Highlights / Stock Picks of the Day - DRB-Hicom ("DRBHCOM") – Not Rated

DRBHCOM’s technical picture was mostly positive right until this morning when the stock declined 15 sen at RM2.53. In fact, the “Bullish Pennant” pattern which was beginning to take shape over the past month has now been dispelled as a result of the downward move. The 14-day Stochastic and RSI indicators have now dipped down from overbought levels, while the MACD is suggesting that the bearish momentum is likely to continue. That said, we believe that all is not lost for the stock. The overall uptrend remains largely intact, and we reckon that traders who had previously missed out on the December run-up can now take the opportunity to buy the stock at a bargain. We expect strong support to exist at the RM2.40 and RM 2.30 trend line supports, and suggest that traders look to buy just above those levels. Should a buy transaction be triggered at those levels, traders may then target the conservative RM2.70 sell price while on the flipside, a stop-loss should be placed at RM2.18.

Source: Kenanga