Stock Of The Week : KINSTEEL

KINSTEEL Bhd has been recovering steadily on renewed bargain-hunting interest for almost two months, which saw its shares mending from their most recent lows of 47 sen in mid-December last year to a high of 63 sen during intra-day session yesterday.

Apparently, prices had breached the pivotal 200-day simple moving average for the first time in 10 months. Based on the daily-bar chart, the positive breakout looks real, as it was backed by bigger trading volumes. Logically, Kinsteel is likely to firm going forward amid follow-through buying momentum.

Turning to the indicators, the daily slow-stochastic momentum index was on the rise. Its oscillator per cent K reversed up from the mid-range and climbed over the oscillator per cent D to trigger a short-term buy on Thursday.

Likewise, the 14-day relative strength index climbed from a reading of 55 earlier this week to settle at the 85-point level yesterday.

Meanwhile, the daily moving average convergence/divergence histogram continued to expand upward against the daily signal line to retain the bullish note. It had issued a buy call on Dec 23 last year.

Technically speaking, this stock may strengthen in the short term, with prices expecting to challenge the 77 sen-80 sen band, which is a relatively tough barrier. A successful clearance will probably lead the bulls to the greater resistance of 95 sen-RM1 range.

Initial support is envisaged at the 56.5-sen floor. Crucial support is pegged at the 21-day simple moving average line, resting on the 52.5-sen level. By K.M. Lee

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