SAM ENGINEERING & EQUIPMENT BERHAD (Technical Buy)

• SAM Engineering & Equipment (M) Berhad (SAM) closed at RM4.15 last Friday, rising by 1.72%, as the stock rebounded from its immediate support level at RM3.84, signalling a potential recovery following a prolonged downtrend. The price action reflects renewed buying interest with a breakout attempt from the recent consolidation range, underpinned by strengthening momentum. The convergence of the 5-day SMA at RM4.05 and the 13-day SMA at RM4.12 reinforces a critical pivot zone that could dictate the near-term direction.
• From a technical perspective, the stochastic oscillator at 27.84 is emerging from oversold territory, indicating a shift in momentum and signalling the possibility of further upside. The Tom Demark Pressure Ratio (TDRP) at 46.97 highlights easing selling pressure, fostering an environment supportive of a recovery. Meanwhile, the RSI at 42.77 is trending upwards, displaying signs of stabilisation and suggesting improving sentiment as it climbs toward the neutral 50-mark.
• Key levels to watch include immediate resistance at RM4.22, coinciding with the 50-day SMA, with a breakout above this level potentially driving the stock towards RM4.52 and RM4.80, marking the next significant resistance levels. On the downside, immediate support remains firm at RM4.00, with additional cushioning at RM3.84, which has proven to be a strong support zone in recent trading sessions.
• Trading Strategy recommends accumulating the stock at RM4.05-RM4.15 for an optimal entry point. A take-profit target at RM4.49 offers an upside potential of approximately 8.2%, while a stop-loss at RM3.82 limits downside risk to around 7.9%. This set-up presents a balanced risk-reward profile, appealing to traders anticipating a continuation of SAM's rebound momentum from current levels.

Source: Kenanga Research - 16 Dec 2024