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Stock Market Weekly: Lingering uncertainties remain
Investors continue to be wary. We expect sideways trading with a slight downward bias this week.
By First Metro Securities Research
WHAT HAPPENED LAST WEEK
Last week, the Philippine Stock Exchange index (PSEi) kicked off February with a strong rebound, surging 292.40 points (+4.99%) to close at 6,154.99, fueled by bargain hunting in oversold names.
The market reached the 6,200 level in a technical bounce following the previous week’s sell-off driven by the PSEi rebalancing. Optimism also grew after US President Donald Trump granted Canada and Mexico a last-minute reprieve from the planned 25% tariff. Investors digested key local data: (1) S&P Global Manufacturing Purchasing Managers’ Index (PMI) at 52.3 for January 2025, (2) 2024 unemployment rate at 3.8% year-on-year (YoY), the lowest since 2005, and (3) January 2025 inflation at 2.9% YoY, aligning with the Bangko Sentral ng Pilipinas’ (BSP) target but slightly above the 2.7% consensus estimate.
However, momentum waned as investors locked in gains after a three-day rally, amid heightened political uncertainty following the House of Representatives’ move to impeach Vice President Sara Duterte. Despite steady foreign inflows, gains were capped, reflecting cautious sentiment amid global and domestic risks.
WHAT TO EXPECT THIS WEEK
The PSEi surged above its 6,000 support, ending the week up 4.99% week-on-week (WoW) at 6,154.99 (+292.40 points). However, it remains below key moving averages (20-day, 50-day, 100-day, and 200-day), reflecting sustained bearish sentiment.
Momentum indicators show a mixed picture as the RSI has bounced from oversold levels to slightly lower-than-neutral levels, while MACD stays in bearish territory with minimal signs of reversal. Immediate support is seen at 6,000, while the nearest resistance is at 6,200 and next at 6,400.
Therefore, a breakout above 6,400 supported by positive momentum indicators and strong buying volume can trigger an upward reversal. With the risk-reward skewed to the upside, accumulating on breakout is advisable.
Resistance: 6,400 / 6,200
Support: 6,000 / 5,800
ANALYSIS
The PSEi surged above its 6,000 support, ending the week up 4.99% WoW at 6,154.99 (+292.40 points). However, it remains below key moving averages (20-day, 50-day, 100-day, and 200-day), reflecting sustained bearish sentiment. Momentum indicators show a mixed picture as its RSI has bounced from oversold levels to slightly lower-than-neutral levels, while MACD stays in bearish territory with minimal signs of reversal.
Immediate support is seen at 6,000, while the nearest resistance is at 6,200 and next at 6,400. Therefore, a breakout above 6,400 supported by positive momentum indicators and strong buying volume can trigger an upward reversal. With the risk-reward skewed to the upside, accumulating on breakout is advisable.
STOCK CALLS FOR THE WEEK
DMCI Holdings, Inc. (DMC) – BUY ON PULLBACK | NO CONSENSUS TARGET PRICE
DMC’s share price has been trending upward after forming a double bottom near its support level at PHP 10.20. Moreover, DMC’s recent closing price closed at its previous resistance at PHP 11.30 and remains above its 20-day, 50-day, 100-day, and 200-day moving averages (MAs).
On momentum indicators, its MACD and RSI are both above neutral levels, which supports its recent upward momentum. Therefore, given its most recent close at its previous resistance level, wait for a pullback near its 20-day and 50-day MAs at PHP 11.15 for a more favorable entry. Accumulating DMC on a pullback at PHP 11.15 is advisable. Set stop limit orders at PHP 10.26 and take profits at PHP 12.82.
JG Summit Holdings, Inc. (JGS) – SELL | CONSENSUS TARGET PRICE: PHP 35.88
JGS has declined by 21% year-to-date (YTD), breaking below all major support levels and continuing its long-term downtrend since peaking in January 2021. It is currently trading within a reversal wedge pattern below all key moving averages (50-day, 100-day, and 200-day) with momentum indicators at oversold levels. Selling at current levels is advised. For those who want to accumulate JGS, we suggest buying the counter at the close of the day when the MSCI index results are made available.
DigiPlus Interactive Corp. (PLUS) – BUY ON PULLBACK | CONSENSUS TARGET PRICE: PHP 34.00
PLUS has been trending upwards within a channel on high volume. It is trading above key long-term moving averages (50-day, 100-day, and 200-day) with momentum indicators at overbought levels, signaling strong momentum. However, the counter has already broken above its continuation pattern to post an all-time high of PHP 31.30.
Thus, we suggest accumulating on pullbacks or until another buy signal forms. Accumulating on pullbacks around PHP 29.0 is advised. Set your stop loss below PHP 26.6 and take profits at PHP 33.35.
KEY DATA RELEASES
- PH Bank Lending YoY for December 2024 on Tuesday, February 11, 2025 (previous: 9.0%).
- PH Money Supply M3 SRF YoY for December 2024 on Tuesday, February 11, 2025 (previous: 7.7%).
- US Consumer Price Index (CPI) YoY for January 2025 on Wednesday, February 12, 2025 (estimates: 2.9%; previous: 2.9%).
- PH Interest Rate Decision on Thursday, February 13, 2025 (estimates: 5.75%; previous: 5.75%).
- US Retail Sales YoY for January 2025 on Friday, February 14, 2025 (previous: 3.9%).
(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.)