We opt to look at several quality resilient stocks such as SCGM and PESTECH that has underwent some price weakness in view of the recent market plunge.

SCGM (TB, TP: RM3.94) had held well during the recent market plunge, as the share price consolidated towards its 50-day SMA level and -1SD regression level. Key momentum indicators such as Stochastic and RSI have also neutralised their prolonged overbought situations, with the former already deeply oversold while the RSI is approaching the oversold threshold rapidly. We deem the recent price weakness and oversold situation to be a good opportunity to buy into this resilient stock, as we anticipate buying interest to push the share price towards our mid-term TP of RM3.94. Meanwhile, a strict stop loss is placed at RM3.38.

PESTECH (Trading Buy, TP: RM5.95) Earlier this month, PESTECH registered an all-time high of RM5.95 (R2). However, the share price failed to continue its bullish move due to the poor market sentiment. PESTECH suffered four consecutive days of losses; the share price subsequently rebounded from the strong uptrend trend line support of RM5.28 (S1). Chart-wise, the Stochastic indicator has hooked up from oversold level, while RSI also turned positive. We expect the technical rebound to continue into the week; note-worthy is that the overall technical picture remains positive as the share price is well supported by both 50 and 100-day SMAs. Hence, we suggest that investors should take this opportunity to accumulate PESTECH at current level and offload into strength at the recent high of RM5.95 (R2). Meanwhile, a protective stop-loss of RM5.00 (S2) should be placed.

Source: Kenanga Research - 14 Aug 2015