Stock Of The Week : EMICO

AFTER peaking out at a 22-month high of 44.5 sen on Nov 9, last year, Emico Holdings Bhd shares succumbed to an apparent profit-taking pressure to pullback, touching a low of 24 sen on a two-week correction phase before turning range-bound amid bargain hunting interest alternated with light selling.

Based on the daily bar chart, this stock has been trapped the past three months, interpreted as base building process. With the latest developments, showing sporadic buying momentum on the tracking system and trading volumes glaringly piling up, it looks like the recent correction may be coming to an end soon and the next logical move would be a new leg of an upward trend.

Turning to the indicators, the daily slow-stochastic momentum index had issued a buy call, with the oscillator per cent K climbing over the oscillator per cent D in mid-week.

After triggering a buy a week ago, the daily moving average convergence/divergence histogram continued to expand steadily against the daily signal line to retain the bullish note.

Meanwhile, the 14-day relative strength index had indicated a ticking up pictogram from the 62 points level following the recent weakness.

Technically, indicators are pretty encouraging, implying prices are likely to firm in the near-term. A breach of the recent high of 44.5 sen may drive Emico to the 52 sen level.

Strong overhead resistance is pegged at the 64 sen level, of which a successful penetration would clear the path for the bulls to challenge the 85 sen-86 sen band.

Initial support is seen at the 26.5-27 sen range. An additional support is resting at the 24 sen floor. — By K.M. Lee

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