AMERICAN stock markets ended mixed on Wednesday as Apple Inc and Hewlett-Packard Co led technology stocks down. US Federal Reserve chairman Janet Yellen reiterated that inflation and wage growth remained too low to warrant raising key interest rates at the Fed’s next meeting. The S&P 500 Index inched down 1.62 points to close at 2,113.83 points whilst the Dow gained 15.38 points to end at 18,224.57.

In Malaysia, the FBM KLCI Index moved in a narrow and sluggish range of 16.72 points for the week with lower volumes of 1.69 billion to 2.47 billion shares traded. The index closed at 1,820.87 yesterday, up 5.01 points from the previous day as blue-chip stocks like Genting Bhd, Malayan Banking Bhd, MISC Bhd, Telekom Malaysia Bhd and Tenaga Nasional Bhd caused the index to rise on consistent local nibbling activities. The ringgit was slightly firmer against the US dollar at RM3.5920 as Brent crude oil remained quite firm at US$60.90 (RM219.85) per barrel.

The index rose on a rally from the 801.27 low (October 2008) to its 1,896.23 all-time high (July 2014) and it represents an extended Elliott Wave “Flat” rebound in a “Pseudo-Bull” rise completed. The next few months’ index price movements since July 2014 had key swings of 1,837.28 (low), 1,879.62 (high), 1,766.22 (low), 1,858.09 (high), 1,671.82 (low), 1,810.21 (high), 1,706.18 (low) and 1,831.41 (high).

All the index’s daily signals are positive. As such, the index’s clear support levels are seen at the 1,738, 1,770 and 1,820 levels, whilst the resistance areas of 1,822, 1,831 and 1,858 may cap any index rebound.

The FBM KLCI’s 18 and 40 simple moving averages (SMA) depict an emerging uptrend for its daily chart. However, the price bars of the index are now between the 50 and 200 SMA, and remain in a neutral position on that front. The recent fall from its all-time high of 1,896.23 saw a low of 1,671.82. The price rebound from 1,671.82 stalled at 1,831.41 (on Feb 4, 2015) and remains below the 200-SMA line of 1,829.69.

Despite the sluggish tone for the FBM KLCI Index, we are recommending a chart “buy” on Latitude Tree Holdings Bhd (Latitud). Latitud released its second quarter of financial year 2015 (2QFY15) results recently on Feb 12, 2015. Looking at the 2QFY15 results announcement, Latitud recorded a minor revenue growth of 0.9% from RM361.5 million in 2QFY14 to RM364.8 million in this quarter. Correspondingly, profit before tax rose 2.4% from RM46.8 million in 2QFY14 to RM47.9 million in 2QFY15. A higher unrealised foreign exchange gain arising from translation of monetary assets and liabilities denominated in foreign currencies aided the small improvement in profitability.

Latitud also pointed out that its group operation is seasonal in nature. Its turnover for the first three months of a calendar year is usually slightly lower after the long festive year-end Christmas and New Year holidays.

A check on the Bloomberg consensus reveals that no research house covers Latitud. This stock currently trades at a very low and reasonable price-earnings ratio of 8.98 times while its price-to-book ratio of 1.60 times indicates that its share price is trading at a minor premium to its book value.

Latitud’s chart trend on the daily, weekly and monthly time frames is very firmly up. Its share price made a good surge since its minor weekly Wave-2 low of 78 sen in August 2013. Since that 78 sen low, Latitud surged to its February 2015 recent all-time high of RM6.08.

As prices broke below its recent key critical resistance levels of RM4.67 and RM5.30, look to buy Latitud on any dips to its support areas as the moving averages depict very firm short- to long-term uptrends for this stock.

The daily, weekly and monthly indicators (like the CCI, DMI, MACD and Oscillator) have issued buy signals and now depict very firm indications of Latitud’s eventual move towards much higher levels. It would attract firm buying activities at the support levels of RM4.67, RM5.30 and RM6.07. We expect Latitud to witness some profit-taking at its resistance and all-time high of RM6.08. Its upside targets are located at RM6.18, RM6.80, RM7.64 and RM8.80.

Lee Cheng Hooi is the regional chartist at Maybank Kim Eng. The views expressed in the article are the opinions of the writer and should not be construed as investment advice. Please exercise your own judgment or seek professional advice for your investment decisions. Technical report appears every Wednesday and Friday.

This article first appeared in The Edge Financial Daily, on February 27, 2015.