Keppel - Bullish breakout suggests more upside potential

Likely more upside ahead. Keppel Corp (KepCorp) could see more upside potential in the days ahead after initiating a bullish breakout from its 1-month flag consolidation pattern on heavy volume yesterday. Incidentally, yesterday’s breakout also took place at its key $7.70 key support (key resistance-turned-support level and lower boundary of 6-month uptrend channel).

Positive signs from indicators. With the RSI rebounding off strongly from the 50% mark and the MACD indicator rebounding off the centerline and initiating a bullish crossover in the process, these seem to suggest a build-up in upside momentum.

Initial resistance zone at $8.45. We expect the stock to advance to the key resistance zone at $8.45 (2009 high), breaking which, the next resistance is at around $9.19 (minor peak in Sep ‘08).

Immediate support at $7.70. Beyond the $7.70 immediate support, we pegged the subsequent supports at $7.00 (resistanceturned- support) and $6.38 (minor troughs in Jun and Jul ‘09).

Note: We currently have a fundamental HOLD rating on KepCorp with $8.20 fair value.

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