[ANALYSIS] The Lenten season and the market

Last Friday’s (March 31) steep downturn was a classic example of Mark Douglas’ proposition about the nature of the market. It can be fickle like Lady Luck and as flighty as a nervous horse. 

To recall, Douglas is the author of the book, The Disciplined Trader, which I recommended for you to read as a handy reference in further understanding the market as you create your own trading system.   

Most notable in his comment about the market is that it has “. . . no beginning, middle, or end – only what you create in your own mind.” Because of this, he also went on to say that any point in time can be a turning point for the market – just like it did last Friday (and break its upward trend).  

Of course, the exact reason why the market fell sharply last Friday was more than just the onset of the Lenten season. Also, we still had three trading days this week before we took a break for vacation.  

But do you know that Lent is usually a dull period for the market? It’s one of those seasons of the year that for whatever reason, the market goes down – or almost all the time. This is why seasoned investors don’t spend much time in trying to find out the fundamental reasons behind a market’s weakness or fall than just staying alert to see it coming. And as already mentioned, it’s the trading systems that will help you see these turning points.

Make character during Lent

There is a little difference, though, between the mood and behavior of stocks prices by the onset of Lent and the annual arrival of other seasonal events that happen within the year.  

During Lent, market turnovers also become thin but do not necessarily result into much weaker stock prices.  Swings of stock prices are a bit less exaggerated and more steady than volatile.   

Last Monday, April 3, for instance, while five of the 10 most actively traded stocks for the day were down, the other five were up. To mention a few in detail, Monde Nissin Corporation (MONDE) was the top grosser. It closed at P9.0 per share and was down P0.51 from previous, with the equivalent percent loss of 8.26%. JG Summit Holdings, Inc. (JGS), on the other end, closed higher from previous with a gain of P3.10 at its closing price of P51.00 per share. The gain was equivalent to 6.47%.

Ayala Land, Inc. (ALI) closed at P27.40 per share. It was up by P0.90 with an equivalent gain of 3.40%.  yala Corporation (AC), which is very sensitive to investors’ mood fared well despite diminished market turnover.  It closed at P667.50 per share, up P17.50 or the equivalent of 2.69%. The rest took a dip but only slightly like PLDT Inc. (TEL), SM Investments Corporation (SM), BDO Unibank, Inc. BDO), and Globe Telecom, Inc. (GLO) while International Container Terminal Services, Inc. (ICT), and SM Prime Holdings, Inc. (SMPH) were also up but not so up.

Thus, Lent retains a similar pattern as other seasonal periods but without the latter’s general character of volatility. The explanation given is that this is more or less the result of the absence of market players and not because of the loss of interest in the market. And as further characterized by an old hand in the market, Lent “is like the old siesta when people take a nap and put aside the day’s care to a temporary hold, as is where is.”  

Some reflections

Let me share with you one story for Lent that may lend inspiration when adversity comes, like when the market goes against your trade.  

This is about the story of the simple donkey. The donkey fell in an empty well – not exactly its fault, though most of the time, dumb and stupid like we are in the market.  

The owner tried to save the donkey at first. However, he found it very difficult. Since his donkey is already old, he decided to get rid of it instead. The farmer thought that since the well had been dry for long a time, too, he might as well cover it with dirt and bury the donkey in the process. When the farmer started shoveling the dirt into the well, the donkey bleated for dear life, realizing what the farmer was doing.  

After a while, the donkey stopped bleating. The farmer became curious and looked as he threw some more dirt into the well.  In the darkness, He could see the donkey shaking off the dirt and stomping on the dirt to harden it so it could stand on it. The farmer made more effort to throw dirt to bury the donkey. But as he did this, the donkey only shook off the dirt and stomped on it.  

It became a furious race, so to speak, between the donkey and the farmer. And before long, lo and behold, the donkey was able to jump out of the well and walk away from the farmer.  

The moral of the story: stop complaining, don’t be in denial, face the problem. Do something positive to alleviate your situation, shake off the problem, stomp on it and use it as your foundation to achieve victory. – 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 author at densomera@yahoo.com.