SUPPORTLINE by FONG MIN YUAN

YONG Tai Bhd appears to have bottomed out at a recent low of 59.5 sen. Given the share price movement over the recent sessions, the stock may be headed for a sustained rebound. On Tuesday, the stock made a push to an intra-day high of 69.5 sen on positive momentum. Trading volume spiked to a record high as buying interest was seen returning to the stock. The counter has been on a steep decline since July this year. The share price dropped about 60% of its value before hitting the support of 59.5 sen last Thursday. Should the rebound take root, the counter could be looking at hitting the immediate resistance of 78.5 sen. The 50-day simple moving average (SMA) rests at 88 sen overhead, and a crossing would serve as a bullish indication. The next hurdle at RM1.01, however, should serve as a stiffer resistance. In terms of a longer-term outlook, the negative crossings and downwards trajectories of the SMAs suggest an overwhelmingly bearish formation. The key momentum indicators are looking more positive in the wake of the most recent price action. The slow-stochastic momentum index shows the per cent K oscillator crossing the perc ent D oscillator to issue a “buy” signal. Rising at 48 points, the index is on a positive growth trajectory. The 14-day relative strength index has moved higher to 49 points, also approaching the mid-point of the index. Meanwhile, the daily moving average convergence/divergence line is moving higher ahead of the signal line. Should the buying interest fade however, the stock could return to the 59.5 sen support, and in crossing, find further support at 53 sen.

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

Note: This article first appeared in StarBiz Premium yesterday.