ACCORD CAPITAL EQUITIES CORPORATION

GF EC-058B East Tower, PSE Center, Exchange Road, Ortigas Center, Pasig City, PHILIPPINES 1605 (632)687-5071 (trunk)
Outlook for Week 51_December 20 to 23, 2010
1 of 3

BACKDROP FOR WEEK 51

• Technical measures show a “weak” market; global markets positively biased

• Domestic economy remains firm and on-track to meet most of its targets
• Shift in investor sentiments over the fate of Europe, US, China
• Positioning for 2011, looking over Santa's shoulder

THE PSE INDEX & UNDERLYING INDICATORS

ADL KEEPS A “WEAK” READ: The Advance-Decline Line (ADL) 1.60

continues to send warning signals that rallies are, for the most part, 1.40
technically, unsustainable, drawing a divergent move vis-a-vis the PSE 1.20
Index. Consider, for example, on a year-to-date basis, the PSEI has 1.00
gained over a thousand points or roughly 33% in addition to the 63% 0.80
booked in 2009. On the other hand, the ADL has shed -667 points or 0.60 PSEI
-70% over the same time-frame. The ADL is a cumulative breadth 0.40 ADL
indicator derived from daily net advancers. Simply put, it is a runnng 0.20
total of the daily advancers minus decliners in the broad market, -
although it can also be applied to each sectoral indices. The key to its
interpretation is its function as a tool to “confirm” the movements of the
market as measured by the index of composite stocks. Divergences are 1/420

3/8201

8/201
/2501
2/150
3/2901
4/1920
5/102
5/3120
6/210
7/120
8/2301
9/1320
10/42

12/60
10/25
1/520
considered warnings of an impending reversal in favor of the ADL's
direction.

The divergence is most pronounced from late September as the index made its successful and sustained break of the 4,000-level. (chart above)
The ADL topped on September 27th with the index trading between 4,079.31 and 4,129.26. Succeeding record closing highs for the index were
accompanied by the ADL dropping to even lower levels. By the time the index closed at its highest point at 4,397.30 on November 4 th, ADL had
declined by -103 points. In percentage terms, the index gained 6.66% versus the ADL's -11.44% slump. Note that the PSE Index is a measure of a
composite of the stocks of 29 companies and thus, heavy concentration of buying on these issues will push the index higher, even if the majority of
traded stocks, which includes non-component counters, are being sold.

At least on this score, the Santa Claus rally, if it unravels over the two shortened-trading weeks, is an opportune time to SELL the market. Re-entry
is subject to the occurrence of a divergent move in the opposite direction, e.g. the index heading south, with the ADL picking up – or at least,
moving sideways.

FOREIGN FUNDS FLOW: THE movement of foreign funds over the 90.00
last two months has added to investors' apprehension, translating to 80.00
n
s B
ilo

a collective and general hesitation to aggressively pick up bargains or 70.00

60.00
to commit long term funds to the market. Unless the trend in the 50.00
current month reverses over the next seven days, December will turn 40.00
out as only the fourth month foreigners ended up as net sellers. The 30.00

first two stretched between July and August, with net positions 20.00
10.00
narrowing by 18% to php13.648 billion. Nevertheless, the flow -
reversed aggressively in the next two months, with purchases nearly JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
1.5x sales proceeds. By the first month of Q4, net foreign position had BUY SELL ACCUMULATED NET
grown to php56.836 billion. Although this continued through the the
first week of November trades, peaking at php57.369 billion, the succeeding weeks saw a discernible shift in bias that by Friday's close, their net
position had dwindled to “just” php52.766 billion. This, however, represents but a -8.2% depletion from the end-October levels.

The shift in direction in the flow of foreign funds can be explained by a combination of, but not limited to, the following reasons. First, admittedly,
local equity values had inflated substantially throughout the year. The composite measure alone, shows a year-to-date return of 32%, more so if
we stretch the period back to the October 2008 bottom. At one point this year, the gains nearly topped 40%, as the Philippine market hovered in
2nd and 3rd among the best performers in the Asian region, behind Indonesia (JKCI) , and intermittently, Thailand (SET). Such margins, in the face
of an extended slump the growing uncertainties presented by regional giants China and Japan, not to mention Europe, may have been prudently
booked. And, for much the same reason, the plough-back has been relatively slow. Second, the consistent strength of the domestic currency vesus
the US dollar has squeezed, or at least tempered, margins or trading and investment gains. Thus, liquidating positions to protect margins becomes
a logical and sound portfolio management decision. Third, we can likewise attribute the “sell-off” to funds rotation, although evidence in this
regard is scarce from this end.

