SUPPORTLINE

LAY HONG’s steep sell-down since late September may have finally seen the stock hit bottom for now as it attempts to rebound and retrace some of the losses. On Monday, the share price closed at 53.5 sen, near the recent low of 52 sen. This triggered a rebound the next day as the stock pushed forward to a day’s high of 57 sen. While the downtrend remains intact, there are signs the stock is oversold and further retracement of the losses are in the offing. The momentum indicators paint a negative picture for the stock, although they are now returning from oversold conditions. The slow-stochastic momentum index shows the percent K oscillator crossing the percent D oscillator to issue a “buy” signal. At eight points, there is still some room for the percent K oscillator to travel before it hits neutral territory. The 14-day relative strength index looks slightly more bullish, having moved above the 30-point line in Tuesday’s trade. However, the daily moving average convergence/divergence line remains bearish, falling steeply against the signal line in a “sell” position. This suggests the current negative trend is set to continue despite potential gains in the immediate term. The immediate resistance above the counter is 61 sen. Given the technical weakness in the stock, there is a chance the stock may bounce off this resistance and enter consolidation mode. A positive crossing of this hurdle would be bullish for the share price although for a longer-term change in the stock’s outlook, it would need to breach the next resistance at the 71.5 sen level. On the bottom end, the recent low of 52 sen represent the immediate support level. The comments above do not represent a recommendation to buy or sell. Note: This article first appeared in StarBiz Premium yesterday.