Eye on Stock BY K.M. LEE

by **Cals** Mon 10 Feb 2014, 05:39

Published: Saturday February 8, 2014 MYT 12:00:00 AM
Updated: Saturday February 8, 2014 MYT 8:19:15 AM
Eye on Stock
BY K.M. LEE
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AFTER finding support at the 36-sen floor during the recent steep correction phase on Oct 22, Sersol Bhd shares staged a rebound, hitting a high of 62 sen on Nov 8 last year on renewed bargain-hunting activity.
However, the lack of follow-through interest to fuel the mending process prompted the young bulls to abandon the idea.
Consequently, prices drifted sideways to marginally lower on consolidation.
Sersol climbed 5.5 sen to 44.5 sen on Thursday but finished down one sen to 43.5 sen owing to an apparent profit-taking activity yesterday. Based on the daily chart, this counter may be building up the momentum to launch the next upward wave, with trading volumes building up after undergoing a period of correction and consolidation. But more observation is needed.
A decisive penetration of the 100-day simple moving average of 55.5 sen, followed by a clear breakout of the relatively strong overhead barrier of 62 sen would give investors the confirmation. If successful, the immediate upside objective would be to fill the gap at the 69 sen-72 sen band. Greater resistance is resting at the 85 sen level. The oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index were rising.
It had issued a short-term buy at the very oversold territory late last month. Similarly, the 14-day relative strength index improved significantly from a reading of 14 on Jan 27 to settle at the 65 points level. In addition, the daily moving average convergence/divergence histogram had crossed above the daily signal line to trigger a buy. Technically, indicators are pretty encouraging, implying Sersol shares are likely to firm, with a potential of staging a positive breakout in the short-term. As for the downside, trailing exit is pegged at the 36 sen line.

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