DISCLAIMER: THE MATERIAL CONTAINED IN THIS PUBLICATION IS FOR INFORMATION PURPOSES ONLY. IT IS NOT TO BE REPRODUCED OR COPIED OR MADE AVAILABLE TO OTHERS. UNDER NO
CIRCUMSTANCES IS IT TO BE CONSIDERED AS AN OFFER TO SELL OR A SOLICITATION TO BUY ANY SECURITY. WHILE THE INFORMATION HEREIN IS FROM SOURCES WE BELIEVE RELIABLE, WE DO NOT
REPRESENT THAT IT IS ACCURATE OR COMPLETE AND IT SHOULD NOT BE RELIED UPON AS SUCH. IN ADDITION, WE SHALL NOT BE RESPONSIBLE FOR AMENDING, CORRECTING OR UPDATING ANY
INFORMATION OR OPINIONS CONTAINED HEREIN. SOME OF THE VIEWS EXPRESSED IN THIS REPORT ARE NOT NECESSARILY OPINIONS OF ACCORD CAPITAL EQUITIES CORPORATION ON THE CREDIT-
WORTHINESS OR INVESTMENT PROFILE OF THE COMPANY OR THE INDUSTRIES MENTIONED.
ACCORD CAPITAL EQUITIES CORPORATION
GF EC-058B East Tower, PSE Center, Exchange Road, Ortigas Center, Pasig City, PHILIPPINES 1605 (632)687-5071 (trunk)
Outlook for Week 51_December 20 to 23, 2010
2 of 3

Having said that, while it is understandable that recent (short-term) trends in this series do raise concerns, if not outright fears of a sustained
slide, or at least a weak rebound proferring at best a sideways movement on light volume turnover, the bigger picture is not too discouraging. As
had been pointed out earlier, the aggregated sales in the last three to four weeks erased less than 10% of the accumulated position through
October, substantially slower than the -18% erosion past the first semester.

7.00 VALUE TURNOVER: AVERAGES CONTINUE TO RISE: The average

6.00 daily value turnover continues to expand, despite the drag posed by
n
s B
ilo

5.00
December-to-date's rather “slow” pace of php4.9 billion. Over the
three months prior, the average have stayed above php5.2 billion, net
4.00
of block sales, with September registering the biggest at php6.128
3.00
billion per session. The accumulated average at that point was
2.00
php3.61 billion. It is no surprise therefore that September booked the
1.00 biggest monthly gain (15%) since 2002. There have been only two
- months, February and July when the month ended with the daily
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC average below the cumulative average. July fell just 2% below the
MONTHLY ACCUMULATED norm. Thus, using this as a hint of “investor interest” we can
conclude that the attraction for local equities has not diminished
significantly. The slowdown in December, -10% vs. November, may be considered a hopeful sign that the drop in the index level is only temporary
driven mostly by “external shocks.”

OTHER INDICATORS: The other underlying indicators do not lend

much encouragement, however, heading into the last two weeks of
trades. Daily MACD (12,9,26) is negative, on the second day under
the signal line. The historgram do not show hints of a dissipation of
the downward pressure. This despite the fact that the market
managed to eke out gains to close out last week. The weekly chart
shows an even worse picture, with the MACD extending its break
under the signal line to a third week. Thus, even as the monthly
reckoning shows a sustained bullish long-term trend, off the buy
signal it generation in July last year, the short- and medium-term
propositions invite caution.

