MANILA, Philippines - The local stock market, which has gained over 200 points since the start of May, could move in either direction this week depending on developments overseas, analysts said.
Last week, the PSEi gained 66.72 points or 2.98 percent to close at 2,308.7 on average volume of 2.46 billion shares valued at P3.38 billion.
The market’s improvement week-on- week has been buoyed by rising optimism that the US economy is bottoming given encouraging data reports.
“Economic indicators in the US have been driving markets all over the world. It started when housing indicators stopped setting record lows. Although the numbers were still negative, the deceleration in the drops gave optimism that a bottom might be near,” said Prince Anthony A. Yeung of AB Capital Securities.
“The PSEi is on a crossroad at 2,300. Should it conclusively break through this resistance come Monday, then it will be a very bullish signal and the rally will continue gaining ground. However, should it falter then the overdue correction might be upon us,” Yeung said.
Accord Capital Equities Corp.’s Jun Calaycay said the market is ripe for correction as stocks have reached overbought levels.
“It has been a seven week old run up, highlighted by positive closes in nine of the last 11 sessions. Those who managed to take the sustained wave of the advance may find it prudent to book their positive margins whilst re-positioning for a possible buy back several notches below. They may be joined by those who failed to get on the first time which will serve not only to strengthen the support but posit the probability of a relatively stronger ensuing rebound,” Calaycay said.
Initial support has been pegged at 2,235 while major support remains at 2,170. Resistance is expected to be at 2,350.