After setting new record highs last week, the local stock market is seen trading sideways as investors may turn hesitant to load up more equities at lofty prices.
Last week, the main-share Philippine Stock Exchange index surged 2 percent to close at a new record-high level of 4,880.71 on Friday.
In terms of fundamentals, stock market prices are still very expensive relative to earnings, said AB Capital Securities analyst Gregg Adrian Ilag.
“From the technical viewpoint, the opening gap looks very bullish, especially after the index closed above the previous all-time high at 4,756,” Ilag said, adding that the momentum indicators were still showing a bearish divergence.
He said the PSEi’s support levels should be between 4,848 and 4,852 and resistance levels near 4,912.
“We advise investors to wait for lower index levels before buying blue-chip stocks, an entry at the current level poses a risk of trading loss,” Ilag said.
He said there would only be a few economic indicators to watch out for this week, which means that global market sentiment will most likely reflect developments in Europe.
The analyst noted that last week, foreigners were net buyers as optimism prevailed on investors’ minds despite the ongoing eurozone fears.
Banco de Oro Unibank chief strategist Jonathan Ravelas said that based on the charts, a break below the 4,700 levels could trigger further tests toward the 4,600 levels in the near term.—Doris C. Dumlao