Bearish trading seen

THE LOCAL stock market is seen trading with a bearish bias this week as the market digests remaining corporate-earnings reports while the “ghost” month has started.

Last week, the Philippine Stock Exchange index (PSEi) lost 124.08 points or 1.65 percent to close at 7,408.44 on Friday, weighed down by jitters on the yuan’s devaluation and a mixed bag of local second-quarter corporate results.

But since most of the corporate results had come out, there would likely be not much local news that could move the market, said Bede Lovell Gomez, vice president at First Metro Investment Corp. With the onset of the “ghost” month, many investors are seen opting to stay on the sidelines.

The next big news to wait for by the end of this month, Gomez said, would be the second-quarter Philippine gross domestic product (GDP) growth rate.

“Unless the index recovers above the 260-day moving average, we are to expect wider

pullbacks to two-month range support (7,272) as weaker signals and recent support breaks last week put downward pressure on prices,” said Luis Gerardo Limlingan, managing director at Regina Capital Development Corp. “Lightening up or taking profits on trading positions is advised, and then wait for a support bounce before entering a range buy.”

The test of the support level will be crucial, Limlingan said, noting that trend reversals would usually occur during such crossroads.

Jonathan Ravelas, chief strategist at Banco de Oro Unibank, said last week’s close below 7,500 signaled “the market’s march toward the 7,000 levels.” Doris Dumlao-Abadilla