KUB Malaysia Bhd (stock code: 6874) surged in yesterday’s trade to test the uppermost 100-day simple moving average (SMA).
A strong buying lead triggered the advance, leading to a breakout of the consolidation channel.
As is the case following such dramatic price surges, the question remains if the rally is sustainable or if the profit-taking will end the uptrend.
Looking at the daily price chart, the stock is touting a brearish outlook. Owing to its sharp fall from a year’s high of 53 sen in January, the share price retreated below the long-term SMAs, which became obstacles to recovery.
Yesterday, the share price jumped above the 50- and 200-day SMAs in a return of bullish sentiment.
However, it now faces the 100-day SMA at 38 sen, a hurdle which if overcome will help to confirm the sustainability of the uptrend.
In the event of a positive breach, the share price could make a strong push towards 45 sen.
The technical indicators at this point are looking healthy although the slow-stochastic momentum index requires a further nudge before it confirms a “buy” call.
The percent K oscillator is on the verge of crossing above the percent D oscillator, and should intersect after another session of gains.
The 14-day relative strength index has risen to overbought conditions at 77 points given the sudden spike in share price.
The daily moving average convergence/divergence line is signalling a growing uptrend although it remains unconvincing below the zero line at present.
The cautious investor should take into consideration profit-taking following yesterday’s advance. A retreat below the 34 sen range would see the share price re-enter the consolidation channel.
The channel floor serves as a support at 32 sen, while a breach below the would see the share price falling towards the recent low of 29 sen. — By Fong Min Yuan
The comments above do not represent a recommendation to buy or sell.