Eye On Stock

IOI PROPERTIES Group Bhd (code: 5249) rose above the 50-day simple moving average (SMA) yesterday, suggesting another attempt to reverse its fortunes after having slid from a year’s high of RM2.05 on Feb 22.

However, short of crossing the immediate resistance at RM1.70, the stock remains in consolidation mode and runs the risk of range-bound trading with a bearish bias.

The stocks’s decline saw it bottom out at an all-time low of RM1.47 on May 4, before it rebounded. An attempt to approach the RM1.70 resistance was seen this past Monday, although the attempt fizzled out due to a lack of follow-through buying in the ensuing sessions. Should the share price make the crossing and rise to the following resistance of RM1.77, it would have recovered 50% of the losses it saw between Feb 22 and May 4. Incidentally, the 50% retracement level coincides with the 100-day SMA, suggesting stiff resistance at this level.

The short-term 14 and 21-day SMAs are resting at the RM1.56 level, and poses as the stock’s immediate support should there be profit-taking in the immediate term.

A breach of this support would be a bearish development for the stock and risks the resumption of a downtrend. However, a final support lies at the RM1.47-RM1.50 range wherein a negative crossing would see the risk of the stock trading at a new low.

The SMAs on the daily price chart are in a negative crossing situation following the prior steep decline in the share price. There will be some ways to go before the condition rectifies itself, although the technical indicators show some positive retracement in the share price in the interim.

Developments in the technical indicators suggest growing positive momentum. The slow-stochastic momentum index has moved closer to the mid-point at 48 points. The percent K line sits close to the percent D, suggesting a “buy” crossing is imminent

The 14-day relative strength index is also gaining in bullish momentum, rising to a healthy 64 points with more room to grow before it touches the overbought line.

The daily moving average convergence/ divergence line, which has been steadily growing, is now moving in positive territory, ahead of the signal line.

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