Cautious trading seen

LOCAL stocks are seen to trade with caution this week as the local stock barometer failed to sustain a rally above the 7,000 mark last week.

Ahead of the long weekend break, the Philippine Stock Exchange index (PSEi) slipped by 0.08 percent week-on-week to close on Friday at 6,927.07. The rally earlier in the week was reversed when third-quarter domestic growth turned out slower than expected.

Last Thursday, it was reported that Philippine gross domestic product (GDP) had expanded by 6 percent year-on-year in the third quarter versus the 6.3 percent consensus forecast.

“The PSEi is expected to face more downward pressure this week following the failed resistance test. Revising 6,720 support is a possibility if 6,900 initial support breaks down,” said Luis Gerardo Limlingan, managing director at Regina Capital Development.

On the other hand, he said breaking 7,028 would be needed to pursue the PSEi’s consolidation rally and move toward the resistance of 7,160.

“Our ‘range trade’ recommendation is maintained but we advise keeping a close watch on support for issues that recently corrected,” Limlingan said. “For issues trading close/at resistance, a ‘range trade sell’ is advised and then wait for prices to settle down before planning to position again.”

Local stockbrokerage AB Capital Securities said the mid-term trend remained bullish for the PSEi but noted that the long-term trend technical indicators remained mixed. The initial and secondary support levels could be found at 6,800 and 6,720, respectively, while the initial and secondary resistance levels could be found at 7,000 and 7,100, AB Capital said. Doris Dumlao-Abadilla