ADVANCECON Holdings Bhd (code: 5281) made a convincing breach of the 200-day simple moving average (SMA) on Friday, reflecting improving sentiment in the counter.
This marked the first time the share price had crossed above the 200-day SMA since data on the moving average was first available in May 2018.
Over the course of the past week, the stock had pushed off the 50-day SMA on Monday, triggering the start of a rally that extended over five consecutive sessions.
Looking over the slightly longer term, the advance had begun as far back as Dec 17, 2018, when the share price had reached a low point after a year-long decline.
Friday’s development bodes well for the stock as it remains on course for a further recovery.
The immediate resistance rests at 41 sen, which is just off Friday’s intra-day high of 39.5 sen.
However given the growth in positive sentiment, the resistance could well be breached in the coming week as the stock targets the next, higher resistance of 49 sen.
The momentum indicators are lending support for a continuation of the rally.
The slow-stochastic momentum index has reached closer to overbought territory at 79 points but shows no indication of slowing as yet.
The continued rise in momentum is supported by the 14-day relative strength index, which remains on a growth path in extreme overbought conditions at 85 points.
Meanwhile, the daily moving average convergence/divergence line is rising off the signal line, which is a bullish signal.
In the event of consolidation, the 200-day SMA offers promising support. Profit-taking or a temporary halt in the current rally could see the share drifting on moving average.
A negative catalyst coming into play however would result in stronger selling pressure, which could take the share price back to the 50-day SMA at 32 sen.
Trading volume in the counter remains quite promising. Thursday’s trading volume had risen to its highest since July 2018. On Friday, the volume remained at elevated levels to suggest continued buying interest.The comments above do not represent a \trecommendation to buy or sell.