DAILY TRADING STOCKS: Nextnation Communication, Nova MSC

Nexnation’s daily chart

Nextnation’s  share price  may  rise further  after  yesterday’s firm move.  We looked at this stock  in early January as it showed potential to move higher. Since then, it has moved favourably and reached our first target of RM0.145. After the price spike, it slipped into a nearly 2-month correction. Nontheless,  the stock now bears an upward bias it has retraced by less than 62% of the January rally, which is  positive according to Fibonacci analysis. The strong move yesterday may have confirmed the formation of a higher bottom at RM0.09. Thus, we expect a new upleg and  believe a  purchase can be made at the current price, or on pullback towards the stop loss at RM0.09. A measured move based on the January rally could see the price reach  RM0.18,  also a Fibonacci level of the 2007-2009 price decline, provided that the recent high of RM0.145 is violated. A strong move could even see the share price testing the late 2007-high of RM0.22, which  represents a  clawback of  38% of the 2007-2009 decline, while a close below RM0.09 will invalidate the trade and may even spell the end of the 6-month rally.

Nova MSC’s daily chart

Nova MSC’s share price may go up if it can break above the longterm  resistance level.  This stock has been trading sideways between RM0.055 and RM0.10  for the past 3 years.  The RM0.10 level  is clearly a firm resistance  as it has held  up  despite  having been  tested 3 times over the  3-year  period.  However,  an  upward bias was  detected after  the stock tested  its  3-year low last September, judging from the series of higher lows it has chalked up. The  close at  the  52-week high yesterday  brought the stock just below the RM0.10 resistance level, with a successful violation today potentially  seeing it trading higher. This  could  prove  that  the highest volume in 5 years recorded yesterday was  indeed buying volume. A purchase can be made if this happens, with a stop loss on a close below last week’s low of RM0.07. A measured move target based on the 3-year sideways move could see it  rise to  RM0.15, while a strong move may even see the stock test the psychological RM0.20, the high in 2007. A trade may not work out if the stop loss is triggered, after which the stock may return to its sideways trend.

Source: OSK188