Stock Of The Week : BORNEO Oil Bhd

BORNEO Oil Bhd shares retraced from the near three-year high of 82 sen on Jan 21 to a low of 45 sen a month later on correction owing to an apparent profit-taking before turning range-bound on consolidation in the wake of mild bargain hunting interest. The stock finished up one sen to 48 sen yesterday.

The downward pressure of this counter has clearly halted and based on the daily bar chart, prices are attempting to build up the momentum for a recovery. If trading volumes continues to improve, the outlook would be more certain.

Apparently, the daily slow-stochastic momentum index was seen creeping higher. The oscillator per cent K climbed over the oscillator per cent D to trigger a short-term buy deep in the oversold area on Wednesday.

The past week witnessed the 14-day relative strength index firming from a reading of 18 on Monday to settle at around the 36 points level yesterday. Though the daily moving average convergence/divergence histogram remained flirting below the trigger line to retain the sell signal, the downward momentum has slowed markedly.

Technically, indicators suggest Borneo Oil may strengthen in the short term as the recent overbought condition has been fully neutralised. If prices can penetrate the 14-day simple moving average (SMA) of 60 sen and charge forward to tear down the next upper strong barrier of 63.5 sen, which is the 21-day SMA, then, a bullish reversal pattern would be in the offing.

Pivotal support line is pegged at the 45-sen level, of which a breakdown may drag prices to the 33-sen mark, also the 50-day SMA.- by KM LEE, thestar.com.my

The comments above do not represent a recommendation to buy or sell.