There is still room for the bourse to climb this week, although profit-takers may also drag it down from time to time just to keep it in check and possibly allow it to hover around 7,500–its pandemic high.
With all the frenzy over easing monetary policies settling, traders may now try to book profits, especially after the benchmark Philippine Stock Exchange Index (PSEi) entered the bull territory, according to Japhet Tantiangco, research manager at Philstocks Financial Inc.
Bull territory
For a stock market to be considered in bull territory, it must have risen by at least 20 percent from a recent low.
In the PSEi’s case, it charged into the bull market mid-week and planted its feet firmly there. The index closed at 7,428.30 on Friday, or 20.62 percent above its lowest for the year at 6,158.48, which was recorded on June 21.
“While we may see episodes of profit-taking [this] week as the market is technically overbought … the general direction of the bourse is still projected to be upward,” Tantiangco said.
“Optimism toward the dovish monetary policy stances both here and abroad are expected to help in sustaining the market’s movement,” he added.
Key catalyst
The Bangko Sentral ng Pilipinas (BSP) announcing lower cash buffer requirements for banks was among the key catalysts last week, along with the US Federal Reserve’s half-point rate cut.
With traders now holding their breath before the BSP’s next policy rate-setting meeting in October, Philstocks sees the market’s support level at 7,400 and resistance at 7,700.
Meanwhile, stock trading platform 2TradeAsia.com said “more volatile trading action” was expected in the coming months as companies adjust year-end targets and report their nine-month earnings results.
2TradeAsia.com sees the market’s immediate support at 7,100 and resistance at 7,500.