TOMEI CONSOLIDATED BERHAD (Technical Buy)

• Tomei Consolidated Berhad (TOMEI) closed at RM1.55 last Friday, rising by 1.31%, as the stock extended its rebound from the recent low near its critical support at RM1.42. The price action indicates improving sentiment, supported by increasing volume, as TOMEI trades above its short-term 5-day SMA at RM1.49 and 13-day SMA at RM1.51. The recent breakout above these levels reinforces a shift in momentum, suggesting a potential recovery from oversold conditions.
• From a technical perspective, the stochastic oscillator at 36.44 is trending higher, emerging from oversold territory and signalling strengthening upward momentum. The Tom Demark Pressure Ratio (TDRP) at 71.30 highlights robust buying pressure, further supporting a bullish outlook. Meanwhile, the RSI at 56.19 has climbed above the neutral 50-mark, indicating improved momentum with a clear bullish divergence observed, reinforcing the likelihood of a continued recovery.
• Key levels to monitor include immediate resistance at RM1.61, coinciding with the 50-day SMA, with a breakout above this level potentially driving the stock towards RM1.64 and RM1.70, marking key resistance zones. On the downside, immediate support is firm at RM1.49, with additional cushioning at RM1.42, providing robust stability against further pullbacks.
• Trading Strategy recommends accumulating the stock at RM1.50-RM1.55 for an optimal entry point. A take-profit target at RM1.68 offers an upside potential of approximately 8.4%, while a stop-loss at RM1.45 limits downside risk to 6.4%. This set-up provides a favourable risk-reward profile, appealing to traders anticipating a continued rebound in TOMEI's price trajectory.

Source: Kenanga Research - 16 Dec 2024