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Eye On Stock - Hartalega

Hartalega Holdings Bhd (code: 5168) is seeing a return of upward momentum after a steady decline in recent months.

With yesterday’s positive bounce, the correction could be bottoming out for now, providing a window of opportunity for investors to profit from a potential short-term recovery.

Evidence of a bounce can be seen in the technical indicators, which have crept out of oversold territory to neutral ground.

The slow-stochastic momentum index has risen from oversold conditions to 31 points while the 14-day relative strength index has also neutralised to 31 points.

Meanwhile, the daily moving average convergence/divergence line is perking up and challenging the signal line overhead to suggest the return of bullish momentum.

Trading volume in the stock was subdued yesterday although there is expectation of growing buying interest signalling a rally.

Despite the bullish signals for further gains on the price chart, the longer-term picture suggests that the outlook remains caught in a strong negative trend and that the current rebound will be short-lived.

The daily price chart reveals that the counter has been on a decline since the final quarter of last year, placing it firmly within the grasp of an established downtrend.

The key simple moving averages (SMA) are descending, while the “death cross” formation sighted in January remains in play.

In the event of a short-term recovery, the share price faces resistance at RM7.60, where it will face downward pressure from the 21-day SMA.

A break above this hurdle could see the stock rise to RM8.55 where it will once again face falling pressure from the 50-day SMA.

On the lower end, support can be found at RM6.90 and RM6.67.

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


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