SUPPORTLINE by FONG MIN YUAN

Malaysia Bhd remains ailing and in consolidation mode even as it faces resistance at the 50-day simple moving average (SMA). On Monday, the stock challenged the 50-day SMA at its session high, but closed lower. A convincing breach of this resistance in the coming days would serve to put the counter on more positive footing and perhaps an attempt to recover some losses seen during the downtrend that began in March. The stock was battered in post-GE14 trading. It bounced off a low of 28 sen on May 14 but didn’t get far before it began moving in a sideways direction. The partial recovery took the stock to a high of 34.5 sen but it was unable to escape the channel. The recent developments in the technical indicators, however, suggest that positive momentum continues to be elusive. The slow-stochastic momentum index is travelling at the 34-point mark with the percent K oscillator turning towards the percent D, suggesting a possible “sell” signal. The 14-day relative strength index has also returned to a downwards fac- ing angle at 44 points. Meanwhile, the daily moving average convergence/divergence has picked up slightly in relation to the signal line. However, a positive signal from this indicator remains unconfirmed as it remains below the zero line. Trading interest in the counter was also seen to tick higher with Monday’s volume being the highest since the May 14 selldown. Now that the share price is within reach of passing the 50-day SMA at 33.5 sen, a breach of this resistance would see a potential rise to the 37 sen mark, effectively closing a large downside gap left behind on May 14. There is a long way to rise before the counter changes its current bearish formation given the negative crossings between the key SMA lines. Turning lower, support for the counter rests at 30.5 sen while next support is at the 28 sen mark.

The comments above do not represent a recommendation to buy or sell. Note: This article first appeared in StarBiz Premium yesterday.