Stock of the Week - Magna Prima

AFTER rebounding from the recent lows of 73.5 sen on Sept 26 to achieve a two-month high of 84 sen on Oct 28 amid fresh bargain hunting interest, Magna Prima Bhd shares turned range-bound on profit-taking activity alternated with sporadic buying momentum, undergoing consolidation.

Based on the daily bar chart, the recent sideways correction appeared healthy and usually, a typical process of such, indicates there are more climbing in the pipeline. Perhaps, investors can consider accumulating while the bulls paused for air.

Apparently, the oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index were on the slide, ending at approximately 44% and 62% respectively yesterday. It had issued a short-term sell at the overbought area earlier of the week.

The 14-day relative strength index retreated slightly from a reading of 76 to settle at the 67 points level yesterday. In stark contrast, the daily moving average convergence/divergence histogram maintained a comfortable posture above the daily signal line to stay bullish. It had called for a buy on Sept 29.

Analysis on the indicators suggest that if the recent recovery still is constructive, a resumption of climbing would come about soon.

Initial resistance is seen at the 84-sen level, followed by the 90-sen mark, of which a successful penetration is likely to propel Magna Prima to challenge the upper stiff hurdle of RM1.04-RM1.05 band.

Crucial support floor is pegged at the 80-sen mark, which is also the trailing stop-loss exit. - By K.M. Lee

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