Index may continue downtrend this week

MANILA, Philippines — The stock market is expected to remain on the downtrend on another shortened trading week while investors wait for positive catalysts.

The benchmark Philippine Stock Exchange index (PSEi) was winless last week, suffering four days of consecutive losses.

It finished below the 6,400-mark last Friday at 6,383.70, down by 2.07 percent week-on-week.

Japhet Tantiangco of Philstocks Financial said the bourse has broken below the 6,400 level, which was considered as a support.

“The market’s 50-day exponential moving average has also gone below its 200-day counterpart, forming a death cross which indicates the possibility of a downtrend moving forward. All in all, the market’s chart has shown bearish developments,” he said.

While last week’s four-day decline is seen to have opened the door for bargain hunting opportunities, Tantiangco said the optimism needed for the market to rally is not yet seen.

He said investors are still waiting for positive catalysts, primarily one which would hint of monetary policy easing soon in the country.

“Hence, next week, unless we see positive developments on the outlook of our interest rates, the local market may only move sideways with bargain hunting providing the upside force. Downside risks including the less dovish outlook of the Federal Reserve and the sustained weakness of the peso may continue to weigh on market sentiment,” Tantiangco said.

2TradeAsia said the recent anemic turnover of P3.6 billion on average may be indicative of a potential retest of the PSEi’s three-year key support within 6,000 to 6,100.

“This opens up range trading opportunities while the macro backdrop resolves itself,” it said.

Resistance is currently seen at 6,400 to 6,500.

There will be no trading on the PSE today in observance of Eid’l Adha (Feast of Sacrifice).