Eye on Stock: Pentamaster

  • Stocks Analysis
  • Saturday, 02 May 2020

AFTER bouncing higher in the final week of March, Pentamaster Corp Bhd (code: 7160) retraced about 50% of its losses before easing into a sideways trading pattern.

Hovering near the RM4 mark, the stock could be seen making a slight progress on the daily price chart over the month of April although investors also displayed caution given the recent surge in share price. On Friday, the stock made a decisive push to close at RM4.17.

At this level, the stock has crossed the 50% Fibonacci retracement level on to a seven-week high.

This also marks a convincing breach of the 50-day simple moving average (SMA), which suggests the return of bullish sentiment.

The share price, meanwhile, continues to move higher than the short-term 14- and 21-day moving averages, which reflects the continued bullishness in the short-term trend.

Looking overhead, the next critical resistance for the rally lies at the 61.8% Fibonacci retracement mark, which coincides with the uppermost 100-day SMA at RM4.36.

Given the recent pick-up in momentum, there is a possibility that the stock is aiming towards this next hurdle amid the improving mood.

The slow-stochastic momentum index has risen to 69 points while the 14-day relative strength index indicates 70 points. Both indicators suggest continued momentum growth over the immediate future.

The daily moving average convergence/divergence line also remains positive after having crossed above the zero line in mid-April. The moving average convergence/divergence (MACD) is moving nearly parallel to the signal line, which suggests the positive trend is yet to pick up speed. A sudden divergence with the MACD outpacing the signal line would indicate the onset of bullish momentum.

While the resistance is pegged to the RM4.36 mark, a breach of the point would see a freeing of the bulls to roam higher towards the RM5 level. On the support side, the share price could be buffered by the 38.2% and 23.6% Fibonacci levels of RM3.60 and RM3.14.

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

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