"Going into the last trading sessions of the year, the market may drift sideways with an upward bias," AB Capital Securities’ Jose Vistan Jr. wrote at the investment website PhilStocks.net.
He said while volume may get thinner as some investors go on an extended Christmas vacation, the market’s psychology is seen to get a lot healthier as the new year approaches.
"Some investors are already anticipating a rebound in the global economy by the second half of the year. Once such a view becomes broader, then we could be looking at a strong start for stocks in 2002," Vistan said.
Stock prices rose last week, helped along by some last-minute window dressing, pushing the main index higher by 19.06 points or 1.77 percent week on week to 1,145.97.
Despite a number of positive corporate developments that perked up trading, the market’s gains remained modest due to the continued worries of a global economic crisis.
"The market’s breadth was mixed as the traditional Christmas rally was humbled by unrelenting fears of a long economic slum," Vistan said. Still, the market managed to overcome such fears and extended the buying streak that started in November, he added.
But the PhilStocks report warned of possible dampeners as fund managers monitoring developments in Afghanistan with fugitive Osama bin Laden remaining at large, along with fresh apprehensions surfacing from Argentina and Japan.
While the peso remained stable, Vistan said the market should watch out for the drop of the Japanese yen to a three-year low against the dollar as Japan struggles amid unemployment of more than five percent.
Another factor is the deteriorating situation in Argentina, where countless people have either died or were injured last week due to the violence sparked by the government’s decision to slash wages and freeze bank accounts to avoid a devaluation.
"Things can still get worse, especially if the Argentine peso will be devalued," Vistan said.
"We are still in a very challenging environment. It takes a lot of courage to be aggressive with the lack of any clear and compelling evidence of economic recovery. But investors should make up their minds and lay down their bets or be left out," he pointed out.
He added since the prognosis is for the economy to recover, investors can narrow their buying to those groups that are best suited to benefit from the current environment.
"If most companies are expected to benefit from an expansion, then risk in equities would be relatively low and an accumulation strategy is advisable," Vistan said.