Stock Market Weekly: Sideways trading after bargain hunting  

WHAT HAPPENED LAST WEEK

Last week, the Philippine Stock Exchange index (PSEi) recovered by 1.74% week-on-week, closing at 6,724.14.The local bourse started the week on a high note amid persistent value buying after it closed at the key support level of 6,600 the previous week. However, gains were short-lived, as investors stayed on the sidelines mid-week waiting for the Philippine November inflation data that came in line with consensus.

On Friday, the index ended the week on a high note, following the peso’s appreciation to the PHP 57 level. In the US, the labor market added about 227,000 jobs in November, higher than consensus. The unemployment rate aligned with expectations at 4.2%. Labor force participation stood at 62.5%, and wage growth came in at 4.0% year-on-year.

WHAT TO EXPECT THIS WEEK

The PSEi is expected to trade sideways with a slight upward bias due to:

1. Persistent value buying, 
2.  Continued peso appreciation, and
3.  Lower oil prices, with Brent and West Texas Intermediate (WTI) improving to  USD 70 per barrel and  USD 67 per barrel, respectively.

On the foreign front, investors will digest US inflation and PPI data for November 2024, with consensus expecting slight upticks. However, sentiment may be dragged by ongoing geopolitical unrest in the Middle East, as Syrian rebels successfully oust President Bashar al-Assad.

Resistance:  6,800 / 6,700

Support:  6,600 / 6,400

ANALYSIS

The PSEi bounced back from the 6,600 level despite heavy foreign selling. It remains below key moving averages (50-day, 100-day, and 200-day), but momentum indicators are improving, with the RSI returning to neutral levels and the MACD above the signal line.

The bourse appears poised to retest the 200-day moving average (MA). At current levels, the risk-reward is skewed to the upside, making accumulation at current levels advisable.

Robinsons Retail Holdings, Inc. (RRHI) |  BUY ON BREAKOUT | Target Price: PHP 47.00 

• RRHI is trading below its 50-day, 100-day, and 200-day MAs and within the 20-day MA.
• Momentum indicators suggest RSI is moving away from oversold territory.
• A breakout above PHP 41.23, supported by increased volume, could confirm an uptrend.

Action Plan:

• Accumulate once it breaks above PHP 41.23.
• Take profits at PHP 47.00.
• Set stop-loss below PHP 38.00.

Aboitiz Power Corp. (AP) | BUY ON BREAKOUT | Target Price: PHP 45.33

• AP’s share price is consolidating below a trend line with multiple retests for a breakout.
• While below its 20-day and 50-day MAs, it remains above its 100-day and 200-day MAs.
• Momentum indicators (MACD and RSI) suggest potential upward movement.

Action Plan:

• Buy upon breakout above PHP 37.30.
• Take profits at PHP 42.90.
• Set stop-loss at PHP 34.30.

Semirara Mining and Power Corp. (SCC) | BUY ON BREAKOUT | Target Price:  PHP 37.80  

• SCC shows bullish momentum and trades above all key MAs.
• A gap-down in early November between PHP 34.00 and PHP 32.00 is being filled.

Action Plan:

• Accumulate near PHP 33.60.
• Take profits at PHP 38.64.
• Set stop-loss below PHP 30.91.

KEY DATA RELEASES

1.  PH Balance of Trade for September: Monday, 09 Dec 2024 (Prev.: -USD 5.08 billion; Est.: -USD 4.20 billion)

2. US Inflation Rate year-on-year for November: Tuesday, 10 Dec 2024 (Prev.: 2.6%; Est.: 2.7%)

3. US PPI year-on-year for November: Thursday, 12 Dec 2024 (Prev.: 2.4%; Est.: 2.5%)

4. US Initial Jobless Claims as of 07 December 2024: Thursday, 12 Dec 2024 (Prev.: 218k; Est.: 219k)