Market expected to move sideways this week

MANILA, Philippines - Share prices are likely to continue with its sideways movement this week amid the lack of positive leads.

“Expect the index to continue consolidating between its weekly high and low as technical readings struggle to secure a foothold in the current trend scenario. With reaction lows starting to slope upwards, trend bias for this week is slightly bullish but the index still needs to stage a clear reversal,” said Luis Limlingan, managing director at Regina Capital.

Limlingan said the Philippine Stock Exchange index (PSEi) would continue to reflect volatility amid the prevailing global uncertainties.

“Note the index is still not out of the woods yet so keep a close watch on support,” he said.

Limlingan advised investors to be selective of issues given the prevailing market volatility.

On the other hand, Jason Escartin, investment analyst at F. Yap Securities said the PSEi’s outlook has improved.

“Our short-term outlook has improved with PSEi’s lows rising from 6,603, 6,720 and 6,924. Meanwhile, 7,200 has proven to be a robust resistance, after two previous tests,” he said.

He noted the previous two weeks has seen the PSEi finally trade above its 30-day simple moving average (SMA).

But still, he said the medium and long-term views are not as rosy as it still trades below its 100- and 200-day SMAs.

“Also, the PSEi’s 30-day average true range has remained elevated since its 480-point drop on Aug. 24, hovering between 95 and 100, compared to 80 in prior periods,” he said.

For this week, Escartin said immediate support is expected at 7,000, while secondary at 6,900 and resistance at 7,150 to 7,200.

He said the disappointing economic data from China brought local equities lower but noted weak data from the US – which spurred speculation the Fed may not raise rates this year – offset the declines.

“The PSEi ended the week 83 points lower at 7,055 (-1.17 percentweek-on-week), weighed down by property (-2.84 percent) and financials (-1.53 percent).  Average turnover fell 23 percent to P5.9bn, as market breadth remained bullish, 91to 89,” Escartin said on last week’s performance. 

He said foreigners remained net sellers at P384 million daily.