RHB Research sees possible rebound in MRCB shares (1651)

KUALA LUMPUR: RHB Research Institute sees a possible rebound in the short term for Malaysian Resources Corp Bhd (MRCB) shares following the steep decline in the stock's price.
It
said on Monday MRCB's share price had climbed from a low of RM1.27 in
February 2010 to a year-high of RM2.60 on Aug 2, 2011 before a gap-down
on Aug 5 2011 triggered a correction which saw its share price fall to
a year-low of RM1.48 by end-September 2011.
RHB Research said as
MRCB was grossly oversold, the stock's price staged a five-month
recovery to a high of RM2.27 by early-February before it gradually fell
back to a low of RM1.54 in mid-May.
A bullish wave subsequently
lifted the stock to a high of RM1.93 in early-July. Nevertheless, the
stock failed to sustain above the 61.8% FR level of RM1.91 and
corrected to a low of RM1.71 by end-July. A second corrective wave
subsequently pushed the stock's price to a low of RM1.67 over the next
three weeks. “Last Friday, the stock continued to slip below the 10-day
SMA and ended the day at RM1.61 (from its open of RM1.66), registering
a total trading volume of 7.5m shares,” it said.
“Noticeably,
the medium-term outlook is negative with both MACD and signal lines
heading deeper into the negative region. This is substantiated by the
growing bearish divergence between the 10 (RM1.722) and 40-day
(RM1.783) SMAs. RHB Research said similarly, the short-term trend is
also negative given the increasing bearish divergence between the MACD
and signal lines.
“Despite the negative outlooks, the steep
decline in the stock's price saw both RSI (27.827 points) and
Stochastic indices cross over into the oversold region prompting a
possible rebound in the short term,” it said.