MFLOUR (Not rated). MFLOUR surged 10.0 sen (7.09%) to stage a technical breakout from its ‘Pennant’ chart pattern, closing at RM1.51 on strong trading volume. The underlying outlook is bullish supported by the bullish convergence breakout seen by the MACD histogram and uptick in RSI indicator. With the dominant bull in play, any follow-through buying interest could propel further upside towards RM1.54 (R1) and possibly RM1.60 (R2) next. Nonetheless, we do not discount the possibility of any retracement in the near-term given the deep overbought situation in both RSI and Stochastic. Hence, interested investors should take note of the stock’s key support levels of RM1.44 (S1) and RM1.38 (S2).

SAUDEE (Not rated). Yesterday, SAUDEE gained 2.0 sen (6.6%) to close at a 3-month high of RM0.325 on relatively high volume. This builds upon the previous day’s 2.0 sen gain which signalled breakout above the RM0.275 – RM0.29 congestion zone. More importantly, the chart has also confirmed a “Golden Crossover” between the 20-day and 50-day SMAs to reflect early signs of a reversal from the downtrend. The indicators have also turned bullish (The MACD crossed above the zero-line and RSI has hooked upwards), and are constructive of a move higher. From here, we expect an upwards move towards the April’s top at RM0.355 (R1) and possibly RM0.38 (R2) higher up. As for downside, support can be identified at RM0.29 (S1), with another lower support level pegged to the bottom of the consolidation phase at RM0.275 (S2).

Source: Kenanga Research - 28 Jul 2016