SUPPORTLINE

SOUTHERN Steel Bhd’s most recent leg of uptrend peaked at RM2.58 on Sept 14 this year and it underwent a brief consolidation before trading in range. Looking at the daily price chart, the share price ranged from RM2.10 to RM2.45 over the last two months with some big intra-day movements along the way. On Wednesday, the stock gapped up 19 sen from RM2.21 to RM2.40 at the opening bell, reversing losses it had seen in the previous trading session. Investor buying interest had been triggered following the announce- ment of its first quarter earnings after the market close on Tuesday. Profit-taking ensued as Wednesday’s morning session wore on and the counter retraced some gains, but by the end of the day’s trading, Southern Steel saw a healthy price increase of eight sen to RM2.29. The positive share price development is coupled with good trading volumes but mixed technical indicators. While healthy, the indicators have not yet confirmed a lasting uptrend to carry the counter across any hurdles. The daily moving average conver- gence/divergence histogram spiked up from the neutral line and crossed into a “buy” signal following the strong upward price movement on Wednesday. The 14-day relative strength index also turned skywards in neutral territory, suggesting budding strength in the current trajectory. On the flip side, the counter may pause to regroup from the recent spike as the slow-stochastic momentum index has turned back south, short of reaching the overbought line. A wait-and-see approach may be prudent as this indicator neutralises further.

The counter will need to see continued buying interest to cross the RM2.58 mark and maintain an uptrend, a crossing of which will see it angle for the RM2.80 level where it meets the ascending trend line.

Support is pegged to the 14-, 21and 50-day simple moving averages (SMA) at the RM2.25 level while more concrete support lies at the 100-day SMA at the RM2.05 point.

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

Note: This article first appeared in StarBiz Premium yesterday.