Eye On Stock

STRAITS Inter Logistics Bhd (code: 0080) may be making a move out of range-bound trading following four straight days of hitting new session highs.

The stock had been travelling closely to the key simple moving averages (SMAs) in consolidation mode although the past week’s rally looks to be building up to a potential break out.

Yesterday, the counter moved past the key SMAs and looked ready to challenge the immediate resistance at 27.5 sen.

The stock had managed to breach the channel in mid-May where it rose to as high as 28.5 sen before subsiding.

To confirm a more bullish breakout on the daily price chart, the counter will have to cross a more definitive resistance at 29 sen, where it would then stand a chance at reclaiming the year’s high of 30 sen set in January.

Prior to this latest rally, the counter had been trading below the key SMAs, hitting a low of 24 sen on May 24. This serves as a support level for the counter, a breach of which would take it to another low of 22 sen, previously set on April 8.

While the technical indicators are looking healthy, there is the danger that the stock is overbought.

A slowdown or turnback in the slow-stochastic momentum index could indicate a breather while investors withdraw some gains from the counter.

However, currently sitting at 87 points, the percent K has yet to slow its ascent and could rise further in extended overbought mode before it attempts to neutralise.

The other indicators remain positive with the 14-day relative strength index at 59 points and the daily moving average convergence/divergence (MACD) line crossing the signal line to suggest a “buy” signal.

The MACD sits on the neutral line, pending a positive crossing that would help to confirm a sustained uptrend.

Meanwhile, the money flow index is climbing at a bullish clip, rising steeply to 76 points.