*** Philippine stock picks thread ***

**Retz** · February 6th, 2014 10:37 PM

PSEi 5,914.59 02/06/14 15:46:00

**baludoy** · February 11th, 2014 09:37 PM

nagsara kanina ng 6106.03 ang psei

btw, here's a good read

Buy the breakout

10 Feb 2014 Written by John Mangun

ANYONE who has heard of technical analysis would usually think of it as applicable to stock prices. Technical analysis involves plotting price movements and looking for patterns in those movements for financial instruments, like equities and commodities. The basic principle of technical analysis is that prices stop falling at a certain level and prices stop rising at another.

The truth, however, is that this type of analysis is used for almost everything in indentifying changes over a period of time. Politicians use it to look at trends in approval ratings. US President Barack Obama’s approval rating has been bouncing about 40 percent—which is not likely to break—for months. Scientists use the same kind of analysis to look at animal populations, plotting against, for example, food supply to draw correlations.

If you ask a couple who have been married a long time, they will probably say something like, “There have been ups and downs.” The analysis is that things never got bad enough that they broke up. At the same time, things were never good enough for long enough that there were no more unpleasant times.

Over a long-enough period of time, prices and situations tend to stay within a range we call support and resistance. From 1960 to 1973 US corn traded between a support price of $1 and a resistance price of $1.50 per bushel. After the price broke and stayed above $1.50, the crop has never traded below that for more than a very few days in the last 40 years.

Technical analysts believe that you can make money when you “buy the breakout” of resistance levels.

Breakout Nations: In Pursuit of the Next Economic Miracles was written by Ruchir Sharma and released in April 2012. Sharma is the head of emerging-markets equity and global macro at Morgan Stanley Investment Management. The book became an international bestseller because of his analysis.

In Breakout Nations, Sharma identified seven countries that he believed “are the real breakout nations to watch.” First on the list was the Philippines, followed by Turkey, Indonesia, Thailand, Poland, Sri Lanka and Nigeria.

How things have changed since 2012: Four of the seven would now be on the “breakdown” list. Turkey’s currency and stock market have been in free-fall as corruption at the highest levels of the Executive branch has been covered up and excused. The surging Turkish economy has turned into an economic bloodbath as money is fleeing that nation. Interest rates are jumping, slowing economic growth, as the Turkish central bank tries to keep the currency from losing even more of its buying power.

Thailand’s political unrest also centers on corruption, but the underlying problem is that the government of Prime Minster Yingluck Shinawatra has wasted billions that could have been used for development on worthless subsidizes to prop up her failing and unpopular government. Investment in Thailand is falling weekly as capital runs away.

Indonesia, too, is facing massive capital flight after a series of government polices to first protect and then to encourage foreign investment became oppressive. Trying to force local and foreign companies to do what the government wants by imposing higher taxes and financial penalties on them has backfired. The Indonesian government has learned that the country needs investments more than the investors need Indonesia.

Nigeria is engaged in a ruthless civil war between Muslim rebels and the government. Corruption has reached new heights as the Nigerian central bank admitted this month that it “lost” the $20 billion remitted by the oil industry to the government. That amount is equal to about 10 percent of the country’s total gross domestic product.

While Poland has maintained its economic growth, primarily because it is not part of the European Union’s currency, the euro, the country recently confiscated half of its private pension money to fund its government debt. Almost $50 billion in private money have been turned over to the government to manage. That should work out well.

Sri Lanka’s Marxist government continues to thrive, even as it cracks down on the opposition. Tourism and foreign investments are growing steadily, as investors are more interested in the seriousness of the government’s desire to do good business than local politics.

I have said many times over the last years to “buy the peso” and “buy the Philippine Stock Exchange.” That trend continued until the deep correction early last year. But the breakout trend that Sharma indentified still continues in the Philippines, unlike in many of the nations on the list of the next “economic miracles.”

BusinessMirror - Buy the breakout