Range-bound trading expected this week

MANILA, Philippines - Range trading will mark the local stock market’s performance this week pending the release of market-moving leads here and abroad, with the 6,800 level still proving to be a strong ceiling. 

Upward movements closer to the resistance level will provide an opportunity for investors to tweak their portfolio and unload stocks at a profit, analysts said.

“Another range trading mode within 6,700 to 6,850 is expected, pending other catalysts at home,” said Jason T. Escartin, investment analyst at 2tradeasia.com.

“The market has seemingly factored-in global support for stimulus, and trading stance would likely be sector-specific,” Escartin said.

Gab Aguila, an analyst at DA Market Securities, said the market would likely continue to consolidate, an testing support levels.

“We will see the market moving sideways this week. As recent events have shown, the 6,800 level is a strong resistance but we also have a strong support at 6,600,” Miguel A. Agarao, an analyst at Wealth Securities Inc., said in a phone interview.

“On a technical perspective, we see a corrective or consolidating readings,” said Joyce Anne J. Ramos, an analyst AB Capital Securities Inc.

Ramos said the main index might momentarily consolidate between 6,640 and 6,800 level, but a breakout could push up the resistance level back to 6,900.

Week-on-week, the Philippine Stock Exchange index rose 1.73 percent or 114.94 points to close at 6,762.62, snapping three consecutive weeks of decline for the bellwether index.

The uptick was led by industrials (+2.5 percent) and service (+2.4 percent) sectors despite an 18-percent decline in turnover to P7 billion while net foreign selling climbed to P162 million from P93 million a week ago.

The local bourse welcomed the European Central Bank’s fresh stimulus measures that will ensure high liquidity despite the US Federal Reserve’s tapering.

For this week, Ramos said noteworthy economic data include the Philippines’ unemployment rate, US retail sales and producer price index, and Japan’s final gross domestic product and monetary policy statement.

“Interest might remain strong in industrials, holdings and service sectors, as lending and reduced trading gains cap financial sector’s performance,” Escartin said. He pegged the immediate support at 6,700 and resistance at 6,850-6.870 levels.

Agarao said investors should remain into the market, buying into companies that outperformed expectations.

“In this scenario and at the current level of the index, we advise clients to take profit near the resistance levels and wait for pull back before accumulating,” Ramos said.