By Denise A. Valdez, Senior Reporter

LOCAL SHARES are expected to tread lower this week due to anticipated selling pressure after two weeks of rally.

The bellwether Philippine Stock Exchange index (PSEi) ended Friday’s session at 6,969.88, down 54.38 points or 0.77% from the last trading day. On a weekly basis, the index was up 284.19 points or 4.25%.

The market was closed on Thursday amid strong winds and flooding due to Typhoon Ulysses, which continue to hit parts of Luzon through the weekend.

“Positive headlines on the coronavirus vaccine front pushed a buying tide; the PSEi breached the 7,000 level mid-week before taking a breather…,” online brokerage said.

Value turnover for the week soared 75% to an average of P14.91 billion. Overseas investors also became net buyers, recording average net inflows of P799.12 million, against the average net selling worth P123.77 million seen the prior week.

However, the market’s uptrend may hit a roadblock this week, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said.

“We may see profit taking moving forward given that the local market has already rallied for two straight weeks which brought it up by 10.21%. The local bourse may also test its initial support, its 10-day exponential moving average, which is currently at 6,718.55,” he said in a text message.

Aside from the rally driven by news of a possible COVID-19 vaccine, investors were also drawing optimism from the earnings reports of companies in the past weeks, which saw marked improvements on a quarterly basis.

As the season ends on Monday, Mr. Tantiangco said investors will be digesting these numbers, and will look for clues on the economy’s condition and direction moving forward.

“This would include the September 2020 remittances data and the Bangko Sentral ng Pilipinas’ policy decision this week. Further developments on vaccine candidates, if there will be any this week, are expected to sustain market optimism,” Mr. Tantiangco said.

Natural calamities may also affect market sentiment as the past two storms — Typhoon Rolly and Typhoon Ulysses — have proven destructive for many sectors of the economy, said.

It noted investors will not only look at how these typhoons will affect inflation, but also the capital expenditures of companies that have to repair any damage brought by the storm.

“The windows draw close [this] week as far as earnings reporting is concerned, and sights will be set on the imagination of 2021, and in our view, the more important 2022. Approaching 7,000 will be crucial in cementing a never-look-back story heading into the new year,” said.

The brokerage set immediate support at 6,800 and resistance at 7,000. Philstocks’ Mr. Tantiangco put support within 6,718.55 to 6,600 and resistance at 7,150.