STO (10,3,3) fell into oversold territory (daily - <20) at the close of
the week. This is an expected result considering the market has
retreated in seven (7) of the last nine (9) sessions. Neither the STO
nor its trigger line give off any indication of an immediate reversal,
although such in not being counted out, and further extensions of the
decline this week will serve to heighted expectations of, at the very
least, a technical rebound. The monthly view is worse, with STO just
about to break under the oversold line (>80), theoretically an intial
warning of an oncoming slump, and ergo, a first sell signal requiring
confirmation from either other indicators or from itself (a restoration
of the levels above 80 and an ensuing drop below it) The same period
chart shows it has slipped below the trigger line in the last two
months. Only the weekly STO offers some hope for a rebound as it is
poised to break above the trigger line. Nevertheless, it hovers in the
middle of the lower half of the STO range. It remains touch-and-g0,
from this perspective. It has not refuted, or presented a counter-
argument to the proposition of the MACD.

The uncertainty-driven hesitation of investors is best illustrated by

either the On-Balance Volume or the Accumulation-Distribution Line
Charts – or both. (we utilize the latter in this report.) While it has
managed to break a 19-session downtrend originating from the
November 4 top, the move following such break has been rather erratic, even as it keeps a slighly negative bias. At least from this indicator, there
appears no threat that the index will fall back towards the recent low of 3,953.70, the lower end of the major support band of 3,950 – 3,970. This
suggests, from the standpoint of investor behavior, a strong belief that the market will hold current levels on one hand, and the lack of fresh leads
to justify further foray by the index near the 4,150-4,200 upside range.

DISCLAIMER: THE MATERIAL CONTAINED IN THIS PUBLICATION IS FOR INFORMATION PURPOSES ONLY. IT IS NOT TO BE REPRODUCED OR COPIED OR MADE AVAILABLE TO OTHERS. UNDER NO
CIRCUMSTANCES IS IT TO BE CONSIDERED AS AN OFFER TO SELL OR A SOLICITATION TO BUY ANY SECURITY. WHILE THE INFORMATION HEREIN IS FROM SOURCES WE BELIEVE RELIABLE, WE DO NOT
REPRESENT THAT IT IS ACCURATE OR COMPLETE AND IT SHOULD NOT BE RELIED UPON AS SUCH. IN ADDITION, WE SHALL NOT BE RESPONSIBLE FOR AMENDING, CORRECTING OR UPDATING ANY
INFORMATION OR OPINIONS CONTAINED HEREIN. SOME OF THE VIEWS EXPRESSED IN THIS REPORT ARE NOT NECESSARILY OPINIONS OF ACCORD CAPITAL EQUITIES CORPORATION ON THE CREDIT-
WORTHINESS OR INVESTMENT PROFILE OF THE COMPANY OR THE INDUSTRIES MENTIONED.
ACCORD CAPITAL EQUITIES CORPORATION
GF EC-058B East Tower, PSE Center, Exchange Road, Ortigas Center, Pasig City, PHILIPPINES 1605 (632)687-5071 (trunk)
Outlook for Week 51_December 20 to 23, 2010
3 of 3

REGION INDEX LAST WK 52WK TECH BIAS WORLD MARKETS:

