PIE INDUSTRIAL BERHAD (Technical Buy)

• PIE Industrial Bhd (PIE) closed at RM5.34 yesterday, registering a modest 0.56% gain. The stock has broken out from a prolonged consolidation phase and is now holding firmly above its 13-day SMA at RM5.31. The 5-day SMA is also trending upwards and is on track to cross over the 13-day SMA, signalling that a renewed uptrend may be in the making. The recent bounce from the key Fibonacci retracement level of RM4.96 (50%) further reinforces the likelihood of a strong support base forming at this level.

• From a technical perspective, the stochastic oscillator continues its upward trend, currently at 53.27, indicating rising buying interest. The Tom Demark Pressure Ratio (TDRP) stands at 54.87, reflecting fading selling pressure and strengthening bullish momentum. Additionally, the RSI is recovering at 50.77, pointing to neutral-to-bullish sentiment in the stock.

• Key resistance levels to monitor include RM5.42 (50-day SMA) and RM5.51 (38.2% Fibonacci retracement level). A breakout above these levels could drive the stock higher toward RM5.98, continuing its bullish trend. On the downside, crucial support is located at RM5.06 and RM4.96, with the latter aligning with the 50% Fibonacci retracement, offering solid support.

• In view of the promising technical setup, we recommend accumulating the stock around RM5.28 or near the 5-day SMA level. A take-profit target of RM5.95 presents an attractive upside of approximately 12.6%. To manage risk, a stop-loss at RM4.95 limits downside exposure to about 6.3%. This strategy provides a favorable risk-to-reward ratio for investors aiming to capitalize on PIE’s potential recovery momentum.

Source: Kenanga Research - 2 Oct 2024