Market seen to resume upward trajectory
The stock market is seen resuming its rally with a full five-day session week ahead that will test the mettle of local share prices.
Analysts have predicted an upward bias in this week’s trading, with the Philippine Stock Exchange Index (PSEi) gunning the 8,200 level.
“Having breached 8,100, the PSEi’s next target is 8,200. Key global incentives would come from merger and acquisition stories, plus highly capitalized stocks’ expansion overseas. Meanwhile, swings at the forex mart will be trailed, especially for local listed firms that have significant exposure to the US dollar, either via debt or topline,” said Jason Escartin, investment analyst at F Yap Securities.
This week will be the first in three weeks that trading in the local stock market will go uninterrupted by holidays.
Last Wednesday, the PSEi took a pause heading into Thursday’s “Araw ng Kagitingan” holiday break but came back on a strong note on Friday to finish with its 27th record finish for the year and its first close above the 8,100 mark.
Week-on-week, the benchmark index climbed 134 points or 1.68 percent.
“Talks on the vulnerability of the market is gaining decibel. The bears have found an audience but the bulls have managed to shoot down most of the arguments. Yet even as the market has, in the recent weeks, eked out fresh all-time records, the sources of fear have not been invalidated. In fact, it could’ve even more strengthened,” said Justino Calaycay Jr., analyst at Accord Capital Equities Corp.
“Everyone is in agreement that a correction is bound to happen — if not a reversal. But the real question that has not found a satisfactory answer — or even hints of one — is when?” he added.
Escartin said oil prices would continue to influence sentiment in the market this week , especially after ample supplies from the US and Saudi Arabia weighed on prices mid-week.
He said that whether or not the US Federal Reserve would uphold its earlier June timeline for a possible rate hike is also something market watchers are keeping their eyes on.
Analysts have placed immediate support at 8,000 to 8,100, while resistance is at 8,200 to 8,250.
“We maintain a hold but we advice traders to be more cautious as the index’s overbought status may cause volatility this week. A stop-trigger will be very helpful to protect positions against potential corrections,” said Luis Limlingan, managing director at Regina Capital Development Corp.
“For the index, our trigger is set at its 9-day MA (moving average) of 7,990. For stock positions, a breach below 20/50-day MA or previous lows, whichever is more significant, will trigger to take profits,” Limlingan added.