Eye On Stock

SKP RESOURCES Bhd (code: 7155) started a rebound in Friday trading, which in crossing above the short-term simple moving averages (SMAS), served to be the strongest attempt at a breakout in recent months.

The stock has been experiencing dwindling fortunes since July this year, having started on a steady descent that put it firmly under a descending trend line.

Attempts to break free of the downtrend have been unsuccessful, given the downward pressure of the 14- and 21-day SMAS. However, based on yesterday’s performance, an opportunity has arisen to test the 50-day SMA that hovers overhead. The stock took out the immediate resistance at RM1.10 and headed for an intra-day high of RM1.15.

However, the share price was turned back at the next resistance of RM1.16, near the 50-day SMA, which if breached would have signalled a trend reversal for the counter.

By market close, the share price had retreated to the RM1.10 mark.

Support for the counter can be found at RM1.03, which represents the stock’s recent low. A return to selling mode would see the share price continue its decline below the trend line towards the next support at RM1.

It is promising to see some growing investor interest in the stock, although sustained buying over the coming sessions would be crucial to keep the rally alive.

Trading volume yesterday rose to its highest since early September, indicating some renewed investor attention.

The technical indicators are also showing growing strength, and having just left oversold territory, they pose attractive entry levels for investors.

The slow-stochastic momentum index is at 19 points with the percent K oscillator rising past the percent D oscillator. The indicator is on the verge of returning from oversold territory, which suggests growing bullishness.

The 14-day relative strength index has spiked to 67 points, which indicates a strong pick-up in momentum with room to grow before it hits overbought conditions.

The daily moving average convergence/ divergence line has also picked up above the signal line, giving a “buy” signal as it continues higher towards the zero line.

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