Smooth Sailing for Alam Maritime?

Alam Maritim (Alam.KL, 5115.KL) stock price has been trading in a range of RM1.90 to RM2.10 since April this year, after a rally from RM1.70 in March. At this level, analysts from broking houses still keeps Alam with a BUY. Below are some recommendations excerpts from Dow Jones Newswire (subscribe to Dow Jones News from HERE).

2008/08/06 13:19PM : Alliance keeps Outperform call on Alam Maritim (5115.KU) with MYR3.10 target price.

2008/08/06 12:27PM: Aseambankers keeps Alam Maritim (5115.KU) at Buy, target price unchanged at MYR3.13

2008/08/06 10:32AM: Affin Investment keeps Buy on Alam Maritim (5115.KU) with unchanged target price of MYR2.53

2008/07/04 12:21PM: MIMB keeps Buy call on Alam Maritim (5115.KU) with MYR2.71 target price.

2008/07/01 15:19PM: OSK Research keeps Buy on Alam Maritim (5115.KU), ups target price to MYR3.00

Price as at noon today is at RM1.97. In the past few weeks, there were some surges in the volume to push prices higher but the price did not move. This shows heavy resistance.

Technically, the current price trend is in a correction and this is one stock that does not attract retail investors because it has been moving sideways for so long and its liquidity is low. Trading volume is only about 1.4m shares a week averagely. The momemtum indicators (like MACD and RSI) are showing weaknesses in the the current price action. These indicators are suggesting that the bears are still in control.

Furthermore, the news/recommendations come after the rally in March and since then, there were no other developments. We'd probably see some speculation on buying because of declining oil prices. Therefore, there may still be opportunity for this stock, but on a short term basis. Resistance is strong at RM2.10, although analysts have much higher price targets (See above recommendations made). Stop loss should be set at 1.90 if traded on a short term basis. at current price of RM1.97, the potential profit to risk ratio may not be attractive. Therefore, lower risk entry is when price around 1.91 to 1.95.

Commetary and analysis by Benny Lee