Eye on Stock: Key Asic

 

Key Asic Bhd (code: 0143) may have bottomed out following its most recent pullback, and looks set to resume a rally.

The stock bounced off the immediate support level of 19 sen on several occassions during a correction after the share price hit a recent peak of 24.5 sen on Aug 20.

A breach of the buffer would have resulted in the stock returning to a downtrend but a rebound on Friday gave evidence that the descent had halted.

The trading action over the course of the past week suggested that the counter was set to move in consolidation mode given the apparent lack of direction.

Neverthless, the technical indicators have picked up the pace, suggesting growth in positive momentum and a build-up before the stock resumes its rally.

Less positively, the key short-term simple moving averages (SMA) have been falling since late August reflecting the recent weakness in share price but there is reason to believe that a longer-term uptrend is forming.

The longer-term SMAs have been moving into more positive formations. The 50-day SMA made a “golden crossing” of the 200-day SMA in the earlier half of August to indicate a return to a bullish outlook. The 100-day SMA is also looking to move above the 200-day SMA, and in doing so, would lend further confirmation of the stock’s positive outlook.

On the technical indexes, the slow-stochastic momentum index remains healthy at 35 points and is moving towards the 50-point neutral area.

The daily moving average convergence/divergence line is also growing stronger just under the zero line, and needs a nudge higher in share price to push above the signal line.

Meanwhile, the 14-day relative strength index is growing more bullish at 49 points.

The stock will see resistance overhead at 22.5 sen although stiffer resistance lies at the 24.5-25 sen range. On the bottom end, support remains at 19 sen although a return to a downtrend would see the counter touch the lower support of 17 sen.

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