PELIKAN International Corp Bhd (Pelikan) was last highlighted in StarBiz under the SupportLine column on May 8, while it was trading at the 93-sen level.
On that day, we mentioned that this stock had rebounded to within striking distance of the two-year high of 96 sen. Going forward, a clear breakout of the RM1 psychological level would see prices heading towards the RM1.50 mark.
A decisive breakthrough was spotted in the middle of last month, a week after we featured this counter and subsequently, the bulls staged a strong rally, hitting our target of RM1.50, four business days later.
Thereafter, shares were generally toying around the RM1.50 area, undergoing a healthy consolidation, although they had climbed to a high of RM1.55 on Tuesday, prompting many of our followers to ask for an update.
A quick scan on the tracking system revealed that buying interest remains solid despite the recent steep climb. But with prices approaching the stiff resistance band of RM1.57-RM1.60, we can expect the bulls to pause for a breather soon to avoid overheating before resuming the scaling, meaning investors can consider accumulating more on weakness.
Additional clues pointing to a mild correction was the falling oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index after triggering a short-term sell at the 75% overbought territory in mid-week.
Meanwhile, Money Flow Index also was on the slide and the daily moving average convergence/divergence histogram appeared in great risk of falling below the daily signal line to issue a sell call.
Unless fresh buying emerges, Pelikan shares are likely to pull back to the 21-day simple moving average of RM1.31 in the short term. A failure to recover from this line may see prices drifting lower to fill a minor gap at the RM1.20-RM1.24 range.
To the upside, a major breakout of the RM1.60 barrier would open the doors for the bulls to challenge the RM2 mark in the near term.
By KM Lee
The comments above do not represent a recommendation to buy or sell.
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