EYE ON STOCK

MALTON Bhd (code: 6181) tripped into correction mode owing to apparent profit-taking activity after a nice rally, which witnessed the shares peaking temporarily at RM1.94 on May 16, the best level since early March 2000.

The downward adjustment process lasted almost three months, dragging the shares to as low as 88.5 sen during intra-day session on Aug 11.

At that moment, Malton appeared defenceless and risked declining deeper into the red.

However, the sudden wake of a fresh bout of bargain hunting came to the rescue and lifted this stock to trade range-bound, marginally above the recent ebb.

Based on the daily chart, Malton remained in consolidation mode apparently, but the positive movements in the share price on Wednesday prompted many people to believe this stock may be about to embark on the mending path.

The tentative positive crossings of the 14-day simple moving average (SMA) against the 21-day SMA added to investors optimism.

Going forward, a clear penetration of the most recent highs of RM1.11 will further confirm this stock is indeed on a new leg of uptrend. Greater resistance can be expected at the 50-day SMA of RM1.19 and heavy barrier is envisaged at the RM1.34-RM1.35 area.

Elsewhere, the oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index were attempting to scale higher after flashing an unconfirmed buy signal at the grossly oversold territory on Wednesday. The past week saw the 14-day relative strength index retracing back to a reading of 35 on Tuesday before curving up rapidly to close the week at the 49-point level on Wednesday. In addition, the daily moving average convergence/divergence histogram resumed the upward expansion against the daily signal line to keep the bullish note. A buy call was triggered a week ago.

Technically, indicators are painting a pretty encouraging pictogram, implying Malton shares will probably rise, with a great potential of scaling new highs in the medium term, if buying interest is strong enough.

Initial support is lying at the 95-sen level and concrete floor is set at the 86-sen level.

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