OSK Retail Research: HWGB may trade higher

KUALA LUMPUR: OSK Retail Research said Ho Wah Genting Bhd (HWGB) may trade higher after the firm move on Wednesday.

It said on Thursday the stock has been in correction mode for six months, after the strong rally in October 2011.

“It is making a series of higher highs and appears to have found strong support at 38 sen, where four tests in the past four months failed to violate this level,” it said.

OSK Research said buying was again seen above the level yesterday, as the stock closed on a “Long White” candle on high volume. Thus, an upward continuation is expected as long as the stock stays above 38 sen.

“Purchases can be made above 40 sen with a stop loss on a close below 38 sen. Strong resistance is at 44 sen, and given the multiple false violations in the past six months, a good rally has to break this level for at least two consecutive days,” it said.

If so, the price target is 51 and a strong move may even see it at 57 sen, both Fibonacci levels of the April-Sept 2011 decline. A failure to break 44 sen convincingly should lead to a return in selling with a confirmation on close below 38 sen.

OSK Research said if this happens, look for the stock to trade lower instead, with support at the prior lows of 33 sen and 25 sen.