• Since we initiated a “Technical Buy” on London Biscuits Berhad (LONBISC) on 9 Feb 2015, which is engaged in manufacturing and trading of confectionery and other related foodstuffs, share price exceeded our long term objective of RM0.78 within 2 weeks, leading to 21% upside!
• However, share price is grossly overbought, triggering a possible technical correction mainly due to: (1) share price crossed below 10-d & 200-d SMAs; (2) MACD is likely to trigger Dead Cross pattern while its histogram turning into negative zone; (3) RSI fell below 70% from 81%, pointing to strong selling strength; and (4) Slow Stochastics declined below 80% from 87%, triggering sell signal.
• Hence, share price is expected to retrace towards RM0.71 (38.2% FR), RM0.68 (50% FR) and RM0.65 (61.8% FR). Resistant levels are near RM0.77 (10-d & 200- d SMAs), RM0.815 (high on 2 Mar 2015) and RM0.83.

Source: Hong Leong Investment Bank Research - 4 Mar 2015