LOCAL stocks are seen continuing to consolidate this week while investors sift through global news and the ongoing stream of local corporate earnings reports.
Last week, the Philippine Stock Exchange index (PSEi) slipped by 20.76 points to close on Friday at 6,771.30.
“Further consolidation is expected from the index this week as 100-day moving average (6,850) continues to put pressure on prices,” said Luis Gerardo Limlingan, managing director at Regina Capital Development Corp.
“Weaker momentum readings increase the chance of a downward reaction back to previous support points,” Limlingan added.
Failure to hold the 20-day moving average at 6,700, Limlingan said, could trigger a pullback toward the January 2016 breakout point at 6,600. “We prefer this scenario to happen in order to induce fresh demand and establish a solid higher low base,” he said.
On the other hand, he said breaking past the 100-day moving average at 6,850 would inspire rallies toward 6,900. But since this was the PSEi’s long-term trend resistance, he said the upside might be limited at this level.
“We reiterate a defensive strategy by lightening up on rallies and keeping watch on key support levels before accumulating positions,” he said.