Eye on stock

Malaysia Building Society Bhd (MBSB) shares pulled back to a low of RM2.10 on Jan 27 on correction amid an apparent profit-taking activity, followed by a brief sideways consolidation.

Thereafter, prices bounced off on renewed buying, hitting a high of RM2.36 on April 23, but only to be met with another bout of selling pressure. Shares reversed down again, but just when they appeared defenceless and in great danger of violating the recent lows of RM2.10, fresh bargain hunting interest came to the rescue, lifting MBSB to an intra-day day of RM2.22 yesterday.

Based on the daily chart, it looks like this stock has corrected enough, with prices showing signs of stabilising and the next phase probably would be base building or recovery.

Elsewhere, the oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index were advancing. It had triggered a short-term buy at the very oversold position on Thursday.

Likewise, the 14-day relative strength index improved moderately from a reading of 25 in mid-week to settle at the 45-point level yesterday.

Though the moving average convergence/divergence histogram retained the sell call, the downward pressure appeared to have paused.

Technically, indicators are on the mend, albeit on a gradual pace, implying MBSB shares are likely to trade within a range, but with an upward bias until a clearer picture emerges.

A breach of the 200-day simple moving average of RM2.33, followed by a successful penetration of the RM2.36 barrier would signal a new leg of uptrend, enroute to re-test the RM2.82 level.

The next objective would be to fill a minor gap at the RM2.95-RM3 band and to challenge the historical apex of RM3.45, set on Feb 24, 1997.

As for the downside, a crack of the RM2.10 floor would signal the continuation of a downtrend. In this case, the lower support of RM1.90 will be vulnerable.

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