MANILA, Philippines–Local stocks are seen continuing their consolidation phase this week as the market awaits fresh incentives to load up shares.
Last week, the main-share Philippine Stock Exchange index (PSEi) gave up 63.82 points, or 0.87 percent, to end at 7,230.56 on Friday. The index hit a high of 7,372.16 on Wednesday but faltered in the last two sessions as the market braced for Typhoon Ruby’s landfall.
“Chart-wise, expect the index to continue to range between the 7,000-7,300 levels in the week ahead,” said Jonathan Ravelas, chief strategist at Banco de Oro Unibank.
“The 7,350-7,400 level is proving to be a tough resistance as any sign of breaching that mark is being met with profit-taking,” he said.
Luis Gerardo Limlingan, managing director at Regina Capital Development Corp., said the PSEi might move between 7,160 and 7,360 in the next two to three weeks as the main trend had reversed from upward to sideways.
“Trend trajectory remains up if we’re basing on a one-year trend so the expected consolidation should provide price stability before trying to create new highs for the index,” Limlingan said.
Given this consolidation phase, he said the recommended strategy for the next two to three weeks would be to trade the range until a reversal occurs.
“We advise traders to use RSI (relative strength index) for this kind of strategy because a range-bound indicator like this will give reliable buy/sell triggers,” he said.
Since the start of this year, the PSEi has gained a total of 1,340.73 points, or nearly 23 percent.–Doris C. Dumlao