EYE ON STOCK

PENTAMASTER Corp Bhd (code: 7160) extended its rally with an upside gap at the opening bell to hit an intra-day high of RM3.44 yesterday.

The counter had been pushing ahead on an uptrend since April this year until a sharp correction on Oct 19 changed the technical outlook.

The pullback saw the stock falling off a peak of RM3.75, shaving off 94 sen or 25% of its value to hit a bottom of RM2.81 on Oct 30.

The positive retracement over the subsequent days picked up momentum, leading to yesterday when the stock came within striking distance of the 50-day simple moving average (SMA) at RM3.49.

A crossing of this SMA would help to confirm the stock’s return to a bullish trend as it targets a return to the recent peak of RM3.75, off this year’s trading high of RM3.87.

On the lower end of the daily price chart, the RM3.10 mark offers some support for the stock en route to the recent bottom of RM2.81.

The key technical indicators have turned more positive from the ongoing rally, suggesting a strong upside momentum moving forward.

The slow-stochastic momentum index has risen rapidly into overbought territory at 82 points, but given its sharp trajectory, looks set to rise further into more extreme conditions.

If the index should neutralise, this would be indication of a halt to the current rally as profit-taking ensues, with the share price at risk of entering consolidation mode.

The 14-day relative strength index remains healthy at 53 points, poised to rise further past the 60-point mark.

The daily moving average convergence/ divergence line is curving up from below the signal line, narrowing the distance to suggest a gradual return to an uptrend. A positive crossing would help to confirm the development of this bullish trend.

The money flow index is becoming more committed to the rally at 29 points, set to move higher with the increased buying interest.

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