SCOMI Engineering Bhd tripped into correction after peaking out temporarily at an eight-month high of 65.5 sen on Oct 12 and in the wake of an apparent profit-taking activity, shares came under pressure to retreat, pulling back to the crucial 100-day simple moving average (SMA) of 50 sen on Oct 14.Thereafter, bargain hunters emerged from the sidelines to seek value buys and their actions led prices to rebound to a high of 53 sen during intra-day session yesterday.
Based on the daily chart, the recent overbought condition of this counter has been fully neutralised and given the latest developments, it appears the bulls are making an attempt to establish a new leg of uptrend.
A push above the 54 sen barrier is likely to set the stage for the bulls to challenge the stiff resistance of 65.5 sen, of which a decisive penetration would signal the continuation of the recovery process, targeting the 75-sen mark in the immediate term. The next upper hurdle is seen at the 85 sen, followed by the 95-sen level.
Apparently, the oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index were firming. It had triggered a buy at the oversold area in mid-week.
Also on the rise, the 14-day relative strength index improved steadily from the neutral zone to end at the mid-range.
Though the daily moving average convergence/divergence histogram remined in sell mode, it had indicated a pretty encouraging convergence pictogram. Technically, indicators are improving, implying prices may strengthen in the short-term. As for the downside, trailing stop-loss exit is set at the 100-day SMA of 50 sen.
— By K.M. Lee, thestar.com.my
● The comments above do not represent a recommendation to buy or sell.