Ramunia bullish in near term
Business Times
11 June 2007

SHARES on Bursa Malaysia fell under heavy selling pressure triggered by weak performances on regional markets and, in particular, China.

Continuing talks of market correction weighed down the China stock market . pulling the Shanghai Composite Index sharply lower last Monday and Tuesday to its intra-week low of 3,404.14 points, momentarily retracing a loss of 596.60 points, or 14.91 per cent.

The drop of the Shanghai Composite Index impacted local stocks.

However, the China stocks rebounded over the following three trading days while other regional bourses continued to slide further.

The benchmark Kuala Lumpur Composite Index (KLCI) posted a new all-time historical high of 1,374.54 last Monday before slipping to its intra-week low of 1,351.38 last Friday, tracing out an intra-week range of 23.16 points.

On the global front, shares on Wall Street consolidated in line with the negative factors confronting the China stock market.

The Dow Jones industrial Average staged a sharp pullback last week, staying above its downside support of 13,000 points. The Dow closed at 13,424.39 last Friday, giving a week-on-week loss of 243.72 points, or 1.78 per cent.

The tech-heavy Nasdaq Composite Index moved in tandem with general market finishing at 2,573.54, giving a week-on-week loss of 40.38 points, or 1.54 per cent.

In Hong Kong, stocks consolidated pulling the Hang Seng Index down to close at 20,509.15 last Friday, posting a week-on- week loss of 93.72 points, or 0.45 per cent.

In Tokyo, the Nikkei 225 Index closed at 17,779.09 last Friday, posting a week-on-week loss of 179.79 points, or 1.00 per cent.

On the home front, the sideway consolidation of the market saw the KLCI drifting lower to close at 1,352.39 points last Friday, giving a week-on-week loss of 7.68 points, or 0.56 per cent.

Recent trading focus centred on oil and gas-related counters with many of them posting impressive gains.

Ramunia Holdings Bhd (Ramunia) was one of these counters.

Its daily price trend rose to close at RM1.54 last Friday, giving a week-on-week gain of 15 sen, or 10.79 per cent.

Following are readings of some technical indicators.

Moving Averages: Ramunia's daily price trend stayed above the support of its 10-, 20-, 30-, 50-, 100- and 200-day moving averages.

Momentum Index: Its short-term momentum index continued to stay above the support of its neutral reference line last week.

On Balance Volume (OBV): Its short-term OBV continued to stay above its 10-day moving averages.

Relative Strength Index (RSI): Its 14-day RSI has since breached the support of its 50 per cent level. Its technical reading stood at the 62.50 per cent level at the market close last Friday.

Outlook

With light sweet crude hovering above US$60 (RM207) a barrel, exploration and production activities would intensify considerably. The heightened demand for exploration and production services is likely to benefit Ramunia as well.

Chartwise, Ramunia's monthly price trend continued to trend on a sideway course in its base-building phase over the last 23 months.

Its weekly price trend found critical support of the resistance-turned-support trendline (See Ramunia's weekly chart - A1:A2). Its weekly price trend is currently climbing on its recently established uptrend (A3:A4).

Ramunia's daily price trend staged a technical rebound last week when it successfully re-penetrated its overhead resistance (See Ramunia's daily chart - B1:B2). Earlier, its daily price trend staged a successful re-test of the support of its intermediate-term uptrend (B3:B4).

Its daily, weekly and monthly fast Moving Average Convergence/Divergence (MACD) indicator continued to stay above their respective slow MACDs, right above their respective neutral reference lines.

The bullish configuration of the three time-frame MACDs suggests that Ramunia's near-term price trend is poised to climb higher.

Riding on the back of a performing sector coupled with the bullish configuration of its technical indicators, Ramunia's near-term price trend will continue to trend in its bullish mood. Its overhead resistance zone hovers between RM1.66 and RM1.80.

The subject expressed above is based purely on technical analysis and opinions of the writer. It is not a solicitation to buy or sell.