Index may retest 7,000 level

Index may retest 7,000 level

MANILA, Philippines — The stock market will likely retest the psychological 7,000 level this week, after briefly flirting with it last Tuesday as the localized lockdowns in Metro Manila took full effect, enabling more businesses to open and allowed workers to report for work.

In a report, online platform 2Trade­Asia said investors should brace for some supply pressure as market psyche remains hesitant on top of the usual volume flows being warped by a deluge of initial public offerings and other capital issuances.

“While a rising tide lifts all boats, prudence calls to bet on the potential third quarter and fourth quarter winners that will float to the top, rising tide or not, Support is 6,800, resistance at 7,000 to 7,100,” it said.

Last week, the Philippine Stock Exchange index (PSEi) snapped a four-week upswing to end lower at 6,912.85.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the market’s behavior is considered a healthy profit-taking after encountering some resistance toward the 7,000-psychological level.

Overall, he said there are still some factors that are constantly affecting the behavior of the market – new COVID-19 local cases which have remained elevated above 20,000.

However, he said this was offset by the pilot implementation of the more localized or granular lockdowns.

On the external front, US stock markets also corrected from record highs last week as investors anticipate the next US Federal Reserve monetary policy-setting meeting on Sept. 22.

Ricafort sees the next important resistance levels at the 7,000 mark and then the potential re-test of the 7,064.24 immediate high posted on July 6, as gateways versus further upside potential toward the 7,100 to 7,400 highs posted earlier this year.

The immediate minor support would be at the range of 6,660 to 6,740, he added.