EYE ON STOCK
A MASSIVE rally pushed Yong Tai Bhd (Yong Tai; Code: 7066) shares to a high of RM1.61 on April 27, the best level in almost 15 years.
Thereafter, in the wake of an apparent bout of profit-taking selling, prices succumbed to tremendous pressure to retreat back to a four-month low of RM1.35 on June 28, only to be followed by a rebound.
However, the upward momentum could not be sustained and short-lived one week later at RM1.48, as this stock was met with more liquidation. Yong Tai revisited the recent floor of RM1.35 on Aug 3, thus carving out a short-term “double-bottom” formation before bouncing off again on renewed bargain hunting interest.
This stock finished at RM1.46, up three sen yesterday. Based on the daily chart, it looks like Yong Tai is making another attempt to resume the rally. Should the buying momentum becomes persistent going forward, it has a great potential of making a breakthrough.
A breach of the RM1.48 barrier, which is the “neck line” of the existing short-term “double-bottom” pattern will clear the way for the bulls to challenge the previous rally peak of RM1.16, of which a decisive penetration will signal an uptrend continuation.
If that happens, the immediate target is set at the RM2 mark and the next upper hurdle is expected at the RM2.35-RM2.40 area.
Elsewhere, the daily slow-stochastic momentum index had indicated a tentative topping out pictogram at the 65% level.
In stark contrast, the past week saw the 14-day relative strength index rising from the mid-range on Monday to settle at the 63 points level yesterday.
Meanwhile, the daily moving average convergence/divergence histogram continued to rise in tandem with the daily signal line to keep the bullish note. A buy call was issued on Aug 14. Except for the daily slow-stochastic momentum index, other technical indicators are painting a pretty encouraging landscape, offering investors a ray of hope that a major breakout may be on the cards.
To the downside, solid floor is pegged at the recent lows of RM1.35, of which a crack will have a negative impact on the outlook of this stock.