KAREX (Not Rated). Yesterday, KAREX surged 9.0 sen (3.86%) to close at RM2.42. The share price seems to be able to find some strong support at RM2.27 (S1), as it attempted to stage a rebound play yesterday. MACD histogram is looking to stage a bullish crossover, while strong uptick in Stochastic from its oversold region is indicating a sudden surge in buying momentum. Nonetheless, we observe that the share price could face another headwind soon exerted by its downtrend resistance line. Thus, we advise investors to look out for a decisive breakout above the downtrend resistance line at RM2.48/2.50 (R1), which could offer an opportunity for the share price to climb further up towards RM2.74 (R2) next. Failure to break the aforesaid level could result in the share price resuming its downtrend trajectory towards RM2.27 (S1) and possibly RM2.00 (S2) further.

 WELLCAL (Not Rated). WELLCAL has been trading range bound within RM2.28-RM2.52 since March 2016, where it managed to find a strong footing at RM2.28 (S1) recently. Yesterday, the share price rebounded from the S1 level by surging 18.0 sen (7.83%) to close at RM2.48. Key momentum indicators are looking positive at this juncture, with the MACD histogram displaying a bullish crossover on the back of strong hookup seen in the Stochastic indicator. However, we observe that the strong surge in share price yesterday was accompanied by relatively low trading volume, begging a question on its sustainability. Hence, we advocate investors to be on the lookout for another strong volume climb in share price above the RM2.50 (R1) level to confirm the reversal play before entering the stock. Next level of resistance is seen at RM2.60 (R2), while downside supports are noted at RM2.38 (S1) followed by RM2.28 (S2).

Source: Kenanga Research - 20 May 2016