· UMW (Not Rated). UMW recently managed to stage a strong rebound rally to close at RM8.39 yesterday, after undergoing a sell-down by investors over the past two months. The share price then formed a ‘Shooting Star’ candlestick to suggest that a possible bearish trend reversal is imminent. The strong trading volume seen in tandem with the ‘Shooting Star’ candlestick indicates that investors are generally locking in their profit from the recent overdone rally. Besides, the tapering of the buying momentum is showed by the flattish RSI, while the rolling over of the Stochastic from its overbought levels reinforces a likelihood of consolidation in the near-term. Hence, we advocate investors to adopt a ‘Sell-on- Strength’ stance for now but we may relook the stock at the more compelling level of RM7.82-RM8.20.

· TENAGA (Not Rated). TENAGA recently staged a breakout from its resistance-turned-support level of RM12.54 (S1) to rally towards its +2SD regression level. The underlying trend looks positive from here given that the share price currently trades above all its key SMA level. Nevertheless, we foresee the upside potential for the stock looks capped at the RM13.07 (R1) level underpinned by the overbought situation shown by the RSI and Stochastic. In that case, we suggest investors to employ a ‘Sell-on-Strength’ strategy as the share price approaches the RM13.07 (R1) level. 

Source: Kenanga Research - 13 Oct 2015