SUPPORTLINE

PIE Industrial Bhd has made a convincing return to an upright position after hitting bottom on Sept 12. The correction that started on July 24 appears to have ended on a strong rebound with investor interest picking up on the stock. On Tuesday, the short-term descending trend line was breached. By Wednesday, the share price gapped up at the opening bell and pushed past the 50-day simple moving average to a session high of RM1.51. Trading volume ratcheted up over the two days with Wednesday’s interest approaching levels seen during a share price surge on Aug 20. At its current trajectory, the stock is headed for a crossing of the uppermost 200-day SMA at RM1.54, which would give it a more bullish outlook. The long-term 200-day SMA had been breached in recent weeks, suggesting that it is no longer a stiff resistance. Higher up the chart, the RM1.68 mark reached in July would serve as a more difficult hurdle. At current trading levels, the resistance offers a potential 11% upside which is significant room for the bulls to roam. The technical indicators suggest overbought situations given the rapid rise of the slow-stochastic momentum index past the 80-point line. The 14-day relative strength index is also flirting with overbought territory at 70 points. Nevertheless, the indicators remain growing with the slow-stochastic looking to enter more extreme overbought conditions. The daily moving average convergence/divergence line has curved up steeply past the signal line, giving a “buy” signal and indicating the start of an uptrend. Support for the stock rests at RM1.35, the recent low point that initiated the current rebound. The comments above do not represent a recommendation to buy or sell. Note: This article first appeared in StarBiz Premium yesterday.