Stocks seen to continue trading lower

The local stock barometer is seen to continue trading below a tough barrier at 8,000 level this shortened trading week as investors turn cautious.

Last week, the Philippine Stock Exchange index (PSEi) fell by 0.6 percent to close on Friday at 7,873.18.

BDO Unibank chief strategist Jonathan Ravelas said investors seemed to be on an extended profit-taking as the market encountered a strong resistance at the 8,000 levels.

“Rising oil prices as well as lack of fresh incentives to trade kept the market confined at the 7,700 to 8,000 levels,” Ravelas said, noting that Friday’s finish showed that the market was consolidating within this range.

Christopher Mangun, head of research at Eagle Equities Inc., noted that the PSEi had held support at 7,840 for the last two weeks on the daily chart but could not break above resistance at 8,000.

“Investors may continue to sit on the sidelines as we go into to the holiday season and maybe wait as long as after the election in May. Because of this, we may continue to see the index go lower,” Mangun said.

After 7,800, Mangun said the PSEi’s next support level would be at 7,600.

He said retail investors would likely continue trading second-liners and speculative issues as has been the trend for the past few weeks.

“The general investors’ sentiment has gone from cautious to extremely cautious as investors are probably anticipating an event that would be negative for the market or possibly waiting until the end of an event that could go either way,” Mangun said.

“The event could be the coming elections in May … The bottom line is local investors are staying away indefinitely and this will cause the market to go lower,” he added. —DORIS DUMLAO-ABADILLA