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Eye on Stock: GENTING (3182) GENTING BHD

Genting Bhd (code: 3182) has risen above its recent high and continues to outpace the key simple moving averages (SMAs) in a show of bullish momentum.

At yesterday’s close, the counter was trading at April highs.

The stock has retraced more than 50% of its losses since the share price fell off a cliff starting Jan 22 this year.

On the Fibonacci retracement chart, this indicates a significant recovery, which bodes well for further advances.

As the incline on the ascending trend grows steeper, the stock looks likely to rise to its next price target at the RM4.95-sen mark before taking a breather from the rally.

The key SMAs are reflecting this change in sentiment as the 50-day SMA appears on the verge of crossing above the 100-day SMA, which would reflect an unwinding negative long-term trend on the daily price chart.

There are, however, fears of the stock being overbought. The recent share price increase has taken the slow-stochastic momentum index into overbought territory near 80 points.

The 14-day relative strength index is also similarly overbought at 80 points.

This suggests that the rally could slow in coming days with consolidation possibly taking place below the resistance.

However, the daily moving average convergence/divergence line reflects a positive trend with strong momentum above the signal line.

Given the overall bullish indications, the resistance of RM4.95 is likely to be breached when the indicators neutralise from overbought positions and the rally resumes.

With initial resistance at RM4.95, the next resistance can be found at RM5.45. Support for the stock is pegged to RM4.02 and RM3.60.

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

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