[ANALYSIS] Concern about the right trading call during Holy Week

It’s practically the Holy Week break as we are just three days away from wrapping up trading for the Catholic observance of this year’s Lenten season.    

The Lenten season is a six-week (or 40-day) period that starts from Ash Wednesday and ends at sundown on Holy Thursday, a period of preparation to celebrate the resurrection of Jesus at Easter Sunday.  

Incidentally, Ash Wednesday fell on February 14 this year, which was also Valentine’s Day.  For the young and the restless among the faithful, it was bad timing. This year’s Valentine Day festivities have to be muted because while not a holiday of obligation, Ash Wednesday is a day of fasting and abstinence.  

Like the young and the restless, the market appears to defy its seasonal pattern especially from its movements early this week.   

This week’s initial trading results show that foreign investors appear to be coming back. Their total value turnover is also going up. Their trading sentiments have changed, as well. They are now turning to become net buyers from net sellers.  

As many have always observed, the trading tack of foreign investors always have a lot to do about the direction and character of our market. Yet, the market is unable to move higher up to the middle of this week. It remained subdued as it normally does during Holy Week.

Come to think of it, the time to sell should have been ideally as far back as the last week of February. This was during the height and period of eventual collapse of the constitutional amendment or Cha-cha issue, which created some good volatility in the market.      

With these observations, what should be the trading call at this time? The market’s behavior is quite inconsistent. After a few points of advance, it is also weighed down a few more points back.  

Does it really matter to have the right forecast to make money from the market? 

Right forecast, making money

The quandary we are placed at the moment actually begs the question of whether a right forecast is our only way of making money from the market.   

My serious efforts to also present a good read about the market’s movements to make a right forecast all these times may have also given the impression that success in making money in the market entirely depended on it.  

The truth of the matter is that making the right forecast and making money in the market are two separate tasks and concerns.  

The former may help in making the latter happen, but the latter is not entirely dependent on the former. Seasoned investors have seen this happen from their successful and unsuccessful trades in the market.  

Unfortunately, there are times that even seasoned investors fall into this folly.  They sometimes act like what beginners do. They focus on having the right forecast and neglect about harnessing the ability to identify good trades or turn around losing positions from certain losses when wrong about the market.  

This brings us to some of the fundamental technical skills needed by us to win our game in the market as presented in the book of Jake Berstein, entitled No Bull Investing – Straightforward Advice to Maximize Your Returns in any Market, with Any Amount of Money.  

The first of which is the ability to find so-called “set ups.”  These are market patterns or data that give rise to an expectation of what may happen in the market.  

Set-ups only serve as basis to make trading calls.  To make the trading call, wait for the so-called “confirmation.”  This is the presence of corroborative market pattern or data of the expected outcome from actually happening.  

When this shows up, this is the only time when you actually make the trading call, whether to enter or exit a trade.  

 I hope this little trip back to the basic principles of trading will be of help in what you have to do in the next three remaining trading days before the Holy Week break. 

Trading calls from the market

Here are the trading calls of most stockbrokerage house. From their latest news bulletins, they say you have to watch out for possible market catalysts. These can be factors that can either lift up or undercut the market. 

Among these is the outlook on the policy decision of the US Federal Reserve for interest rates, which may be made soon. An inclination to lower the interest rate may certainly prompt upside impact on the market.  

The equities rebound of Wall Street from its recent pullback when sustained can also serve to lift markets like ours. 

On the local front, the imminent swift passage of House Bill No. 9794, otherwise known as the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy Act (CREATE MORE) bill, has a positive impact on the market. The principal aim of the bill is to make the country’s tax regime both compliant and competitive with the minimum global tax.  Corporate income tax will be lowered to 20% from 25%.

On a technical note, the market’s support is still placed at 6,700, and its resistance is still seen at 7,000.

The next time you’ll hear from me will be after the Holy Week. Here’s wishing you a meaningful Lenten break and advance Happy Easter! – Rappler.com

The article has been prepared for general circulation for the reading public and must not be construed as an offer, or solicitation of an offer to buy or sell any securities or financial instruments whether referred to herein or otherwise. Moreover, the public should be aware that the writer or any investing parties mentioned in the column may have a conflict of interest that could affect the objectivity of their reported or mentioned investment activity.  You may reach the writer at densomera@yahoo.com