Stock Market Weekly: Investors looking for bargains 

WHAT HAPPENED LAST WEEK

Last week, the Philippine Stock Exchange index (PSEi) traded upwards by 1.15% week-on-week (WoW), closing at 6,603.81—an increase of 75.02 points—supported by bargain hunting at the start of 2025. Amid the shortened trading week, volume started to pick up as investors adjusted their portfolios to start the new period afresh. Furthermore, optimism surged as the country’s manufacturing Purchasing Managers’ Index (PMI) rose to its 2.5-year high at 54.3 in December 2024, driven by robust performance in both output and new orders.

WHAT TO EXCPECT THIS WEEK

This week, we expect the market to trade sideways with an upward bias, driven by continued bargain hunting. Additionally, positive sentiment is expected as investors foresee inflation data remaining within the Bangko Sentral ng Pilipinas’ (BSP) target range. However, market gains may be capped as investors remain cautious about the impact of a Trump 2.0 administration, with the inauguration set for January 20, 2025.

On oil news, experts project a hike in prices this week, driven by recent global developments such as heightened demand due to the winter season, production cuts from OPEC+, and ongoing trade tensions.

Resistance: 6,800 / 7,000

Support: 6,600 / 6,400

ANALYSIS

The PSEi continued its recovery to the 6,600 level to start the year on a positive note, rising by 1.15% and closing at 6,603.81 (+75.02). However, volume remains weak as the bourse trades below key moving averages (50-day, 100-day, and 200-day). On the other hand, momentum indicators have improved, returning nearer to neutral levels.

Long-term resistances abound, with the index poised to retest the 200-day MA around the 6,800 area. For those who accumulated at oversold levels, this may provide a good take-profit area. Traders who want to accumulate may wait for a pullback and a potential double-bottom pattern.

STOCK CALLS FOR THE WEEK

DoubleDragon Properties Corp. | BUY ON BREAKOUT | NO CONSENSUS TARGET PRICE

The counter has been testing the immediate resistance at PHP 10.50 in recent sessions. A break above this level could indicate bullish momentum. However, confirmation is preferred at PHP 10.80. This is supported by an upward RSI, which is still below overbought territory, and the recent formation of a golden cross, where the 20-day moving average (MA) has crossed above the 50-day MA, signaling a short-term bullish trend.

In line with these indicators, we recommend accumulating DD on a breakout accompanied by increased trading volume to confirm sustained upward momentum. Accumulating once DD breaks above PHP 10.80 is advisable. Take profit at PHP 12.42 and set a stop loss limit below PHP 9.94.

DigiPlus Interactive Corp. | TRAILING STOPS | CONSENSUS TARGET PRICE: PHP 34.00

PLUS is once again treading dangerous territory, with momentum indicators at overbought levels (RSI: ~81). While it is still in a long-term uptrend, trading above key long-term moving averages (50-day, 100-day, and 200-day), the counter typically exhibits significant drawdowns of 20%-30% when it prints these signals.

Thus, we recommend implementing trailing stops or taking profits at key levels. Taking profits around PHP 28.00 is advised. For those looking to enter PLUS, we suggest waiting for more constructive technical patterns and visible buy signals to form.

LT Group, Inc. | BUY ON BREAKOUT | CONSENSUS TARGET PRICE: PHP 8.01

LTG has formed a cup-and-handle reversal pattern marked by two bell-shaped figures as it trades above key long-term moving averages (50-day, 100-day, and 200-day). Momentum indicators are tilted to the upside, with RSI at 52 and MACD notably above the signal line.

Moreover, as it has shown strong relative technical strength during the market’s downturn, we believe LTG will be among the first to rally once the PSEi recovers. Thus, accumulating LTG once it breaks out of its reversal pattern is advised. Buy once LTG breaks above the resistance line on high volume around PHP 10.50. Take profits at PHP 12.05 and set a stop loss limit below PHP 9.60.

KEY DATA RELEASES

1. PH Consumer Price Index (CPI) year-on-year (YoY) for December 2024: Tuesday, January 7, 2025 (estimates: 2.6%; previous: 2.5%)

2. US Trade Balance for November 2024: Tuesday, January 7, 2025 (estimates: -USD 78.2 billion; previous: -USD 73.8 billion)

3. PH Unemployment Rate for November 2024: Wednesday, January 8, 2025 (previous: 3.9%)

4. US Initial Jobless Claims as of January 4, 2025: Wednesday, January 8, 2025 (previous: 211k)

5. PH Imports and Exports YoY for November 2024: Thursday, January 9, 2025

6. PH Trade Balance for November 2024: Thursday, January 9, 2025 (estimates: -USD 5,490 million; previous: -USD 5,803 million)

7. PH Bank Lending YoY for November 2024: Friday, January 10, 2025 (previous: 10.6%)

8. PH Money Supply M3 SRF YoY for November 2024: Friday, January 10, 2025 (previous: 5.5%)

9. US Unemployment Rate as of December 2024: Friday, January 10, 2025 (previous: 7.8%).

(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)