GESHEN (Cut loss). Recall that we last recommended GESHEN after it broke above its multi-month resistance at RM1.74 (report dated 29- June). While the share price had continued its climb over the subsequent few days, the gains had proven short-lived. The overall technical picture has also deteriorated since then, with GESHEN’s short-medium-term trend no longer intact. At the same time, the RSI indicator is now on a downtrend. Yesterday’s “Hammer” candlestick signals that a relief rebound may be on the cards. However, with the overall technical outlook already weakened substantially, traders should consider selling on strength at the RM1.72 (R1) and RM1.90/1.95 (R2) levels. Downside support can be identified at RM1.51 (S1) and RM1.30 (S2) further down.

MBSB (Not Rated). MBSB returned to investors’ spotlight after news emerged that seasoned investor Tan Sri Chua Ma Yu has increased his stake in MBSB to 8.97% from 6.06% through subscription of the company’s right issue. The stock surged 5.5 sen (7.9%) on strong trading volume to stage a rebound play from its multi-month downtrend pattern, closing above its 50-day SMA level at RM0.755. Strong healthy uptick in RSI and Stochastic from their oversold zone are also implying that buying momentum is pilling on the stock, lending a supportive hand on the rebound play. From here, the share price could set sight on RM0.79 (R1) and possibly RM0.845 (R2) next if it manages to decisively break away from the R1 level. Do note that failure to breach the R1 level successfully could result in the share price being trapped in a sideways consolidation phase, where downside support is seen at RM0.70 (S1) and possibly RM0.68 (S2) further.

Source: Kenanga Research - 3 Aug 2016