Stock market investors could be in for a bumpy ride this week, with the PSEi likely to face more volatility, based on technical indicators.
“We expect the PSEi to face corrective pressure this week,” according to Luis Gerardo Limlingan, managing director at Regina Capital.
The PSEi again slipped below the 7,700 level last week. It surged to as high as 7,721.57, partly on optimism over President Duterte’s state visit to China. By the closing bell on Friday, however, the PSEi was back down to 7,650.
Limlingan said prices were likely to find their support between 7,580 and 7,500 “in an attempt to establish a higher low base.”
“Given the index’s weak medium-term trend trajectory along with soft technical momentum, we need this pattern to prompt at least a consolidation, if not an uptrend,” he said.
Share prices last week also took their cue from indicators overseas, as investors weighed the likelihood of an interest rate hike by the powerful United States Federal Reserve before the end of the year. Investors last week also cheered a report by Moody’s investors Services raising its growth forecast for the Philippines.
Nevertheless, Limlingan said “a cautious approach is still advised coming into this week’s trading as volatility remains to be our top concern.”
Regina expected “sharp price movements with slight bias on the downside” with no clear market drivers.
“Issues with stable support bases with no negative technical divergence are good buys this week, while we suggest avoiding issues trading in a downtrend or near resistance as they contain the most corrective risk,” he added.
For the coming week, investors are also expected to position ahead of the third quarter earnings season, which will enter full swing in the next few weeks.
This also comes ahead of expectations of higher consumer spending typically seen in the fourth quarter of the year, which includes the busy Christmas season.—Miguel R. Camus