Volatile trading seen this week

Local stocks are expected to remain volatile this week, with investors keeping a close eye on key technical indicators before making huge moves.

The benchmark Philippine Stock Exchange index (PSEi) lost around 1.4 percent last week to 8,311.08.

The decline came despite the country’s successful hosting of the 31st Association of Southeast Asian Nations Summit, where several business and trade deals were closed. Moreover, the Philippine Statistics Authority said last week that gross domestic product (GDP) grew 6.9 percent in the third quarter, or faster than expected.

“The index barely maintained itself above the 8,300 level. Volume as of close is significant and still within average. Looking into the indicators, we can see hints of continued decline although as of now the 50-day MA (moving average) is respected,” according to Luis Gerardo Limlingan, managing director at Regina Capital Development.

He said indicators also suggested “high volatility so caution is advised.” Should support levels crumble, he said the market could see a strong barrier down to the 8,100 level.

“We recommend a range trade based on the current movement,” he added.

With the third-quarter earnings season wrapped up, Limlingan said results were mixed.

Property and gaming sectors exceeded expectations, while construction was disappointing. Banking stocks were in line with expectations while mixed results were seen in the retail sector, he said.

The Philippines is due to release balance-of-payments data for October this week. Abroad, investors would look toward to economic and financial announcements in the United States and Europe, including jobless claims and the US Fed activity index, Limlingan said.