PSEi to gain upward momentum this week

The Philippine Stock Exchange index (PSEi) is expected to gain more upward momentum this week and may be closer to the 9,000 level before the end of the year, traders said.

Chris Mangun, head of research of Eagle Equities, said the market needs more consolidation to sustain the upward momentum.

“The market simply could not sustain itself above 8,500 as it needs more consolidation within that area for more momentum. Nonetheless, we still have several weeks and I think it will gain the momentum it needs to be closer to 9,000 before the end of the year,” he said.

Last week, the PSEi saw a very interesting period, reaching another record high but also pulling back.

“We had a very interesting week on the PSEi this week. On Monday, we saw a huge 150 point move to the upside to close at 8,521.81 and then we stayed above 8,500 for most of the week. However on Friday, in the afternoon session, we saw a total reversal with an 80-point drop to close the week at 8,433.48. We had average volume for the week and there were no surprises in earnings reports as they came in within or a bit above estimates,” Mangun said.

He noted that third quarter earnings results were indeed positive, which added to the positive sentiment.

“I expected the gap to be filled at the 8,300 level this week, however, in anticipation of positive earnings reports. We saw a lot of buying pressure on several issues which kept the index above 8,500 for most of the week. They were only able to delay the inevitable which resulted in the drop that we saw on Friday,” he said.

“Overall, we closed the week up 0.68 percent. We enter next week with some negative momentum. We may or may not fill that gap at 8,300,”Mangun added.

In all, he said the market is still in consolidation phase.

“I am tightening my range by adjusting my main support from 8,200 to 8,300,” he said.

Jonathan Ravelas, chief market strategist at Banco de Oro, said the week’s close at 8,376.13 shows that the market could still try another assault toward the 8,500 to 8,600 levels in the near-term.

“Immediate support and resistance is seen at 8,300 and 8,600 levels, respectively,” Ravelas said.