FREE Stock Picks for the week (Jan 6-10, 2025) by First Metro Securities

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Market Recap: Stock market last week

Last week, the PSEi traded upwards by 1.15% week-on-week, 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 Dec 2024 driven by robust performance of both output and new orders.

PSE outlook this week

This week, we expect the market to trade sideways with an upward bias driven by continued bargain hunting. Additionally, positive sentiment is anticipated as investors foresee inflation data remaining within the Bangko Sentral ng Pilipinas’ (BSP) target range. However, market gains may capped, as investors remain cautious on the impact of a Trump 2.0 administration whose inauguration will take place on 20 Jan 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.

Stock Picks this week

1. DoubleDragon Corporation (DD)

The counter has been testing immediate resistance at PHP10.50 in recent sessions. While a break above this level could indicate bullish momentum, confirmation is preferred at PHP10.80. This is supported by an upward RSI 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, signalling 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 PHP10.80 is advisable. Take profits atPHP12.42 and set your stop loss below PHP9.94.

2. DigiPlus Interactive Corp. (PLUS)

PLUS is once again treading dangerous territories 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.

Implementing trailing stops or taking profits at key levels around PHP28.00 is advised. For those who are looking to enter PLUS, we suggest waiting for more constructive technical patterns and visible buy signals to form.

3. LT Group, Inc. (LTG)

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 that 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.

Accumulating LTG once it breaks above the resistance line on high volume around PHP10.50 is advised. Take profits at PHP12.05 and set your stop loss below PHP9.60.

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