list contains facts or simply fear-mongering. If these are facts and you combine them into one, what message do they tell you?