EYE ON STOCK
NAIM Holdings Bhd (code: 5073) made a rapid advance over the two trading days following the Chinese New Year break.
The stock, which has been trapped under a descending trendline since the closing days of 2017, seemed to finally make a breakout to greener pastures.
Of late, the counter has been moving in consolidation mode and trading under the 50and 100-day simple moving averages (SMAs).
However, on Thursday the stock rose past the descending trendline to an intra-day high of 53 sen.
Following on that performance, it gapped up at Friday’s opening bell and proceeded to breach the overhead 200-day SMA at 60.5 sen and hit an intra-day high of 63.5 sen, suggesting a convincing return of bullish sentiment. Interest in the counter surged with trading volume climbing to its third highest session on record.
At present trading levels, the share price is seeing a return to the levels last seen in September 2018.
While the breach of the 200-day SMA is a positive development in the stock’s recovery, resistance is seen at the 72-sen mark, which could halt the current rally. A further advance would take the share price to a higher resistance of 78 sen.
The technical indicators show extended overbought levels, which indicate strong momentum. However, short of the indicators attempting to neutralise, there is no reason to believe that the rally will come to an end as yet.
The slow-stochastic momentum index rests at 80 points with growing momentum that is mirrored by the 14-day relative strenght index, which has surged to 93 points.
The daily moving average convergence/ divergence line also indicates a bullish trend, as it rose strongly off the zero line while extending its distance from the signal line.
The 200-day SMA at 60.5 sen serves as the immediate support. A further support rests at the lower limit of Friday’s trading gap at 53 sen. A descent below this mark would see the stock run the risk of returning to a consolidation phase.
The comments above do not represent a recommendation to buy or sell.