CAB expected to re-challenge immediate overhead resistance

September 28, 2014
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OVERALL market weaknesses on the Wall Street and regional stock markets triggered market corrections on the local bourse.

At the market close last Friday, the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) ended lower at 1,840.50 points, posting a week-on-week loss of 0.49 per cent.

Seventeen of the 30 heavyweights made week-on-week losses.

The index trended lower staying below its immediate downside support of 1,850 after hitting an intra-week low of 1,829.24 points last Friday.

The local bourse hit an intra-week high of 1,851.91 points before staging a technical pullback to an intra-week low of 1,829.24, giving it an intra-week trading range of 22.67 points.

The FBM Small Cap Index depreciated by 74 points, or 0.40 per cent, to close at 18,642.49 points while the FBM ACE Market Index gained 37.55 points, or 0.52 per cent, to 7,293.16 points last Friday.

Meanwhile, share prices on the New York Stock Exchange (NYSE) slipped into technical pullbacks last week. The Dow Jones Industrial Average closed lower at 17,113.15 points last Friday, with a week-on-week loss of 0.96 per cent.

The tech stock-heavy Nasdaq Composite Index moved in tandem with the broader market sentiment last week. It closed lower at 4,512.19 points last Friday, with a week-on-week loss of 67.60 points, or 1.487 per cent.

Hong Kong stocks consolidated lower last week. The Hang Seng Industrial Index closed at 23,678.41 points last Friday, with a week-on-week loss of 2.58 per cent.

Tokyo stocks ended lower with the Nikkei 225 Index slipping to 16,229.86 points, with a week-on-week gain of 2.56 per cent.

CAB Cakaran Corporation Bhd (CAB) staged a technical rebound last Friday. Its daily price trended higher to close at RM1.06, with a week-on-week gain of 16 sen, or 17.78 per cent.

Below are some of the readings of CAB’s technical indicators:

Moving Averages: CAB’s daily price trend stayed above all its 10-, 20-, 30-, 50-, 100- and 200-day moving averages.

Momentum Index: Its short-term momentum index stayed above its neutral reference line last week.

On Balance Volume (OBV): Its short-term OBV stayed above the support of its 10-day moving averages.

Relative Strength Index (RSI): Its 14-day RSI had since stayed above 50 per cent, while its technical reading stood at 74.45 per cent.

Outlook

Major market weaknesses on the Wall Street and regional stock markets continued to exert their negative impact on Bursa Malaysia performance.

Select Main Market counters made notable gains last Friday. CAB was one of these counters with a day-on-day gain of 16 sen, or 17.78 per cent.

Chartwise, CAB’s monthly price trend staged an overhead breakout of its intermediate-term rounding-bottom formation’s neckline at the market close last Friday.

CAB’s weekly price trend made a technical breakout of the neckline of its intermediate-term rounding-
bottom pattern formation last Friday. (See CAB’s weekly price chart B1:B2) In the meantime, CAB’s weekly price trend stayed above its neckline.

It’s daily price trend staged an overhead penetration of its short-term overhead resistance (See CAB’s daily price trend C1:C2). Also, its daily price trend trended well above its short-term overhead resistance (C1:C2).

Its daily, weekly and monthly fast MACDs (moving average convergence divergence) remained above their respective slow MACD’s last Friday.

RSI stood at 74.45 per cent last Friday, while its 14-week and 14-month RSI were at 74.85 per cent and 78.03 per cent, respectively.

The overhead breakout of its short-term neckline (C1:C2) on its daily price chart augurs well for its near-term perspective.

CAB’s daily price trend is poised to stage a re-challenge of its immediate overhead resistance zone of between RM1.20 and RM1.45 a share.

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