For the fifth straight week, the 30-company main index ended on a higher note, closing last Friday at 1,130.20 points, up by 1.73 points or 0.15 percent week-on-week.
But despite the continued uptick, stock experts remain apprehensive about the market’s longer-term prospects, given the limited gains and the trading swings seen this week.
"Investors have apparently reverted to a shorter-term investment horizon following the market’s recent rally. This may indicate that while confidence is up, investors are not totally convinced as to the market’s prospects next year," said Spencer Yap, vice president of BPI Securities.
He said as a number of sectors will continue to face challenges despite the reduction in borrowing costs, further corrections in the market will present a mentum that is clearly upwards as gleamed from the substantial strides made over the last few weeks, hence presenting an opportunity for profit-taking, as seen in the early part of last week.
"Pullbacks are natural specially if investors are reminded of the global economy’s weakness. The market will digest the gains it has made and should consolidate a little before the short term rally continues. The Phisix has begun to show some signs of hesitation lately. It has formed two spinning tops in the last two sessions while volume has trimmed down a bit," Vistan wrote in the investment website PhilStocks.net.
But for the longer term, he said doubts remain about the sustainability of the rally, as the market’s recent run-up has largely been driven by technical factors, with faint signs of improvements in corporate and economic fundamentals.
"We need stronger evidence of improvement in the economy and corporate profits before the market can make a sustained major advance. Still, the Phisix’s downside appears to be capped at 1,050. If we will not get any fresh negative surprises anymore, we believe that the market has already (reached) its low point for the year at 980. The big test for the market is its medium to long term upside potential. It is still a mystery how the market will perform next year," Vistan said.
From a technical standpoint, BPI Securities senior analyst Roberto Cano pointed out that market sentiment has recovered a bit as can be seen from the improvement in the daily value turnover for the past weeks to the P400 million range.
"Technically, the market needs to break the 1,135-point resistance level before it can test the medium term target of 1,250. We suggest accumulation on dips," he said. "The market is testing a critical resistance at 1,135 but is encountering some difficulty in breaking through it. This is likely due to some profit taking as some investors take the resistance as cues to cash in on their gains," Cano added.