Stock Market Weekly: No significant catalysts to drive market higher 

WHAT HAPPENED LAST WEEK

Last week, the Philippine Stock Exchange index (PSEi) mostly traded lower and declined by 4.3% week-on-week (WoW), closing at 6,676.65, a decrease of 300.53 points. The market was mainly weighed down by growth concerns and uncertainties surrounding potential Trump administration policies. Furthermore, investor confidence was adversely affected by the persistent weakness of the peso and a less dovish monetary policy outlook from the Federal Reserve.

WHAT TO EXPECT THIS WEEK

This week, we expect the market to trade sideways with a slight downward bias given the absence of significant catalysts to drive the market higher. While this week may be light on data, investors will focus on assessing the impacts of Typhoon Pepito (international name: Man-yi) and the conclusion of the 3Q 2024 earnings season.

Resistance: 6,800 / 6,700

Support: 6,500 / 6,600

ANALYSIS

The PSEi extended its losing streak to four weeks and recorded its worst week YTD, declining by 4.31% WoW to close at 6,676.65 (-300.53 points). The index broke below all key support areas, reaching oversold levels before bouncing late in the week. It is still trying to find a near-term bottom with momentum indicators hovering at oversold areas. At current levels, risk-to-reward is skewed to the upside for the local bourse.

STOCK CALLS FOR THE WEEK

Ayala Land, Inc. (ALI) | BUY ON SUPPORT | FMSEC TARGET PRICE: PHP 35.80

Despite the growth reflected in the earnings results, the stock continued to decline, breaking below all key moving averages (20-day, 50-day, 100-day, and 200-day). This weakness started in early October, when the stock established resistance around PHP 38.00 and has since continued to fall. In terms of momentum, the RSI is now at oversold levels, suggesting a potential reversal. We recommend accumulating at identified support areas ahead of a potential price bounce back. Accumulating ALI on pullbacks around the PHP 30/PHP 28 support range is advisable. Take profits 15% above your average cost and set stop-loss limits 8% below your average cost.

BDO Unibank, Inc. (BDO) | BUY ON BREAKOUT | FMSEC TARGET PRICE: PHP 167.00

BDO has dipped below its 20-day and 50-day moving averages (MA) but found new support around its 200-day MA, indicating sustained long-term bullish momentum. Further, the RSI rebounding from oversold territory suggests a potential short-term rally, with BDO now testing resistance around its 100-day MA. We recommend buying BDO when it decisively breaks above its 100-day MA on high volume. Accumulating once BDO breaks above its 100-day MA (around PHP 149.46) on strong volume is advised. Take profits at PHP 171.88 and set stop-loss limits below PHP 137.50.

AREIT, Inc. (AREIT) | SELL ON RALLY | CONSENSUS TARGET PRICE: PHP 41.25

AREIT has been rallying after breaking above its consolidation pattern in July 2024. It is currently trading above key moving averages (50-day, 100-day, and 200-day), supported by momentum indicators signaling strong continuation. Despite bullish action, we see rebalancing activities as an opportunity to take profits on the counter as it encounters upward pressure. Taking profits on AREIT on rallies prior to and on the rebalancing date (November 25) of the MSCI Index changes is advisable.

KEY DATA RELEASES

1. PH Overall Balance of Payments (BOP) for October 2024 on Tuesday, November 19, 2024 (previous: USD 3,526 million)

2. US Initial Jobless Claims as of November 16 on Thursday, November 21, 2024 (previous: 217k)

3. US S&P Global Manufacturing PMI for November 2024 on Friday, November 22, 2024 (previous: 48.5)