SKP RESOURCES BERHAD (Technical Buy)

• After an eleven-day decline, SKP Resources halted the downward trajectory, closing above the day’s low at RM0.795 yesterday. Notably, this closing price is near its floor price recorded in June 2020, suggesting that a technical rebound may be on the horizon.

• From a technical standpoint, both the Stochastic Oscillator and the Tom Demark Pressure Ratio (TDRP) have entered oversold territory and are showing preliminary signs of an upward trend. This increases the likelihood of an imminent trend reversal and warrants close attention from investors. Furthermore, historical data reveals that SKP's share price has successfully rebounded on the two previous occasions when similar conditions were met, thereby bolstering the likelihood of an upcoming technical rebound.

• In terms of price action, a sustained close above the 5-day Simple Moving Average (SMA) of RM0.845 could act as a catalyst for a rally towards RM0.910, aligned with its longer-term 13-day SMA. On the flip side, a breach below the immediate support level of RM0.775 could trigger a new bearish phase.

• We recommend initiating a position at the current market price of RM0.795, with a take-profit target set at RM0.840. This strategy offers an estimated upside potential of approximately 5.7%. To mitigate downside risk, we suggest implementing a stop-loss at RM0.770, corresponding to a potential downside of roughly 3.1%

Source: Kenanga Research - 2 Nov 2023