CABNET HOLDINGS BERHAD (Technical Buy)

• Cabnet Holdings Berhad (CABNET) closed at RM0.38 yesterday, marking a 2.6% decline. The stock has been in a consistent downtrend since its peak, now nearing its 200-day SMA at RM0.37, which could act as a crucial support level in the near term.
• From a technical standpoint, the stochastic oscillator is currently in deeply oversold territory, sitting at 14.48, which could indicate that selling pressure is reaching exhaustion, and a potential rebound might be on the horizon. The Tom Demark Pressure Ratio (TDRP) is stable at 45.87, suggesting that selling pressure has started to ease. The RSI remains at 36.8, showing signs of recovery, but still in the lower end of the spectrum, indicating the stock is oversold. Additionally, the Smart MCDX indicator hints at some accumulation taking place, which supports the possibility of a near-term bounce.
• Key resistance levels to watch include RM0.40, aligned with the 13-day SMA. A breakout above this level could propel the stock toward the next resistance at RM0.435. On the downside, immediate support lies at RM0.370 (200-day SMA), with a more critical level at RM0.35 (50-week SMA), which may offer additional support if the stock declines further.
• Traders looking to capitalize on a potential technical rebound could consider accumulating near the current levels. A take-profit target at RM0.43 offers an upside potential of approximately 13.2%, while setting a stop-loss at RM0.345 limits downside risk to around 9.2%. This setup presents a favorable risk-reward ratio for traders aiming to catch CABNET's potential rebound.

Source: Kenanga Research - 10 Oct 2024