Eye On Stock: Elsoft Research Bhd


  • Stocks Analysis
  • Saturday, 05 Oct 2019

ELSOFT RESEARCH BHD (code: 0090) breached the uppermost 200-day simple moving average (SMA) as it extended its advance along an ascending trend line, suggesting further bullish growth.

Yesterday, the share price crossed above the 200-day SMA as it continued to retrace losses from a selldown in July and August this year.



The stock has recovered more than 75% of the losses, putting it in good stead to return to the pre-decline high point of RM1.01.

It helps also that trading volume has not waned since the rally started in September and remained robust yesterday.

The staggered ascent of the share price along the short-term positive trend line bodes well for the rally, suggesting a measured build-up of buying momentum in the counter.

The 14-day SMA is rising with the positive trend line, reinforcing the bullish short-term sentiment.Indeed, the slow-stochastic momentum index suggests that this rally has room yet to grow.

The percent K oscillator has crossed above the percent D oscillator to trigger a “buy” signal, but remains at a healthy level of 55 points.

With room left to grow before it hits overbought levels, there is evidence to suggest that the rally will go the distance to RM1.01.

The 14-day relative strength index has made a positive crossing of the overbought line at 75 points and remains in a growing position.

Short of turning back towards the neutral area, the index is expected to pick up momentum in extended overbought mode.

The daily moving average convergence/divergence line, meanwhile, is staying ahead of the signal line in positive territory, suggesting the continuation of the uptrend.

In the event of a retreat below the trend line, there is a convergence of the 21- and 50-day SMAs near the 90-sen mark, which should serve as a support for the share price.

Lower support can be found at 87.5 sen, which should serve as the lower end of a consolidation channel.

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

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Eye On Stock , Elsoft Research Bhd

   

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