US MARKETS ended much lower on Wednesday after a poorer set of durable goods figures for February dampened American fund managers’ sentiment. The S&P 500 Index plunged 30.45 points to 2,061.05 points while the Dow tumbled 292.6 points to end at 17,718.54.

The FBM KLCI moved in a volatile and narrow range of 23.89 points for the week with higher volumes of 1.95 billion to 2.44 billion shares traded. The index closed at 1,818.42 on March 26, down 0.68 of a point from the previous day as blue-chip stocks like British American Tobacco (M) Bhd, Hong Leong Financial Group Bhd, Kuala Lumpur Kepong Bhd, Petronas Chemicals Group Bhd and UMW Holdings Bhd caused the index to decline on miniscule profit-taking activities ahead of potential window dressing in the first quarter of 2015 (1Q15). The ringgit was marginally firmer against the US dollar at 3.6620 as Brent crude oil remained slightly firmer at US$56.37 (RM206.87) 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), 1,831.41 (high) and 1,774.30 (low).

All the index’s daily signals are marginally positive for now, with its CCI, DMI, MACD, Oscillator and Stochastic indicators showing upbeat readings. As such, the index’s obvious support levels are seen at 1,774, 1,800 and 1,818, while the resistance areas of 1,823, 1,831 and 1,896 will cap any index rebound.

The 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 remained neutral on that front. The recent fall from its all-time high of 1,896.23 saw a trough at 1,671.82. The price rebound from 1,671.82 stalled at 1,831.41 (on Feb 4) and remains below the 200-SMA line of 1,822.81.

Due to the rebound tone for the KLCI, we are recommending a chart “buy” on CCM Duopharma Biotech Bhd (CCMDBIO). The stock rose sharply over the past fortnight after posting a strong set of quarterly results. Looking at the most recent fourth quarter of financial year 2014 (4QFY14) results announcement, the group recorded an increase of 8.9% year-on-year to RM176.9 million from RM162.4 million in 4QFY13. Correspondingly, profit-before-tax also rose by about 15.7% in 4QFY14 from RM40.2 million to RM46.5 million. The stronger profitability can be attributed to the increased demand from government hospitals.

Further to the results announcement, CCMDBIO highlighted that demand in the pharmaceutical industry is expected to remain stable due to the defensive nature of the industry. However, demand may fluctuate especially for supply to government hospitals via the tender process.

A check of the Bloomberg consensus reveals that no research house covers the stock. CCMDBIO currently trades at a fair historical price-earnings ratio of 14.8 times. Its price-to-book value ratio of 2.72 times indicates that its share price is trading at a steep premium to its book value. It gives a high dividend yield of 4.9%.

CCMDBIO’s chart trend on the daily, weekly and monthly time frames is very firmly up. Its share price has made a good surge since its major monthly Wave-2 low of RM1.24 in October 2008. Since that RM1.28 low, CCMDBIO surged to its March 2015 recent all-time high of RM3.84.

As prices broke above their recent key critical resistance levels of RM3.33 and RM3.37, look to buy CCMDBIO 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, Stochastic and Oscillator) have issued buy signals and now depict very firm indications of CCMDBIO’s eventual move towards much higher levels. It would attract firm buying activities at the support levels of RM3.33, RM3.37 and RM3.80. We expect CCMDBIO to witness some profit-taking at its resistance and all-time high of RM3.84. Its upside targets are located at RM3.88, RM4.63, RM4.98, RM5.22 and RM6.20.

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 March 27, 2015.