More Upside For Volcano Stocks, Supported By Higher Trading Volume: CGSCIMB

Volcano Bhd’s stock surged and broke out of its triangle pattern yesterday with a long white bullish candle. Prices also closed above both the 20-day and 50-day exponential moving average (EMA) after consolidating within the said range for the past 1 month. The EMA is a type of moving average that places a greater weight and significance on the most recent data points.

Supported by a higher trading volume and coupled with the higher lows formation from the RM0.69 low, more upside is likely to follow in the near term, said CGSCIMB in the recent Malaysia Retail Research Report.

The Moving Average Convergence Divergence (MACD) just confirmed its golden cross while the Relative Strength Index (RSI) has pushed on higher. Both indicators are supportive for the current breakout move.

“We think that aggressive traders may want to go long now or accumulate on a pullback, with a stop-loss set at RM0.815. This current breakout move may see prices climb towards the historical resistance at RM1.00 and RM1.08 next,” said CGSCIMB.

On another note, the Asian stock markets finished mixed on Wednesday on concerns over China’s economic growth. The local benchmark FBMKLCI (KLCI) recovered 0.84 points or 0.06% to end the day at 1,424.34.

Healthcare (+1.90%) led the top gainer for the day, followed by plantation (+1.65%) and utilities (+1.20%). On the flip note, telecommunications (-0.67%), REIT (-0.45%) and industrial products (-0.19%) were the top laggards.

Trading volume rose to 2.60 billion while trading value improved to RM1.63 billion. Market breadth turned slightly negative as 412 gainers marginally lost out to 427 decliners.

The benchmark formed its second white candle yesterday and pulled away from the double support near the lower end of the 1,416-1,438 range.

Prices retested the 20-day EMA but failed to close above it. Both the 20-day and 50-day EMAs currently act as the immediate resistances.
A close above both the said EMAs would indicate that the KLCI is likely to push higher to fill the 10th March gap of 1,445-1,448 next.

However, the bears still have the slight upper hand as the benchmark remains below the EMAs. A breakdown below the 1,412 level is required to confirm that the bears are in charge. The next support is seen at the 1,400 psychological levels.

“Our portfolio stays in risk-off mode this week,” said CGSCIMB.

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