Cautious trading seen
After a roller-coaster ride last week, local stocks are seen to trade with caution this week and enter the consolidation phase before resuming an interrupted upswing.
Despite a dip into “bear territory” earlier last week, gains in the last three trading days allowed the main-share Philippine Stock Exchange index to rise by 283.11 points or 4.5 percent, its first weekly gain in more than a month.
“The recent gains may be convincing to return and buy bargain issues again. However, there is a risk that this might be a technical rebound. Notice the gaps made by some issues upon their opening during the past three days,” said AB Capital Securities analyst Maria Arlysa Narciso. “What we are looking for in particular is a level of consolidation where an issue or the index itself forms a strong support after deep and successive declines.”
AB Capital Securities is looking at a possible consolidation at 6,115 to 6,330 with 6,000 seen as a main support. “Any drop below this major support level would confirm the dreaded long way down to 5,500 if we purely rely on technical valuation,” she said.
Philippine Stock Exchange president Hans Sicat told reporters Friday night that the market’s “comfort level after last Monday and Tuesday certainly has increased.” The recovery seen in the last few days across global markets, Sicat said, was due to the fact that investors realized they had overreacted to US Federal Reserve Chair Ben Bernanke’s statements about the tapering of quantitative easing or the aggressive bond-buyback activities that injected a lot of liquidity across global markets.
The PSEi entered the bear market territory on Tuesday last week after declining 21 percent from its peak of around 7,400 in mid-May.
“It’s kind of funny because when you think about it, when the Fed mentioned they will be looking at data and as data gets better, they will think about tapering, everybody interpreted that they will do it tomorrow,” Sicat said, leading a scramble for the exit door. Doris C. Dumlao
