HOT STOCK: Tanjung Offshore Bhd - Signs of Short-Term Strength

We detected signs of strength in Tanjung’s share price yesterday as the stock violated the 50-week MAV line, which it failed to crack last month. Although it was not a major breakout,  this does signal a potential price appreciation in the near-term. We advise traders to accumulate the shares at above the RM0.955 level. If this is a genuine breakout, the stock may potentially test the 200-week MAV line which now lies at the RM1.22 level, and cut loss should the share price close below the RM0.95 level.

The stock was on a clear downtrend during the Sept 2010 – Nov 2011 period but it appears that selling pressure on Tanjung Offshore has been subsiding since December last year. In addition, the stock also violated the 50-week MAV line yesterday– a line it failed to crack last month. As we are determining its price strength based on the stock’s breakout from the weekly moving average line, we would need to see if it can maintain its posture at above this line by the end of this week. In the meantime, the breakout looks rather decisive as trading volume in the stock increased considerably yesterday.

We would advise traders to accumulate the shares at above the RM0.955 level. Although the violation of the 50-week MAV line is not a major breakout, it does signal short-term strength. The share price may potentially test the 200-week MAV line,which now lies at RM1.22. Nevertheless, traders may want to cut loss should the share price dip below the RM0.95 level.

From the current level, immediate resistance lies at the RM1.06 level, followed by the 200-day MAV line. To the downside, look for the RM0.95 level as the immediate strong support, followed by the RM0.83 level.

Source: OSK188