The crude oil prices (Figure 3) had been consolidating over the past two weeks to form a ‘Pennant’ chart pattern on its daily chart, after staging a strong rebound play off the USD42/barrel level. In tandem with the declining trading volume, key momentum indicators have also turned softer to neutralise near overbought situation. This has led us to believe that if buying momentum started to pick up on positive sentiment surrounding the sector, a bullish breakout from the ‘Falling Wedge’ pattern could occur to rally prices further. A swift breakout from the USD50/barrel level will lead the prices to break its downtrend pattern, and boost sentiment among upstream Oil & Gas players.

· SKPETRO (Not Rated). Recall that on the 27th of August, we featured SKPETRO at RM1.53 where a bullish reversal signal appeared in the daily technical chart. The share price had mostly played out as anticipated and SKPETRO ended Monday at RM1.85 for a hefty gain of 32.0 sen since our recommendation. In fact, following yesterday's 2.0 sen rise, the share price managed to hold above the 123.6% Fibonacci Retracement Line firmly and is well positioned to retest the recent high of RM1.90 (R1). The MACD Histogram is still on an expansion track, and we believe that the bullish momentum is likely to continue. Hence, we advocate investors to look out for a swift breakout from the RM1.90 (R1) level for the stock to continue its uptrend.

· ARMADA (Not Rated) has been trading below its mean regression line for the past one month and it spiked up to close at RM0.905 last Friday. Yesterday, it hit an intraday high of RM0.955, attempting to break out from its +2SD regression level. However, the price remained unchanged despite heavy trading volume, suggesting uncertainty in direction. Technically, key indicators such as RSI and MACD are trading sideways while Stochastic indicator is tapering off from overbought zone. Hence, we opine that the share price may undergo another round of consolidation to neutralise the overbought situation. Nevertheless, the RM0.835-RM0.850 levels (20-day SMA and +1SD level) could be good entry points for investors to accumulate.

Source: Kenanga Research - 15 Sep 2015