LOCAL stocks are seen remaining vulnerable to profit-taking pressures ahead of the June 16 US Federal Reserve policy meeting this week.
Last week, the main-share Philippine Stock Exchange index (PSEi) revisited the 7,700 levels but pulled back sharply on valuation woes alongside a string of external concerns. The main index lost 0.06 percent week-on-week to end at 7,509.94 on Friday.
For the week, the PSEi hit a new high for the year at 7,792.34.
“Overstretched market valuations along with uncertainties arising from Brexit (the possibility of Great Britain’s exit from the European Union) concerns and the June 16 US Fed meeting caused investors to solidify their gains from recent rally,” Banco de Oro Unibank chief strategist Jonathan Ravelas said.
Chartwise, the week’s close at 7,509.94 continued to suggest the market to range between the 7,350- 7,600 levels in the week ahead, Ravelas said.
“A break below the 7,350 levels could call for further weakness toward the 7,000 levels,” he said.
Luis Gerardo Limlingan, managing director at Regina Capital, expects profit-taking to continue, especially during the first two trading days of the week.
“Keep watch on 20-day moving average (currently at 7,470) as this will be the week’s key trigger point. A breach will allow wider corrections to 50-day moving average (7,319), extending to 7,300,” Limlingan said.
“Holding support will establish a fresh higher low base which is expected to provide momentum to push prices back to its weekly highs. While a range trade strategy is maintained, some profit-taking can be done on issues that hit their respective trigger points or those still trading at overbought conditions. On the other hand, issues trading near support with no short-term technical divergences are good buys for the week,” he said. Doris Dumlao-Abadilla