Rubber counters captured our interest recently as the sector had undergone a heavy sell-down by investors. The recent price weakness as well as oversold prices could provide an opportunity for investors to accumulate several Rubber stocks, which are beneficiaries of the stronger Greenback. Therefore, we are highlighting SUPERMX and COMFORT as their technical pictures are deemed compelling at current levels.

· SUPERMX (Trading Buy, TP: RM2.56) underwent a short-term downward spiral over the past 2 weeks, in-line with the recent market sell down. Nevertheless, we believe that the recent tumble may have been overdone from a technical perspective, and the share price looks set for further gains. Indeed, the share price appears to have found a strong support at the RM2.00 (S2), and this comes in tandem after two consecutive days of long white candlesticks, implying that buying interests are piling up. The key indicators are turning positive, and we reckon the share price is likely to retest the recent high of RM2.56 (R2). As such, we advocate traders to buy into the stock now with a target price of RM2.56 (R2), while a stop-loss of RM2.22 (S1) should also be employed.

· COMFORT (Not Rated) was trending in the uptrend since Dec-14. However, due to the weak market sentiment, the share price took a beating in the past 2 weeks. Within a 2-week period, the share price had lost as much as 32% to an intraday low of 71.0 sen (S1) two days ago. Looking at the chart, the recent sell-down appears grossly overdone. In fact, we are beginning to see some emerging bright spots; the share price managed to hold above the strong support of 71.0 sen (S1) level, coupled with a white “Marubozu’ candlestick appearing after a ‘Doji’ candlestick (circled on daily technical chart), implying that the bulls are outweighing the bears in yesterday’s trade to possibly confirm the uptrend reversal. The 14-day Stochastic and RSI indicators have also hooked upwards to signal a pick-up in bargain hunting activities, and we reckon that the share price could potentially rebound towards the 77.0 (R1) sen and 81.0 sen (R2) Fibonacci Retracement levels.

· EVERGRN (Take Profit @ RM1.95). Yesterday, share price rose above its 20-day SMA to settle at RM1.95, with high volume being traded. Recall, we have issued a “Trading Buy” call a week ago and the share price had broken above its resistance-turned-support level of RM1.88. Key indicators showed that RSI and Stochastic Indicator remain trending upwards but MACD is trading below its positive Signal line, suggesting a mixed bag of technical outlook. In view of current market volatility and share price hitting our target price of RM1.88, we opt to lock in our gains for now at RM1.95. We will revisit this stock should the technical outlook turn compelling again.

Source: Kenanga Research - 20 Aug 2015