SUPPORTLINE by FONG MIN YUAN

IDEAL Jacobs (Malaysia) Corp Bhd has broken out of a descending trend line to reverse an eightmonth long downtrend. On Wednesday, the stock pushed higher for a third consecutive session on strong momentum to breach the 50-day simple moving average (SMA) at 26 sen and break above the negative trend line at 28 sen. At the day’s session high of 29 sen, the stock was challenging the 100-day SMA in an attempt to gain even further ground. A confirmed breach of this resistance would see the stock approach the 31 sen mark. The uppermost 200-day SMA, which has been intact since March, lies further ahead at 33 sen. Positive momentum has picked up considerably over the course of the trading week, while Wednesday session’s trading volume surged to its highest since early January. The 50-day SMA is a resistance-turned support level for the counter at 26 sen in the event of profit-taking in the immediate term. A further support at the 23.5 sen mark exists just below the short-term 14- and 21-day SMAs, a breach of which would see the resumption of a downtrend for the stock. Looking at the technical indicators, the slow-stochastic momentum index has risen to 79 points, on the verge of entering overbought conditions. The 14-day relative strength index has entered overbought conditions at 77 points but continues to head northwards. The daily moving average convergence/divergence line has pushed above the signal line and is headed for a positive crossing with the zero line. Given the continued growth of the indicators, further gains in the share price look likely before the stock returns to more neutral conditions.

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

Note: This article first appeared in StarBiz Premium yesterday.