DAILY TRADING STOCKS: Gamuda, MMC Corp

Gamuda’s daily chart

Gamuda may  rise further  after the strong move yesterday. The stock  has  rallied sharply since bottoming in Sept last year and the recent peak in February was just a whisker away from the 52-week high set in July 2011. It has since corrected but  its upward bias prevailed,  as the low  of RM3.54  in early March represents a correction of  only 38% of the Nov-Feb rally.  The highest close in almost a month yesterday suggests that  the stock has made  a higher bottom. Yesterday’s  “Long White” candle on the highest volume in more than a year indicates firm buying interest, which has brought  the stock    back above the 50-day MAV  line.  Thus,  a purchase can be made above RM3.70, the highest close in 4 weeks, with a close below RM3.62 as stop loss. The RM3.62 level is the low of  the  “Long Black” of 16 May and also the low of Monday.  The price target is RM4.25, which is the high of last year, provided that the psychological RM4.00 – the resistance of April and July last year– is violated convincingly. A close below RM3.62 could be disastrous for the stock as it signals the failure of  the  price follow-through despite the positive sentiment. Support should come in at RM3.45, the high of Oct/Nov 2011 and the 50% retracement of the Nov-Feb rally.

MMC’s daily chart

MMC’s share price may go up if it can break above the short-term resistance level.  The stock has been  in correction mode since the false breakout  from the psychological RM3.00 in early February. Nevertheless, the correction  had  an upward bias as the low  of RM2.73 in early Feb was a 50% retracement of the Nov-Feb rally, a healthy correction based on Fibonacci analysis. The stock also found support from the rising 50-day MAV line. Yesterday’s strong surge may have ended the correction as the stock formed a “Long White” candle on high volume, which suggests firm buying interest. In view of  the  upward continuation, a  purchase can be made now, with a stop loss on a close below RM2.73, while a conservative trade may involve waiting until the psychological RM3.00 is violated before a position is initiated. A measured move based on the  Nov 2011 to Feb 2012 rally  could see  the price reach  RM3.40, just above the high of 2011, while a strong move could see it  climb  as high as RM3.80, based on the sideways move of the past year. As a close below RM2.73 will nullify the upside bias,  look for the stock to revert to its sideways move.

Source: OSK188