Eye On Stock

KPJ Healthcare Bhd’s (code: 5878) rebound has taken the counter into bull territory as it crossed the 100-day simple moving average (SMA) in yesterday’s session.

The 100-day SMA has been a sturdy barrier for the stock since October 2017, with the only convincing breach of the resistance seen on Feb 28.

Having overcome this hurdle, the stock’s next resistance target meets the 200-day SMA at the 98-sen line.

If the stock should take out this uppermost SMA, it would have truly left behind the descending trend line that extends from September 2017.

Based on the daily price chart, a previous attempt to break away from the trend line on Feb 28 was successful but in failing to extend gains past the 200-day SMA, the stock made a retracement and resumed the downtrend.

At present, with a three-sen distance between Friday’s session high and the resistance, a challenge to the resistance is but a short sprint away.

This latest push higher, while a resumption of an uptrend, is expected to take on a gradual rather than sharp incline.

The slow-stochastic momentum index shows a retreat from overbought territory towards the 50-point mark. Currently sitting at 59 points, there is still strength in the index, which points towards an uptrend with legs.

The 14-day relative strength index is looking more bullish in its push towards the 70-point line.

The daily moving average convergence/ divergence line has crossed into positive territory and continues to gain ground over the signal line, suggesting that this uptrend is gaining strength.

The 13-, 21- and 50-day SMAs have converged near the 91-sen mark, suggesting immediate support at this point. However, the stock may drift slightly lower towards the 90-sen round figure, which would also close an upside gap left behind on April 26.

A further retreat in share price would take the counter to the 87.5-sen mark, the point where the stock last rebounded on April 20. The comments above do not represent a recommendation to buy or sell.