Yesterday, MYEG edged 14 sen or 5.53% to close at RM2.67, surging above its - 2SD regression line. The share price has undergone some heavy profit taking activity after it touched the +2SD regression line due to recent news that the government is seeking to end the monopoly held by MYEG in the market. However, the rally posted a ‘Doji’ candlestick formation, suggesting a potential reversal play from its recent consolidation. We believe that the stock is attracting back investors with the increasing trading volume seen over the past few days. The bullish reversal was further supported by the uptick in RSI and Stochastic indicator, with the latter emerging strongly oversold region. Hence, we are issuing a “Trading Buy” with expectation that the share price would rally on follow through buying to retest its previous high level of RM3.07 (which coincides with the +1SD regression level).

Source: Kenanga Research - 17 Apr 2015