Today’s limelight will be on poultry counters, as we observed rising egg prices according to data compiled from the Department of Veterinary Services (Figure 3) which has led these players to gain traction.

· TEOSENG (Trading Buy, TP: RM1.87). TEOSENG has staged a rebound play off its RM1.12 support level in early September, while it also staged a breakout from its multi-month downtrend resistance level of RM1.48 recently. The share price is on the verge of completing its ‘Rounding-Bottom’ chart pattern, looking to retest its immediate resistance of RM1.73 (R1) in the near-term. Technical-wise, the underlying trend remains positive from here as it trades above all its SMAs. This is further reinforced by the bullish expansion of the Bollinger-band, as well as a strong up-trending RSI. While we do not discount the potential deep overbought situation, we reckon the strong bullish sentiment surrounding this sector could rally the share price to retest the sustainability of the RM1.73 (R1) level. We anticipate a technical breakout would lead the share price to rise towards RM1.87 (R2) further.

· LTKM (Trading Buy, TP: RM2.03). LTKM has been trading sideways within RM1.37-RM1.62 over the past two months after undergoing a downtrend from its four-month’s high. The recent hype among poultry counters has garnered investors’ interest on the stock, as the share price gapped up to break out from its multi-month downtrend resistance level as well as its upper Bollinger-band yesterday. LTKM is en-route to form a ‘Rounding-Bottom’ chart pattern, as it looks to retest its three-month’s high level of RM2.03 (R2). Indicator-wise, the MACD is still undergoing a strong bullish divergence while the RSI is hooking up strongly to imply that buying momentum is building up. Hence, we are issuing a Trading Buy on this counter as we believe that follow-through buying interest could potentially rally the share price to retest the RM2.03 (R2) level to complete its ‘Rounding-Bottom’ chart pattern in the mid-term. On a side note, we do not discount that the share price could possibly consolidate to neutralise the recent overdone rally. 

Source: Kenanga Research - 6 Oct 2015