AMERICA DOW 11,491.90 0.70% 11.48% Positive – STO ov erbought
S&P 500 1,243.91 0.30% 13.49% Positive – STO ov erbought
NASDAQ 2,642.97 0.20% 21.23% Positive – STO ov erbought Bulls took control of global markets last week. Except for a
IBOVESPA 67,981.00 -0.50% 1.36%
Index negative but biased tow ard
accumulation on w eakness handful (refer to”wk” column) that slipped, major regional
MERVAL 3,403.08 0.40%
Neutral – STO ov erbought,
52.91% dissipated upw ard pressure bourses registered gains off the preceding week's levels.
Index neutral, STO crosses over
EUROPE CAC40 3,867.35 0.30% 0.95% trigge lline, positive ac cumulation
Index positive, STO ov erbought, While a good number are in overbought conditions as
DAX50 6,982.45 -0.30% 19.47% near-term distributive pressure
FTSE100 5,871.80 1.00% 12.54% Neutral to sidew ays
viewed from their respective STO levels, volume movements
Index near-term sidew ays, are generally slanted towards accumulation. This could
pos sible double-top at 4,885,
ASPAC All Ordinaries 4,853.00 0.50% 3.48% volume neutral, STO & MA CD mean either two things – short-term positionings for a
positive
Index @ 7w k dow ntrend,
window-dressing inspired year-end push (companies would
BSESN 19,864.80 1.80%
accumulative bias, STO breaks
17.45% above trigger line, MA CD show a want to have higher valuations to reflect on their balance
grow ing distributive pressure sheets, particularly financial instruments/assets and improve
Generally negative, but
HANGSENG 22,714.80 -1.90% 6.40% accumulative bias remains their financial picture at the close of the accounting year), or
KOSPI 11 2,026.30 2.00% 22.97% Positive – STO ov erbought it could be a reflection of investors' optimism over the
10pdEMA moves abov e
50pdEMA , w ith pos itive prospects for 2011.
NIKKEI 225 10,303.80 0.90% 1.38% momentum and ac cumulative
pressures. STO how ever is in
overbought territory
Distribution bias still ev ident, but
The technical biases for each tracked-index is shared in the
STO pierces trigger moving up last column of the accompanying table. Suffice it to say that
NZ50 3,325.11 1.60% 6.47% w ith MA CD show ing a gradual
increas e in pos itive volume. Index the technical outlook for most remains positive, although
basically sidew ays
SSE 2,893.74 1.90% -8.98% Neutral, slight negative bias distributive pressure is still significant enough to temper
TAIEX 8,817.90 1.10% 13.89% Positive – STO ov erbought any advance.
Negative – breakdow ns in index
below 10pdEMA , MA CD below
SEA JKSE 3,581.56 -4.40% 42.72% signal line, STO heads low er,
volume how ever f lat, s teady A LOOK AHEAD
Negative – index poised to move
under the 10pdEMA , MA CD f resh
KLSE 1,499.88 -0.50% 18.38% With very little news expected on the domestic front going
break below signal line, STO
biased s outh, near-term
into the final two weeks of trades, investors' will more and
distributive pressure
STI
PSEI
3,153.01
4,057.33
-1.00%
-1.90%
12.08%
33.11%
Mirrors KLSE
Mirrors KLSE, STI
more take their cue from overseas. Last week, we saw a shift
in sentiments to positive after much of the challenges
presented by Europe and China were satisfactorily hurdled. Europe has moved from its concerns over Irish debts, and fears of a possible contagion
with the 16 members economies agreeing to put up a facility to prevent a recurrence by 2013. There are still obstacles to be hurdled, as Germany
continues to veto any move to expand the present rescue funds, in light of Spain and Portugal's fates hanging in the balance. The markets will be
keenly observing developments in this area. Last week, the debt and sovereign ratings of Spain and Ireland were pulled down.

The first three days will see the markets focusing on the micros of individual companies with economic releases light until Thursday. US markets will
be closed on Friday for the observance of Christmas. Forecasts for existing home sales, core durable goods orders, and new home sales are all positive
which should give investors enough reason to increase their equity exposures. Unemployment claims are seen to nudge marginally higher.

The PSE Index is currently sitting on the lower edge of its 4,050-4,070 support band. Although we expect trades to thin out as we move closer to the
holidays, and even as the technical biases indicated at the beginning of this report presents a negative outlook, we may see bargain-hunters providing
the needed push and support to hold the market at and from its present trading range. We still expect the market to close the year above the 4,100-
mark.

DISCLAIMER: THE MATERIAL CONTAINED IN THIS PUBLICATION IS FOR INFORMATION PURPOSES ONLY. IT IS NOT TO BE REPRODUCED OR COPIED OR MADE AVAILABLE TO OTHERS. UNDER NO
CIRCUMSTANCES IS IT TO BE CONSIDERED AS AN OFFER TO SELL OR A SOLICITATION TO BUY ANY SECURITY. WHILE THE INFORMATION HEREIN IS FROM SOURCES WE BELIEVE RELIABLE, WE DO NOT
REPRESENT THAT IT IS ACCURATE OR COMPLETE AND IT SHOULD NOT BE RELIED UPON AS SUCH. IN ADDITION, WE SHALL NOT BE RESPONSIBLE FOR AMENDING, CORRECTING OR UPDATING ANY
INFORMATION OR OPINIONS CONTAINED HEREIN. SOME OF THE VIEWS EXPRESSED IN THIS REPORT ARE NOT NECESSARILY OPINIONS OF ACCORD CAPITAL EQUITIES CORPORATION ON THE CREDIT-
WORTHINESS OR INVESTMENT PROFILE OF THE COMPANY OR THE INDUSTRIES MENTIONED.