EYE ON STOCK
ALCOM Group Bhd (code: 2674) made a reversal on Thursday following a strong catalyst that saw a positive upturn in momentum.
Investor interest in Alcom surged to an alltime high with 6.014 million shares traded. Yesterday’s trading volume remained elevated above four million.
Prior to the positive price action, the stock had been on a downtrend since end-June 2017 and the technical outlook had been overwhelmingly bearish.
Given the protracted descent, the key simple moving averages (SMA) on the counter were negatively crossed, and it would take more than a brief spike in share price to untangle the “death cross” situation on the SMAs, i.e. the long-term bear market is not yet over for Alcom.
However, over the two-day period, the rapid climb past the key SMAs and yesterday’s intra-day continuation of the rally saw the formation of new supports below the share price and new targets overhead. Yesterday’s pullback in the later trading session to close at 79.5 sen suggested some profit-taking although the immediate outlook remained bullish.
A retracement of share price will see the share price find support at the 50-day SMA mark at 70 sen. Pushing further afield, the immediate resistance rests at 90.5 sen, which would take the stock back to April 2018 levels. A crossing would set a higher target of RM1.08, which was last seen in January of this year.
The momentum indicators suggest the current rally is not yet over. The slow-stochastic momentum index remains below overbought territory at 77 points and can be seen moving further north. The 14-day relative strength index is falling from overbought territory at 77 points and could retrace its steps lower into neutral ground.
While there is a risk the abovementioned indices will neutralise, the daily moving average convergence/divergence line shows a very bullish ascent and departure from the signal line. This suggests that an uptrend has formed for the immediate term, and while profit-taking may stagger the ascent, more share price increases could be in the offing. The comments above do not represent a recommendation to buy or sell.