Market expected to consolidate

The local stock barometer is seen consolidating below the 8,000 this week as profit-taking escalates whenever the market is close to this level.

Last week, the main-share Philippine Stock Exchange index fell by 1.72 percent to close at 7,932.82.

The market failed to sustain its momentum above the 8,000 levels despite encouraging second quarter corporate earnings report of some listed companies that were just in line with market’s expectation, BDO Unibank chief strategist Jonathan Ravelas said.

“Chartwise, the week’s close at 7,932.82 seems to have found support near the 7,900 levels,” Ravelas said. “Expect a retest of the 8,000 levels.”

Immediate support and resistance levels were seen at 7,700 and 8,000 levels, respectively.

Juan Barredo, COL Financial chief technical analyst, said in a briefing on Saturday that the PSEi was just hitting this wall of supply as investors were pocketing gains at 8,100.

“We just have to finish this phase but I’m quite bullish,” Barredo said. “We may have to pause here for a while.”

Barredo said August was historically a weak period for stocks. As such, he said the tendency would be for the market to move sideways for a while or pull back a bit more.

“I would prefer that we move sideways. That would tell me that the market is clearly much stronger and the ability to climb will be much more significant,” he said.

Once the PSEi is able to decisively conquer the major resistance at 8,136, Barredo said the next index target would be 8,370 to 8,540. He said this would likely be reached at the latter part of this semester through the first quarter of 2018.

Investors, he said, could wait for prices to simmer a bit. “We’re waiting for nice pullbacks, nice entry points, nice fresh patterns,” he said.

Meanwhile, Barredo noted that US markets may continue its upswing but soon need a wider correction.

“The US market is still very strong looking into second half but I think there may be a bit of a problem in the US market pretty soon. It won’t be overnight but it’s starting to be quite stretchy. I’m seeing a major correction between now and closing of the year,” he said. —DORIS DUMLAO-ABADILLA