MEGB- if at first you don't succeed, try again!

MEGB rallied strongly today. As at 3.45pm. MEGB was trading at RM2.14- a gain of 22 sen over the closing price yesterday. Readers may recall that MEGB staged an equally strong rally in early January which saw the share price breaking above the triple resistance of 2nd accelerated downtrend line (R2-R2), 50-day SMA line and horizontal line at RM2.25-2.30. The earlier breakout prompted my recent trading BUY call which unfortunately fizzled out. On everyone's mind is the big question: Is today rally another bear rally?

The built-up to today's strong rally started in March 21 when MEGB broke above its 1st accelerated downtrend line (R1-R1) at RM1.80-1.82. On March 30, it broke above the horizontal resistance at RM1.90. Today it charged up early & broke above the psychological RM2.00 level, followed swiftly by an upside breakout of the strong horizontal line at RM2.05 & the 100-day SMA line at RM2.07. MEGB's next resistance would be the strong horizontal line at RM2.25-2.30.

With MEGB, one has to be very careful. It is not only a case of once bitten, twice shy. The question to ask is whether MEGB is riding on the coattail of SEG, which rallied from RM2.00 in late December 2010 to a recent high of RM3.60. HELP, another educational group, also staged a timid rally in early March which saw the share price rising from RM2.20 to RM2.80. For those who like to get into MEGB, which is a fundamentally decent stock, the safer bet would be to buy on pullback to RM2.00-2.05.


Chart: MEGB's daily chart as at Mar 31, 2011 (Source: Tradesignum)