Eye on stock; BHS Industries

  • Business
  • Saturday, 11 Mar 2017

AFTER a massive rally, propelling BHS Industries Bhd (BHS; Code: 7241) to an all-time high of 82 sen on Sept 23, 2014, the shares tripped into consolidation mode owing to an apparent profit-taking selling activity.

However, an early typical process turned ugly later, as follow-through liquidation pressure continued to dominate the floor, tearing BHS to as low as 33.5 sen in late October 2015, the worst level in 20 months on extended correction.

Then soon after finding a shelter, prices staged a steep rebound, but the momentum puctured at the 57 sen level on Jan 13, 2016 and subsequently, BHS retraced back to the 38.5 sen line on Nov 29, last year.

But just when it looked frail and risks heading lower, another bout of fresh buying emerged and this time round, drove the shares to a high of 49.5 sen during intra-day session yesterday.

Based on the daily chart, prices had penetrated the 14-month-old descending trendline yesterday, signalling a new leg of uptrend and it appears real, as the breakthrough was backed by greater trading volumes,

The immediate upside objective will be to challenge the immediate resistance of 57 sen. A fairly stiff barrier is resting at the 60 sen-60.5 sen band, of which a decisive breakout will clear the way for the bulls to re-test the historical peak of 82 sen or explore the uncharted territory.

Elsewhere, the daily slow-stochastic momentum index was on the rise after triggering a short-term buy at the neutral area in mid-week.

Also on the uptrend, the 14-day relative strength index rose to a reading of 76 yesterday from the 45-point level a week ago.

In addition, the daily moving average convergence/divergence histogram climbed over the daily signal line line to trigger a buy call yesterday.

Technically, indicators are painting a promising landscape, implying BHS shares are poised to advance in the short term amid follow-through interest.

As for the downside, initial support is seen at the 47-sen level and crucial floor is pegged at the 44-sen mark. 

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

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