KOSSAN Rubber Industries Bhd touched a 10-month low of RM2.97 on Sept 11 during the recent correction before bouncing off moderately in the wake of renewed bargain-hunting interest. The shares finished up one sen to RM3.10 yesterday.
Based on the daily bar chart, the stock seems to be making another effort to recover after two unsuccessful attempts over the past several months. But unlike previously, Kossan may thrive this time, as investors are seen gradually making their way back to this counter, given that trading volumes were rising recently. However, more confirmation still is needed, as prices appear facing stiff resistance at the 100-day simple moving average (SMA) of RM3.13.
Greater challenges are expected at the 200-day SMA of RM3.23, followed by the RM3.32 barrier, a decisive breakout of which would see the prevailing trend turning more bullish.
Apparently, the oscillators per cent K and per cent D of the daily slow-stochastic momentum index are rising.
Likewise, the daily moving average convergence/divergence histogram continued to expand steadily against the daily signal line to stay bullish. It had issued a buy on Sept 27.
Elsewhere, the 14-day relative strength index crept higher from a reading of 57 to settle at the 61-point level yesterday.
Technically, the indicators are pretty encouraging, implying Kossan shares are likely to strengthen in the short term. If the recent buying momentum can be sustained, a major breakout would come about in the near term. An important support is pegged at the 21-day SMA of RM3.05. - By K. M. LEE, biz.thestar.com.my
● The comments above do not represent a recommendation to buy or sell.
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