Stock Of The Week : Petronas Chemicals

PETRONAS Chemicals Group Bhd recovered from an all-time low of RM5.23 on Sept 26 last year to a high of RM7.03 on Feb 14 amid continuous bargain-hunting interest.

Soon after, it tripped into correction mode due to profit-taking, going down to the RM6.56 level on March 12 before bouncing off slightly to trade range-bound. Based on the daily bar chart, this stock still is trending below the short-term descending line, but growing interest over the past several days offers a ray of hope that it may be getting ready to launch the next upward wave.

A successful penetration of the 50-day simple moving average of RM6.80 would brighten the prospect of it challenging the recent peak of RM7.03, where a clear breakout would give clear the way for of an upward thrust enroute to the RM7.20-RM7.25 upper resistance. Re-testing the historical peak of RM7.61, established on April 7, last yeark would be next. Apparently, the daily slow-stochastic momentum index has issued a tentative buy signal, with the oscillator percent K climbing above the oscillator percent D at the oversold area.

Meanwhile, the 14-day relative strength index ticked higher from a reading of 37 points to end at the 45-point level. Although the daily moving average convergence/divergence histogram retained the sell signal, the downward momentum was clearly narrowing.

Technically, indicators are on the mend, implying this blue chip issue may sustain the sideways pattern, but with an upward bias until a clearer picture emerges.

As for the downside, trailing exit is pegged at the RM6.50 mark. - By K.M. Lee

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