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TheStar Thu, May 16, 2019 08:00am - 6 months ago


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SUPERMAX Corp Bhd looks poised to start a rally and pushed past several key simple moving averages (SMA) in Wednesday trade.

With a buying lead coming into the market, the counter gapped up on strong positive momentum at the opening bell and proceeded to advance to an intra-day high of RM1.62.

At this trading level, the share price made a crossing of the 100-day SMA and breached the immediate resistance of RM1.58, suggesting a return to positive sentiment.

However, the advance is fast-approaching another resistance at the recent peak of RM1.63. A positive crossing of this hurdle would solidify the positive trend and offer support against a return to a consolidation phase.

Looking to the momentum indicators, the daily moving average convergence/divergence line supports this view as it crossed above the signal line, triggering a \"buy\" signal and confirming a return to positivity.

Other indicators are looking more bullish, including the slow-stochastic momentum index which continues to trend higher to 63 points.

The 14-day relative strength index spiked up to overbought conditions following Wednesday's performance and is now at 72 points.

Despite the improving momentum, there remains some negative pressure on the stock from the dead crossings seen on the daily price chart. Following the weak trend since November 2018, the negative crossings between the moving average lines are yet to unravel and reveal a longer positive trend.

The 200-day SMA overhead  at RM1.68 has remained intact since January 2019, and barring a crossing, would continue to exert downwards pressure on the share price. 

Should the current rally fizzle, the stock could remain trapped in the current trading channel and retreat to a support of RM1.49. Further support can be seen in the stock's recent low of RM1.43.

The comments above do not represent a recommendation to buy or sell.

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