KESM (Take Profit). Last week, we recommended a Trading Buy on KESM (13-Sep @ RM8.45) after the share price broke out of a bullish “Pennant” formation. The share price had since rallied to an intra-day high of RM9.99 before ending yesterday almost flat at RM9.78 (down by 1 sen or 0.1% for the day). Chart-wise, KESM’s short to long-term trend remains positive with the share price firmly above all three key SMAs. However, with yesterday’s formation of a “Spinning Top” candlestick and both the Stochastic and RSI are in heavily overbought territories. We would not discount the possibility of a healthy pullback/pause for breath just below the RM10.00 psychological mark. As such, we take the opportunity to lock in prior gains (+RM1.33/ +15.7%) for now. Major resistances include the aforementioned RM10.00 (R1) level, although a decisive breakout would signal further gains towards RM10.30 (R2) and RM10.80 (R3). Downside support levels are RM9.18 (S1) and RM8.20 (S2).

YONGTAI (Trading Buy, TP@ RM1.37). YONGTAI has been consolidating over the past four months after the stock underwent a gradual climb from RM0.80 (in March 2015) to a high level of RM1.16 (in July 2016). YONGTAI surged 7.0 sen (6.14%) to RM1.21 yesterday, breaking out from its sideways consolidation resistance level of RM1.16 on strong trading volume. With the MACD histogram displaying a bullish convergence above its zero-line on the back of strong uptick seen in RSI, the bias is towards the bulls as the stock look to resume its prior uptrend trajectory. YONGTAI looks poised to set a higher high at RM1.24 (R1) before gearing towards our target objective of RM1.37 (R2) in the near-to-mid-term. Downside support could be found at RM1.16 (S1) and RM1.04 (S2), where a protective stop-loss is placed three bids below S1 at RM1.13.

Source: Kenanga Research - 21 Oct 2016