Poor sentiment towards water-related stocks in recent months had caused KPS to lose as much as 36% since its RM2.44 high in November 13. Nevertheless, the technical picture suggests that the sell-down could be grossly overdone with a potential rebound over the horizon. Oversold signals aside, KPS has also confirmed a “Morning Doji Star” pattern, which is indicative of a bullish reversal. From here, we expect the share price to stage a technical rebound, with the RM1.79 (R1) as the first upside target. Should follow-through buying continue beyond this resistance level, KPS could potentially test the RM1.92 (R2). That said, we expect any upside to be capped at the R2 level given the overall bearish major trend.

 

Source: Kenanga