Tuesday, September 6, 2011

AirAsia: Potential Rebound Targets At RM3.58-RM3.69

Stock to watch – AirAsia (Buy on weakness)

AirAsia: Potential rebound targets at RM3.58-RM3.69

AirAsia will stand to benefit on a recessionary environment amid a drop in jet fuel price as well as down trading activities as passengers from full service carriers (notably business travel) will down trade to low cost carriers. AirAsia is also building new ventures in Japan, the Philippines and Vietnam while Thai AirAsia and Indonesia AirAsia are targeted for listing in 4Q11-1Q12. These are all potentially major share price catalysts.

Despite recent plunge, its medium to long term uptrend remains intact as share prices continue to stay above the 200-d SMA and lower Bollinger band. Although there could be further consolidations amid volatile markets and its high foreign shareholding, any price weakness is an opportunity to accumulate for potential rebounds later due to its oversold indicators, an uptick in Money Flow Index and positive MACD.

Immediate resistance levels are RM3.58 (50-d SMA) and RM3.69 (30-d SMA). Supports are RM3.26 (100-d SMA) and RM3.19 (lower Bollinger band). Cut loss below RM3.19.

Daily AirAsia Chart: Potential Technical Rebound Amid Oversold Indicators And Uptick In Money Flows Index

Source: HLIB Research

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