Kenanga Research & Investment
Daily Technical Highlights - SKPRES | PENTA | SERSOL
The FBMKLCI inched up on Monday
The FBMKLCI ended Monday marginally higher (+0.53 points) to close at 1,716.11, tracking gains in key regional markets.
Furthermore, the European leaders have reached a deal with Greece on a debt bailout that will keep it in the Eurozone and the
better-than-expected Chinese trade data boosted the market sentiment. However, the Ringgit continues to weaken against the USD
to close above RM3.80/USD level (Refer to figure 2). Market breadth was relatively balanced, with 357 gainers, 360 losers and 322
counters traded unchanged. Chart-wise, a “Spinning Top” candlestick has formed, suggesting the indecision of the investors on the
market direction. Readings from key indicators are relatively neutral, implying the uninspired mood. We reckon that the trading
volume will remain subdued for this week approaching the Hari Raya Puasa holiday. Thus, we are maintaining our view that the key
index could continue to trade within the range of 1,690-1,730 level. Nevertheless, we are looking forward to the upcoming quarterly
results season for better clarity on market direction. Should the key index manage to convincingly break above the 1,725 (R1) level
with strong volume, it stands a chance to rally towards 1,750 (R2) next. Meanwhile, we observed that several precision moulding
counters are garnering investors interest recently potentially benefiting sentimentally from the stronger greenback, thus we are
featuring two precision moulding counters, namely SKPRES (TB, TP: RM1.47) and PENTA (NR).
Daily Technical Highlights
· SKPRES (TB, TP: RM1.47) recently secured a new contract in May from its key customer, Dyson, to manufacture the new
cordless vacuum cleaners. The contract announcement saw the share price garnering investors’ interest, as the share price
rallied to its all-time high of RM1.35 yesterday. Coincidentally, the share price has broken out from its +2SD regression level on
high trading volume. Despite the overbought situation in both the Stochastic and RSI indicators, we deem this as acceptable
levels as we observed that these indicators usually hover around such levels historically. Should follow through buying interest
continued to gain traction, we reckon that the share price could potentially rally towards its next Fibonacci resistance level of
RM1.47 (R1) in the near-term.
· PENTA (Not Rated) surged 5.5 sen or 7.14% yesterday, breaking out from its long-term resistance-turned-support to close at
an all-time-high of RM0.825. Coupled with high trading volume, strong buying momentum is showcased with all key indicators
heading north. We believe the share price could rally towards our measurement objective target price of RM1.055. However,
possible consolidation could occur in the near term as we are aware that the Stochastic indicator has entered overbought
territory while RSI is approaching the said threshold. Hence, we advocate investors to wait for the stock to consolidate back
towards its resistance-turned-support level of RM0.795 (S1) to neutralise its overbought situation before entering the stock.
· SERSOL (Stopped Out). Recall that we had previously placed a Trading Buy call on SERSOL (TP: RM0.34, report dated 5-
Jun-15) after the share price gapped up to stage a potential rebound play. However, SERSOL has failed to perform according
to our expectation as the share price continued on its consolidation mode after reaching a high of RM0.415. In tandem with the
lacklustre trading volume over the past month, key indicators are also relatively flattish to suggest the lack of buying momentum
and a prolonged consolidation phase is in the cards. As the share price has triggered our stop-loss level of RM0.28, we are
stopping-out our position on this counter.
Source: Kenanga Research - 14 Jul 2015
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